After twelve years of holding steady at $9.99 per month, Spotify Premium has finally conceded to the industry standard as it raises its monthly subscription prices across the board. The new individual Spotify Premium plans in the US will now cost $10.99 a month, reflecting a $1 per month increase. This pricing change is in effect immediately for new subscribers, while existing subscribers will benefit from a one-month grace period, as Spotify elucidated in an FAQ about the price hikes.
The implications of the new pricing extend beyond individual plans. Spotify’s Premium Family tier in the US is experiencing a similar price hike to $16.99 per month. Premium Duo plans have been adjusted to $14.99 per month, which marks a $2 per month increase, while Premium Student will now cost $5.99 per month, an increment of $1 per month. The adjustments are not confined to the US market; Spotify’s individual premium plans in the UK, for instance, will increase by one pound to £11.99 per month.
Spotify’s announcement, despite being anticipated, follows the broader industry trend initiated by Apple Music, which was the first to increase its individual streaming plan to $10.99 per month, Apple set the ball rolling for others to follow suit. The rest, starting with Amazon, followed closely, raising its individual Music Unlimited price to the same amount in January, with Tidal also announcing a price hike for its HiFi tier.
However, the industry-wide shift to a higher price point does not signal any notable feature upgrades from Spotify, such as the long-awaited Spotify HiFi. For now, Spotify Premium plans remain as before, with no news about a rumoured new, and potentially pricier, Spotify Premium tier that includes Spotify HiFi.
The rise in subscription prices across the board comes as part of an evolving “market landscape,” according to Spotify. The extra revenue generated from the increases is expected to fuel further innovation, allowing Spotify to continue delivering a ton of value to its users. This pricing strategy is predicted to generate an additional $1 billion in revenue, which Spotify has considered as crucial to keeping pace with competition, driving more efficiency, controlling costs, and speeding up decision-making, particularly in light of the recent cut of roughly 6% of its workforce.
Critics argue the price increase may negatively impact Spotify’s subscriber growth, yet historical evidence suggests otherwise. Other services that raised prices previously have not seen a substantial churn rate, indicating that the industry may sustain this pricing trend without a severe impact on customer retention.
The decision also aligns with Spotify CEO and co-founder, Daniel Ek’s, previous indications. During an April earnings call, Ek hinted at the possible increases, stating that while lower subscription costs had marginally helped the company, it wasn’t their primary strategy. Instead, Ek seemed to point towards the inevitability of a price increase as part of Spotify’s long-term strategy.
Despite the price increase, Spotify Premium’s benefits remain intact. The Premium tier continues to offer unlimited, ad-free music streaming, making it a favourite among many users. Existing subscribers who feel the sting of the increased prices may still find value in the service, thanks to its vast music library, exclusive podcasts, and personalised playlists.
The implications of these price hikes remain to be seen. While some subscribers may consider switching to more affordable options, others may find Spotify’s value proposition strong enough to justify the higher prices. Regardless of the outcome, Spotify’s move signals a new phase in the music streaming industry’s evolution, where price competition takes a backseat to innovation and value delivery.
In other technology news, Elon Musk continues to surprise everyone with his latest stunt, rebranding Twitter and changing its name. It remains unclear what’s next for the newly-refreshed social media platform.
