Spotify Technology, the leading music streaming service, is planning to raise its monthly subscription price in the U.S. by $1. This long-awaited change comes as the company aims to achieve consistent profitability. The Premium plan, which provides an ad-free experience, is expected to increase from $9.99 to $10.99 per month in the U.S., with similar price hikes anticipated in various global markets in the upcoming months.
Unlike some of its competitors, such as Apple, Amazon, and YouTube, Spotify has been hesitant to raise its prices in established markets. However, the decision to do so now is likely to set a precedent and may prompt other streaming services to follow suit.
Wall Street is pressuring both audio and video streaming services to prioritize profitability over user growth. Various video streaming platforms, including Peacock and Disney+, have already implemented price increases in recent times.
Spotify's stock has seen a substantial increase of 110% this year, and the company had previously announced its intentions to raise prices in order to align with its competitors. The premium plan offers ad-free listening both online and offline, and additional fees apply for more users on the same account.
Music industry executives have long encouraged streaming services to explore different pricing options and tiers to attract more paying users, benefiting labels and artists alike. YouTube, Apple, and Amazon have already raised their prices in response to this demand.
Spotify had initiated price increases for its family plan in several markets, including the U.S., over a year ago, leading to higher revenue per user. The company claims that such increases have not significantly impacted customer retention or acquisition.
Warner Music's Chief Executive, Robert Kyncl, praised Spotify's move and predicted that it would generate an additional $1 billion in revenue from the $1 price hike in the U.S. He also emphasized that price increases were a necessary step for the long-term financial health of streaming services and the creative community, as they have not led to increased customer churn.
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