May 29, 2023
Spotify CEO Daniel Ek Confirms Likely Price Increase in 2023

Spotify CEO Daniel Ek Confirms Likely Price Increase in 2023

Photo credit: Gizmodo

Days after Apple Music raised the cost of its individual plan in markets including the US, Spotify CEO Daniel Ek confirmed that his platform will likely roll out its own price increase in 2023.

Investor Helsing Ek, who just revealed Spotify has no plans to pull Kanye West’s music, hinted at the price hike during his company’s third quarter 2022 earnings call. The Stockholm-based streaming giant reported double-digit year-over-year (YoY) growth among its subscriber base (totaling 195 million) and ad-supported users (273 million) for the third quarter, when revenue rose 21% year-on-year to $3.03. billion.

Nonetheless, Spotify (NYSE: SPOT) stock fell after the earnings report was released, and at the time of this writing, the shares were hovering around $82 apiece. The value is nearly 70% lower than SPOT’s value at the end of October 2021 and only about four dollars above the all-time low share price of $78.50.

Bearing in mind the stock price plunge that came despite Spotify’s aforementioned Q3 gains, Daniel Ek made it clear during his company’s corresponding earnings call that domestic price increases are “the one of the things we would like to do”.

“And again, in particular, primarily for price increases in the United States, that’s one of the things that we’d like to do, and that’s a conversation that we’ll be having in light of these recent developments with our label partners,” Ek replied when asked about the aforementioned Apple Music cost jump as well as that of the YouTube Premium family plan. “And I feel really good about this coming year and what that means in terms of price versus our service.”

Now, as initially reported, Ek has stated unequivocally that a Spotify price increase is likely for subscribers, including in the US, next year.

“‘We have the same pricing power in the United States,'” the 39-year-old said of Apple Music’s high subscription prices in an interview with the the wall street journalwhich further relayed that “subscribers can expect price increases for the service sometime in 2023”.

Needless to say, it will be interesting to see if the move (possibly including a $20 “platinum plan”) slows Spotify’s subscriber growth and/or forces existing paying users to jump ship.

Spotify executives broached the subject earlier in 2022, when their company’s Loud & Clear report stated, “The cost of a subscription is not an insignificant amount to many. Raising the price is a fine balance – we don’t want to drive people back to hacking or non-monetized solutions. »

Meanwhile, it wasn’t until September that Spotify chief financial officer Paul Vogel said, “We believe that over time we will have pricing opportunities. We’ve done that a bit in the past. We haven’t done that more recently. We did this a little over a year ago. But obviously the current economic situation is also one that you’re going to be aware of, and it’s not necessarily something that we think we need to do right now. But we obviously think we have prices over time.

The service has in any case “implemented dozens of price increases in markets around the world without losing customers”, according to the WSJ said of Ek’s interview comments. The same article reiterates that Spotify started raising the price of its family plan last year “in dozens of markets”.

However, the precise extent to which Spotify measured the impact of the price hike on individual accounts is unclear. Deezer, headquartered in Paris, quietly adjusted the price of several plans in 2022, and listeners in the United States now have to pay $10.99 per month for Deezer Premium.

Tidal’s ad-free tier will still cost subscribers $9.99 per month, while Prime members can pay $8.99 to access Amazon Music Unlimited ($9.99 for non-Prime members).

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