Spotify has announced its decision to raise the prices of its premium plans, marking the first increase since 2011. The price hike affects individual, duo, and family plans across various regions, including the UK, US, Canada, and 49 other territories. The company cites the need to continue delivering value to fans and artists on its platform as the reason behind the increase.
Starting in the UK, the single-account premium plan will see a monthly increase of £1, bringing the cost to £10.99. Premium duo plans will rise to £14.99, and family plans will now cost £17.99. Notably, the student plan remains unchanged at £5.99.
Similarly, in the US, individual plans will rise from $9.99 to $10.99 (£8.57), premium duo plans will increase from $12.99 to $14.99, family plans from $15.99 to $16.99, and student plans from $4.99 to $5.99. These changes align Spotify’s prices more closely with those of competitors like Apple Music and Amazon Music.
It’s worth noting that these price adjustments follow a trend among various streaming services, as they also raised subscription costs. This includes platforms like Apple Music, Peacock, Netflix, HBO Max, and Paramount+.
Despite the price increase, Spotify continues to see impressive growth in its user base. In the latest financial results, the company reported beating forecasts by adding 36 million monthly active users between April and June, bringing the total to 551 million users, with 220 million of them paying for subscriptions. However, this growth hasn’t translated into immediate financial success, as pre-tax losses surged to €241 million (£207.3 million) over the last three months, compared to a €90 million loss during the same period the previous year. Sales rose to €3.1 billion but missed analysts’ expectations of €3.2 billion.
To soften the impact of the price hike for current users, Spotify has announced a one-month grace period before the new prices take effect. During this time, subscribers can decide whether to continue with the service at the increased cost or cancel their subscription without penalty.
The decision to raise prices comes as Spotify has been striving to reduce its reliance on expensive celebrity signings and original content, which have impacted its profitability. For example, high-profile deals with celebrities like Meghan Markle and Prince Harry for their Archewell Audio podcast reportedly cost around $20 million. However, this deal came to an end last month as the production company parted ways with Spotify in a mutual decision. Other deals, such as the one with Barack and Michelle Obama’s production company, also ended last year.
Spotify CEO Daniel Ek had previously stated the company’s intentions to raise prices in 2023. He emphasized that the price increase would be well-received by customers due to the value Spotify provides to its users.
For those who are not ready to pay for a premium plan, Spotify will continue to offer its free plan, albeit with advertisements.
source- bbc.com
