Spotify, which increased the cost of its U.S. monthly subscriptions less than a year ago, plans to raise the price of its paid-subscription service in several overseas markets at by the end of this month, and in the U.S. later this year, according to a report published by Bloomberg on Wednesday.
The company, which is the world’s largest paid streaming service by far, will increase prices by about $1 to $2 a month in five markets — including the U.K., Australia and Pakistan — by the end of April 2024, the report claims, citing people familiar with the matter, with the U.S., its largest territory, to follow at an unspecified time later this year. Under the new pricing, individual plans will go up by about $1 a month, while family plans and so-called duo plans for couples will rise by $2.
The report was followed by a boost in the company’s stock price.
While Spotify led the charge for streaming and in the process effectively saved the music industry after years of steep decline, it has struggled for profitability, largely due to the fact that it pays out billions of dollars every year in royalties to major music companies and other rights holders — some $9 billion on $13.2 billion in revenue in 2023. It began raising subscription prices, after years of resistance, last year, following similar increases by its competitors.
While multiple studies have shown that people are generally willing to pay more for music-streaming subscriptions, Spotify has worked to offer more for any price increase, with recent talk of early access to new music and other fan-centric options. The report also states that the company will be introducing new pricing tiers, including one for a “supremium” plan that would offer access to high-fidelity audio at a higher price, although the company said it was sidelining such efforts a couple of years ago.
Contacted by PvNew, a rep for Spotify swiftly declined comment.
According to the report, the higher prices will help cover the cost of audiobooks, a service introduced late last year. The company offers customers up to 15 hours of audiobook listening per month as part of their paid plan. The company faces a similar royalty challenge in books as it does in music, and only collects additional revenue from listeners who exceed the 15-hour limit. The Swedish audio company is also going to introduce a new basic tier that will offer music and podcasts — but not audiobooks — under its current plan. Spotify’s efforts to attain profitability via forays into video and podcasts have met with limited success.
Spotify most recently reported some 236 million paying customers, making it the world’s largest paid subscription service by a wide margin. The report states, “The success of [last year’s] price increase has given management confidence to seek even more.”
