In a highly-anticipated move, Spotify, the renowned music streaming platform, has taken the decision to raise prices for its single-account premium plan after a decade of keeping them unchanged. This price adjustment also affects other subscription services offered by the company. Subscribers in the UK will now see a monthly increase of £1 for the individual plan, bringing the cost to £10.99. The premium duo plan will be priced at £14.99, while the family plan will cost £17.99. Notably, the student plan will remain unaffected, maintaining its price at £5.99 per month.
The same price adjustments will be implemented in the US, Canada, and 49 other territories. In the US, the individual plan will rise from $9.99 to $10.99 (£8.57). The premium duo plan will increase from $12.99 to $14.99, the family plan from $15.99 to $16.99, and the student plan from $4.99 to $5.99.
The decision to raise prices comes as Spotify recently reported robust growth in its user base, surpassing expectations by adding 36 million monthly active users between April and June, reaching a total of 551 million. However, the company’s pre-tax losses during the same period escalated to €241 million (£207.3 million), marking a significant increase compared to the €90 million loss recorded in the corresponding period last year. Despite the growth in revenue, which reached €3.1 billion, it fell short of analysts’ projections of €3.2 billion.
Spotify has justified the price increase by emphasizing its dedication to providing ongoing value to both users and artists on its platform. The company has assured subscribers that they will be given a one-month grace period before the new prices take effect, allowing them the option to cancel their subscriptions without incurring the higher fees.
In recent times, Spotify has made strategic efforts to reduce its dependence on costly celebrity deals and original content, which had previously impacted its financial performance. As a result, deals with prominent figures such as the Duchess of Sussex and Barack and Michelle Obama’s production company have come to an end.
Earlier this year, the company’s CEO, Daniel Ek, hinted at the possibility of raising prices in 2023, expressing confidence that customers would understand the adjustments given the continuous value offered by the platform.
Spotify faces increasing competition from various streaming services, many of which have also adjusted their subscription costs. Apple Music, Peacock, Netflix, Max, and Paramount+ are among the platforms that have recently raised their prices. Despite these changes, Spotify’s premium plans now align with the monthly rates offered by key competitors like Apple Music and Amazon Music.
Despite the price hike, Spotify will continue to provide a free plan supported by advertising, which remains an important component of its vast user base, totaling 515 million active users across more than 180 markets, with around 40% being paying subscribers.