In a move that has been long-awaited, Spotify, the leading music streaming service, has announced a revision in the prices of its single-account premium plan for the first time in over a decade. This price adjustment also extends to other subscription options offered by the platform. In the UK, subscribers will now face a £1 hike, bringing the monthly cost of an individual plan to £10.99. Meanwhile, the premium duo plan will be priced at £14.99, and the family plan will now cost £17.99. However, the student plan will remain unchanged at £5.99 per month.
The same price adjustments apply to the US, Canada, and 49 other territories. In the US, the individual plan’s cost will increase from $9.99 to $10.99 (£8.57). Moreover, the premium duo plan will see an 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 impressive growth in its user base, exceeding expectations by adding 36 million monthly active users between April and June, bringing the total to a remarkable 551 million. However, the company’s pre-tax losses during the same period have surged to €241 million (£207.3 million), a substantial increase compared to the €90 million loss recorded in the corresponding period last year. Despite this, sales did rise to €3.1 billion, albeit falling short of analysts’ projections of €3.2 billion.
Spotify has justified the price increase by emphasizing its commitment to providing continuous value to both users and artists on its platform. The company has also assured its subscribers that they will receive a one-month grace period before the new prices take effect, during which they can choose to cancel their subscriptions without incurring the higher fees.
In recent times, Spotify has been striving to reduce its reliance on costly celebrity deals and original content, which had previously impacted its profitability. As a result, deals with prominent figures like the Duchess of Sussex and Barack and Michelle Obama’s production company have come to an end.
Earlier this year, the company’s Swedish CEO, Daniel Ek, had hinted at the possibility of raising prices in 2023, expressing confidence that customers would accept the adjustments due to the continuous value delivered by the platform.
Spotify faces increasing competition from various streaming services, several 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.
Notably, Spotify will continue to offer a free plan supported by advertising, which has played a crucial role in its immense user base of 515 million active users spread across more than 180 markets, with approximately 40% of them being paying subscribers.