The Hollywood Reporter
Howard Lawrence and Guy Lawrence of Disclosure perform at an event hosted by Spotify during Cannes Lions on June 21, 2023.
In its latest attempt to boost revenue and cut losses, Spotify unveiled a widely telegraphed move to raise prices for its premium paying subscriber base.
The new monthly cost for U.S. users will be $10.99, the company said. The hike brings Spotify in line with rivals Apple Music ($10.99 a month) and Amazon Music ($10.99, though cheaper for Prime members), which both raised prices last year. And Spotify’s move arrives days after YouTube Music also raised its price by $1 to $10.99 a month.
The price of Spotify’s Premium Duo plan will go up by $2 to $14.99 per month, while the Family plan and Student plans rise by $1 to $16.99 and $5.99, respectively.
“The market landscape has continued to evolve since we launched. So that we can keep innovating, we are changing our Premium prices across a number of markets around the world,” the company said in a statement. “These updates will help us continue to deliver value to fans and artists on our platform.”
Spotify had 210 million global paying subscribers (a 15 percent increase year-over-year) and 515 million monthly active users as of March 31. Yet the audio giant has been operating at a loss and has been looking for ways to cut costs amid what CFO Paul Vogel called in late April a “very modest underperformance in advertising” revenue in its first quarter of 2023.
The move will likely be welcome news to Spotify’s major label partners like Universal Music Group and Warner Music Group, which in turn benefit from increased monetization of streaming audio from their artist rosters. UMG, WMG, Sony Music and Music and Entertainment Rights Licensing Independent Network account for 75 percent all of record label audio streams on Spotify in 2022, the company noted in its annual report. And Spotify pays 70 percent of subscription and advertising fees to rightsholders.
The Stockholm-based company, which had 9,800 employees as of last year, unveiled a plan to cut 600 staffers in January and followed that move by consolidation in its podcast divisions, cutting 200 jobs in June. Those efforts were part of a broader initiative that CEO Daniel Ek described as a “need to become more efficient” outlined at the beginning of 2023 along with a broad organizational change that deemphasized some of its original podcasting efforts.
In March, the company unveiled a redesigned home feed that, among other changes, gave more prominence to video in an effort to become a destination for creators and podcasters. The company also capitalized on Wall Street’s artificial intelligence hype by unveiling an “AI DJ” for users with the promise that it knows “your music taste so well that it can choose what to play for you.”
While some exclusive talent deals have ended at Spotify during its efficiency drive — Meghan Markle and Prince Harry’s and Barack and Michelle Obama’s among them — the service just unveiled a new weekly podcast with Trevor Noah, though that show will appear on multiple audio services.
Spotify, which is unveiling its second-quarter earnings on July 25, has seen its stock price double over the first six months of the year.
Source: Hollywood Reporter
