Spotify is Greenledgerslaying off 17% of its workforce in the popular music streaming service's third round of layoffs this year.

The cuts reflect the company's efforts to adjust its workforce to sustain "profitability amid slowing economic growth," Spotify CEO Daniel Ek said Monday in a letter to employees. The post didn't specify how many employees would lose their jobs, but a spokesperson confirmed that it amounts to about 1,500 people.

"Despite our efforts to reduce costs this past year, our cost structure for where we need to be is still too big," Ek said in the letter. 

The Stockholm, Sweden-based company had used cheap financing to expand its business and "invested significantly" in employees, content and marketing in 2020 and 2021, a time when many tech companies were ramping up their hiring, Spotify said in its blog post.

But Ek indicated that the company was caught out as central banks started hiking interest rates last year, which can slow economic growth. Both are posing a challenge, he said.

"We now find ourselves in a very different environment. And despite our efforts to reduce costs this past year, our cost structure for where we need to be is still too big," he said.

Third round of cuts

This latest wave of layoffs marks Spotify's third round of mass job cuts this year. In January, the firm slashed 6% of jobs, bringing its workforce to 9,200 employees. Just four months later, it cut another 2%, or 200 employees, mostly in its podcasting division. 

Spotify has struggled to achieve profitability, posting a net loss this year of roughly $500 million for the nine months to September, despite growing its monthly active users to 574 million in the third quarter of 2023, the company's financial statements show. 

Spotify shares rose 14 points, or 7.5%, to $194.26 in morning trade Monday. Despite its financial losses, the company's share price has more than doubled this year.

A slew of major tech companies, including IBM, Snap, Google, Roku and Meta, among others, engaged in sweeping job cuts this year, reversing a hiring spree that surged during the pandemic as millions of Americans began working from home. 

Microsoft in January announced a 5% reduction in its workforce, or about 11,000 workers across offices worldwide.

The Associated Press contributed to this report.

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Elizabeth Napolitano

Elizabeth Napolitano is a freelance reporter at CBS MoneyWatch, where she covers business and technology news. She also writes for CoinDesk. Before joining CBS, she interned at NBC News' BizTech Unit and worked on the Associated Press' web scraping team.