Music streaming giant Spotify is raising the prices for its Premium subscription tiers in the United States.
Spotify said in a blog post on Monday (June 3, 2024) that it is updating its pricing in the market so that it “can continue to invest in and innovate on our product features”.
In the US, for new users, the subscription price for Spotify’s flagship individual Premium tier is going up by $1 per month – to $11.99 (see below).
Premium Duo will now cost $16.99 per month (up from $14.99). Premium Family now costs $19.99 per month (up from $16.99), while Spotify Premium Student still costs $5.99 per month.
According to Spotify, over the next month, existing US-based subscribers will receive an email (see below) about the update, explaining that the new subscription price will come into effect on their billing date in July.
The move marks Spotify’s second price rise in the world’s largest recorded music market over the past year.
The company announced in July 2023 that the price of its flagship individual subscription tier would be increasing for the first time in the US, from $9.99 per month to $10.99, as of Monday, July 24, 2023, following widespread calls to do so from multiple music industry leaders.
In addition to the US, in July last year, Spotify increased its Premium pricing in around 50 other markets globally, such as Canada, as well as several markets across Europe, including the UK and France, plus markets in Asia, South America, and Australasia.
Spotify’s price hike last year came after most other global music streaming services, including Apple Music, Amazon Music, and YouTube Music, had increased the prices of their subscription plans.
Most recently, in April 2024, Spotify also increased the prices of its flagship Premium subscription plan in the UK, to £11.99, up from £10.99, and in Australia, to AUD $13.99, up from AUD $12.99.
Spotify’s latest price increases will be welcomed by record companies, as well as investors, amid SPOT’s ongoing profitability drive.
In Q1 (the three months to end of March), Spotify posted an operating income of €168 million ($182.41m), which it noted in its investor presentation in April was “a new quarterly high” and reflected “lower personnel and related costs and marketing spend”.
Spotify slashed around 17% of its global workforce in December, the streaming company’s third round of job cuts last year.
The company saw its global Premium Subscriber base grow to 239 million paying users in Q1, up 14% YoY, and up by 3 million net subscribers on the 236 million that SPOT counted at the end of the prior quarter (Q4 2023). (see below).
Spotify’s latest price hike in the US arrives amid the streaming service’s battle with music publishers in the market over SPOT’s decision to reclassify its Premium tiers as ‘bundles’ by combining music and audiobooks.
The move has resulted in Spotify paying a lower mechanical royalty rate in the US to publishers and songwriters than standalone music subscription services.
On May 16, the US-based Mechanical Licensing Collective (The MLC) sued Spotify for allegedly underpaying royalties to songwriters and publishers as a result of it reclassifying its Premium services as bundles.
In October, Spotify started offering 15 hours worth of audiobooks with its Premium plans for free, in other words, ‘bundling’ access to audiobooks with its Premium services. Spotify then launched a $9.99 per month standalone audiobook tier in March in the US.
On Spotify’s Q1 earnings call on April 23, Spotify co-founder and CEO Daniel Ek confirmed that a new ‘music-only’ subscription tier is coming to the platform. The cost and launch date of that ‘music-only’ tier have not yet been confirmed yet.
On Spotify’s landing page about its price updates, the company writes: “As we continue to grow our platform, we are updating our Premium prices so that we can keep innovating in changing market conditions. These updates will help us continue delivering value to fans.”
Music Business Worldwide