Spotify will raise its subscription price in the US for the first time since 2024. What will this bring to the company?
Streaming giant Spotify will raise subscription prices in the US - its biggest market - in the first quarter of next year, the Financial Times reported, citing three sources. The company will take such a step for the first time since July 2024. The price hike is linked to the service's efforts to demonstrate sustainable profitability, the newspaper said.
Spotify shares were adding more than 4% at the New York premarket and are up more than 30% since the beginning of the year. By comparison, the S&P 500 index is up 14% in the same time.
What will the price hike do for Spotify?
Wall Street analysts see the US price hike as critical to Spotify's future share performance, claims the FT.
"Questions about exactly when U.S. prices might be raised have negatively impacted market sentiment," Deutsche Bank analysts wrote last month.
JPMorgan predicted that a $1 per month increase in the US subscription price would boost Spotify's annual revenue by about $500 million, the FT reports. A subscription in the US now costs $11.99: it has only increased by two dollars since the service launched in the country 14 years ago.
In early November, Spotify provided fourth-quarter earnings guidance that came in above Wall Street expectations: the company was counting on strong user growth and additional revenue from price increases during the important holiday season.
Context
Major record labels have long called on Spotify, Apple Music and other streaming services to raise tariffs, arguing that prices have lagged behind inflation and music subscriptions remain too cheap compared to, for example, video services like Netflix, the FT writes.
Spotify has already raised prices in August in a number of countries, including the UK, Switzerland and Australia. In South Asia, the Middle East, Africa, Europe, Latin America and Asia Pacific, the subscription price has been increased from €10.99 to €11.99 per month (equivalent to $13.82), Reuters previously reported.
The price hikes come as a decade of rapid growth in the music industry slows: according to industry organization IFPI, global revenue growth halved last year, the FT notes.
This article was AI-translated and verified by a human editor
