- Today, during an earnings call, Spotify’s CEO divulged that a Spotify price increase is on the way.
- The company didn’t divulge many details, but it is a solid confirmation that price hikes are coming.
- Spotify has already raised Family Plan pricing in certain markets around the world.
Music streaming service Spotify held a quarterly earnings call today (via TechCrunch). The company had good news: the numbers of active users as well as paying subscribers have increased since the end of the second quarter.
However, the company failed to increase sales and earnings during that same period. Spotify’s stock value dropped immediately. This resulted in Spotify’s co-founder and CEO David Ek to comment that there will definitely be Spotify price increases at some point in the near future.
Spotify price increase: Why, when, and where?
By raising prices, Spotify could increase its earnings without needing to increase its number of active users. It will likely continue to grow its user base, but it’s clear that that doesn’t always result in increased revenue. This is the biggest reason why a price hike would be necessary.
Ek didn’t divulge any specifics about when this could happen or in what markets. He did say this: “I believe an increase in value per hour is the most reliable signal we have in determining when we are able to use price as a lever to grow our business.”
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What Ek is referring to is whether users are using Spotify more on a daily basis or not. If they are, they are getting more value out of the product and, therefore, should be fine paying more. Considering Spotify now offers millions of podcasts as well as hosting dozens of exclusive shows, it could easily argue that consumer value has increased.
As far as where this could happen, it wouldn’t be surprising if it included the United States. There have already been Spotify price increases around the world in countries such as Belgium, Switzerland, Bolivia, Peru, Australia, Ecuador, and Colombia. These increases were for Family Plans and other plans with multiple users.
The bottom line is that current Spotify subscribers should plan on a price increase coming soon. It’s inevitable at this point.
