In a bid to boost profitability, Spotify, the world’s leading music streaming service, is raising the prices of its premium subscriptions in the United States, marking the second increase in a year.
The price of Spotify’s individual ad-free plans will increase by $1, bringing the monthly cost to $11.99, the company announced Monday. Group subscriptions are also set to increase, with duo plans going up from $2 to $16.99 a month and family plans going up from $3 to $19.99 a month. However, premium prices for students will remain unchanged at $5.99 per month.
The Stockholm-based audio company, which boasts a vast library of music, audiobooks and podcasts, justified the price increase as a necessary step to continue investing and innovating its product features. “So that we can continue to invest in and innovate on our product features and bring users the best experience, we occasionally update our prices,” Spotify said in a blog post.
The new prices will take effect immediately for new premium users, while existing subscribers will see the increase reflected in next month’s bill. This move puts Spotify’s US subscription plans at a higher price than its rival, Apple Music, which offers an individual plan for $10.99 per month and a family plan for $16.99 per month.
Spotify, which last raised prices in the United States in July, has been focused on increasing its profitability. The company cut staff last year after spending too much on podcast deals with influencers and journalists. In April, Spotify reported its largest quarterly gross profit. The company’s stock rose 5% to $312.07 per share Monday morning.
The company’s CEO, Daniel Ek, has previously said that Spotify regularly evaluates its “value for money” ratio in relation to its subscription price. “We’re constantly looking at how much value we’re adding, how consumers are responding… and what is the fair price to have a good value-to-price ratio” Ek said on an earnings call in April.
At the end of the first quarter of 2024, Spotify had 239 million Premium customers worldwide, with a gain of 3 million in the period. Overall, the audio streamer boasts 615 million listeners (free and paid) globally. The price increase is seen as a strategic move by Spotify to shift investor focus from subscriber growth to profitability, a trend seen among other streaming services.
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