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Business News Digital Labels & Publishers
Spotify boss says subscription price rises in US are being considered
By Chris Cooke | Published on Wednesday 26 October 2022
Spotify boss Daniel Ek yesterday indicated that his company could follow Apple’s lead in increasing its headline subscription price in key markets like the US, adding that price increases are something the firm will discuss with the labels.
Apple announced earlier this week that it is increasing the monthly subscription price for its Apple Music service in key markets, so that the headline price will increase from 9.99 to 10.99. Spotify has already instigated some price increases in some markets, although more commonly around things like the family plan rather than the headline subscription price.
Many in the music industry have been calling for price increases across the streaming sector for some time. In most markets the headline price hasn’t changed since the launch of services like Spotify in the 2000s, which means – once inflation is taken into account – prices have been falling each year.
And, for the music industry, streaming is ultimately a revenue share game, so lower prices mean the music community at large earns less money.
Of course, price increases also benefit the services, as their cut of the digital pie goes up too, so investors in the streaming firms are generally pro higher subscription fees as well. Though the services have nevertheless been nervous about price hikes to date.
That’s partly because all the music streaming set-ups basically have the same catalogue, so there is a risk some consumers will immediately switch to a rival platform where they can get the same music at a lower price. Plus many of the services – and especially Spotify – continue to prioritise subscriber base growth over everything else, and discounting and bundling have been key tactics for achieving that growth.
Ek spoke about price increases yesterday, Spotify putting out its latest financial report for investors the day after Apple’s price increases were announced. YouTube has also instigated a price increase for its main premium service, though in most markets only on family plans.
“When our competitors are raising their prices, that is really good for us”, Ek told investors, while also noting that Spotify has raised some of its subscription prices in recent years. He added that an increase of the headline price in a market like the US “is one of the things we would like to do and it’s something we will [review] with our label partners. I feel good about this upcoming year, and what it means about pricing for our service”.
Elsewhere in Spotify’s latest quarterly report, it was confirmed that premium subscriber numbers are up to 195 million, while the platform’s total userbase, including all the freeloaders, is now at 456 million. Revenues for the last quarter were above expectations, though the company’s gross margin was lower than expected while its losses were higher than anticipated. So a mixed bag then.
But what does Ek make of all the recent Kanye West controversies? That’s what people really wanted to know, right? Will he be removing West’s music from the Spotify platform? No. He will not. Not unless the rapper’s label removes it. If West’s recent “awful comments” were in his lyrics, that might be another matter, Ek said, as that would likely violate Spotify’s content policies.
However, they are not in his lyrics. So, according to Reuters, Ek concluded: “His music doesn’t violate our policy. It’s up to his label if they want to take action or not”.
