The world's largest paid music-streaming service, Spotify, is raising its rates. The company announced this prior to quarter 2 results being announced on Tuesday. Spotify's pricing hike follows competitors such as Apple Music and YouTube increasing the cost of premium accounts as well. However, for Spotify, while they have raised their prices in some markets, this is the first time they will have a price hike in the United States.
Spotify currently has around 210 million subscribers worldwide, gaining five million in the first quarter of 2023, and has about 515 million users including ad-supported free accounts. That's a lot of users, but it also meant Spotify was missing out on a large chunk of potential revenue if they didn't raise their prices.
Speaking of Apple Music, they previously raised their rates to $10.99 a month for individual subscribers and $16.99 a month for a family plan. The individual plan matches what Amazon Music Unlimited is currently. The YouTube Music Premium plan is also $10.99. The point is that you see a trend.
Spotify rate hike will go into affect in a month for current users
To be fair, while Spotify raising their rates makes it a bit more taxing on subscribers, it also allows Spotify to keep up with their technology and also helps with royalties long-term for the artists played on Spotify, which, of course, is next to everyone ever.
Spotify put out a press release on Monday stating that the price increase will let the company "keep innovating" and "continue to deliver value to fans and artists." The rate increase affects many other countries, inlcuding the UK, so it is not just limited the United States audience. Again, it should also be noted that Spotify is one of the few companies that has not freely done tate hikes, but instead tried to keep things as they were.
This is just another sign of how capitalism works. Companies will eventually raise their rates to help the bottom line. But at least Spotify held on as long as they could.