In a note to employees, Ek said Spotify invested too much in 2020 and 2021 and had to “rightsize” its costs for a new economic reality.

Music streaming service Spotify is laying off 17% of its workforce, in a dramatic move aimed at reducing its costs and adjusting for a slowdown in growth, CEO Daniel Ek said Monday.

In an email sent out to staff, Ek said that Spotify was taking “substantial action to rightsize our costs,” adding that the company took on too many employees over the years 2020 and 2021, when capital was cheap and tech companies could invest significant sums into team expansion.

The latest round of cuts equates to roughly 1,500 jobs, according to a CNBC source familiar with the matter. A Spotify spokesperson wouldn’t comment on the exact number of roles affected by the measure.

As of about 4:15 a.m. ET, shares of Spotify were up about 2% in U.S. premarket trading.

“Over the last two years, we’ve put significant emphasis on building Spotify into a truly great and sustainable business — one designed to achieve our goal of being the world’s leading audio company and one that will consistently drive profitability and growth into the future,” Ek said in an internal memo that was shared on Spotify’s website.

“While we’ve made worthy strides, as I’ve shared many times, we still have work to do. Economic growth has slowed dramatically and capital has become more expensive. Spotify is not an exception to these realities.”

It comes after Spotify reported a 65 million euros ($70.7 million) profit in the third quarter, citing lower spend on marketing and personnel.

Spotify raised prices of its subscription plans earlier this year and has been expanding into podcasts and audio books.

The latest round of redundancies follows successive cuts at the firm, which like other growth-oriented tech firms has been forced to cut back on costs in the last year or so due to higher interest rates and a worsening macroeconomic backdrop.

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