UPDATE: Spotify has confirmed that it is raising the subscription price in 53 countries, with the new pricing structure in the USA set at $10.99 for a Premium Individual account (up by $1), $14.99 for a Premium Duo account (up by $2), $16.99 for Premium Family (up by $1), and $5.99 for Premium Student (up by $1). Other countries affected by price increases seem to be seeing similar jumps in price across the various subscription plans, and Spotify said that it will email existing subscribers with details of pricing. However, for new subscribers, it appears to be taking immediate effect: the new prices are now being shown on Spotify’s US and UK websites.
It’s not as if it hasn’t been coming. At the end of last year, in a Q3 earnings investor call, Spotify CEO Daniel Ek mentioned that Spotify has already “done more than 46 price increases in markets around the world” in the last two years, and agreed that an increase in the US was on the streaming platforms’s to-do list.
And now, according to reports from the Wall Street Journal, it’s going to happen. In the US, the price of an individual subscription will increase, Billboard reports, from $9.99 to $10.99. This is the first price rise for an individual premium account in the US, having stayed at the $9.99 point since Spotify launched there in 2011.
Will people be willing to accept a price rise? Apple Music, YouTube Music Premium and Amazon Music have all raised prices by one dollar to $10.99 a month, which points to an answer of “yes”, although data on the effect on subscriber numbers has not yet emerged. Ek is betting that people won’t mind: in October 2022, Ek admitted that price rises elsewhere will pave the way for Spotify’s own price rise: “If you think in light of our competitors raising prices, that obviously gives us more confidence going into it, too.”
Former Spotify chief economist Will Page dug into this 9.99 price point in a Music Ally guest post at the end of 2021, explaining how much more is now being offered (in the form of audio options to listen to) for less money (inflation means that 9.99 has less value today). Meanwhile, artist groups and major labels alikehave been calling for increases in the price of a music subscription, based on the simple maths of more money in = more money out.
So: a small increase of one dollar might be acceptable to most users. But in the bigger picture around music spend, some interesting questions await. Will Page (him again) analysed spending on live music in the UK last week, finding that while spending on tickets has dramatically bounced back to over £2 billion in box-office spend, the number of music events in Britain has dropped. Page called it ”akin to a productivity gain: getting more (box office spend) from less (concerts).”
Page also noted that spending on recorded music also passed the £2bn mark, which is an interesting anomaly of sorts: while the country is in the grips of an extended economic squeeze, people are willing to spend more on music. Moreover, there’s the possibility that many people might be keener right now to spend on a few expensive once-in-a-lifetime tickets, rather than a bigger number of cheaper shows by emerging or touring artists.
Perhaps here there’s a parallel with the handbags-and-Rolexes luxury goods market, which has seen extremely strong growth in recent years thanks to the desires of younger, high-spending, non-super-rich customers. (Perhaps there’s also a lesson here for people setting high ticket prices: the luxury goods market is wobbling as consumers cut back on high-priced goods.)
Therefore, in a testing economic climate, spending on both live and recorded is hitting new highs, and music ticket prices are continuing to rise, with appetite for high-priced tickets remaining high. Meanwhile, spending on recorded music – including the boom in physical media – has reached a new high. Is this the peak before a dip? Or the beginning of a future where more is spent on music as a general rule? We’ll soon find out: as DSPs raise their subscription prices, budget-conscious music fans will either simply swallow the price increase and keep on spending as before, or feel that they need to start getting choosy about where they divvy up their cash earmarked for spending on music.
The full list of countries experiencing a price hike are: Andorra, Albania, Argentina, Austria, Australia, Bosnia and Herzegovina, Belgium, Bulgaria, Brazil, Canada, Chile, Colombia, Costa Rica, Cyprus, Denmark, Ecuador, Estonia, Spain, Finland, France, United Kingdom, Greece, Guatemala, Hong Kong, Croatia, Indonesia, Ireland, Israel, Iceland, Italy, Lithuania, Luxembourg, Latvia, Monaco, Montenegro, North Macedonia, Malta, Mexico, Netherlands, Norway, New Zealand, Peru, Portugal, Serbia, Sweden, Singapore, Slovenia, Slovakia, San Marino, Thailand, Türkiye, United States, Kosovo.