Will Spotify follow Netflix and raise prices in the US?

Photo credit: Magnus Höij / CC by 2.0

As Netflix (NASDAQ: NFLX) has hiked prices again, some wonder if Spotify (NYSE: SPOT) – whose premium version still costs $9.99 per month in the US – will soon follow suit.

Netflix, headquartered in Los Gatos, recently announced the subscription price increase for users in the United States and Canada, ahead of a fourth quarter 2021 earnings call scheduled for this Thursday, January 20.

In the US, the video streaming giant’s standard plan now costs $15.50 per month, according to web movie, and $19.99 per month for the 4K Ultra-HD tier. These higher rates have already gone into effect for new subscribers, but existing users will receive at least 30 days notice before being charged the higher rate.

Netflix has increased its monthly fees six times since 2014, also by web movie – in stark contrast to Spotify and other music streaming services, whose single-user premium subscription options cost $9.99 per month from the start in the US

Of course, Netflix (along with competing movie and TV platforms) creates exclusive shows and movies in an effort to attract fans and justify price hikes. But while major labels scrapped streaming exclusives years ago, arguing they hurt the subscriber market, Spotify, Apple Music and Amazon Music have turned to HD audio, merchandise stores, podcasts, remixes and special versions of projects to stand out. a crowd.

Despite largely identical song libraries that have forced music services to continue charging $9.99 a month in the US, Spotify raised prices for some packages last April.

Although the jump affected Student, Duo and Family plans across Europe and the UK, US subscribers only saw the price of the Spotify Family option increase, from $14.99 to $15. $.99. Additionally, Spotify CEO Daniel Ek acknowledged that his company will continue to “play very conservatively” in terms of rising premium subscription costs in America, in order to capitalize on continued subscriber growth in various regions. .

Now, nearly a year later, Spotify may be considering raising the price of domestic subscription packages once and for all.

The timing associated with the Stockholm-based company’s potential U.S. cost increase(s) could depend in part on how many subscribers the service boasted in the fourth quarter of 2021.

Spotify is expected to reveal its specific performance for the fourth quarter of 2021 (and the full year) on Wednesday, February 2, after forecasting 400 million to 407 million MAUs (vs. 381 million) and 177 million to 181 million premium subscribers (vs. 172 million) for the quarter. However, it’s worth noting with respect to these relatively ambitious forecasts – Q3 2021 only delivered 16 million new MAUs – that Spotify’s monthly cost varies significantly from country to country.

Therefore, hitting subscriber and MAU milestones won’t necessarily bring significant revenue improvement for Spotify – and missing the milestones could hasten the arrival of long-announced price increases due to the resulting revenue.

And in a broader sense, it’s worth noting that Spotify’s per-stream royalty rate has been falling in recent years, as Daniel Ek predicts up to 50 million creators on the platform by 2025.

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