Spotify Raises Prices of Premium Plans in the US to Boost Margins

Spotify has hiked premium plan costs in the United States to increase profit margins. Individual plans are now priced at US$11.99 per month, pair plans at US$16.99, and family plans at US$19.99. The price rise will allow the corporation to invest in new product offers and features.

Credit: REUTERS

The Swedish music-streaming service raised the prices of its individual plan from $10.99 to $11.99 per month, its duo plan from US$14.99 to US$16.99, and its family plan from US$16.99 to US$19.99, making it the largest market by revenue for the company.

This decision comes as Spotify seeks to boost its profits by cutting marketing costs and executing layoffs. Previously, the corporation relied significantly on advertisements and large investments to increase customer numbers. Spotify expects that by boosting pricing, it will be able to continue investing in new products and features.

Spotify shares rose by more than 4% in morning trading on the announcement. Apple and Amazon.com are among the major music-streaming services that compete with the corporation.

In an email to its US members, Spotify noted, "We're increasing the price of Premium Individual so that we can continue to invest in and innovate on our product offerings and features." The email will go out throughout the following month.

According to Spotify's annual report, income in the United States increased by approximately 11% to 5.23 billion euros (US$5.69 billion) in 2023. The company provides both an advertising-supported free service with restricted features and a subscription-based paid version that includes full functionality. Premium subscribers account for the majority of its revenue.

According to industry observers, Spotify may accelerate growth by offering bespoke subscription plans based on consumer tastes in a variety of verticals such as music, audiobooks, and podcasts.

Spotify reached a milestone in April, when its quarterly gross profit crossed 1 billion euros (US$1.09 billion) for the first time, thanks to lower marketing spending. The firm also claimed a 14% increase in premium subscriptions, hitting 239 million, and expects 631 million monthly active users in the second quarter.

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• Spotify has raised prices for its premium plans in the US to boost profit margins.

• The individual plan now costs US$11.99 per month, the duo plan is priced at US$16.99, and the family plan is US$19.99.

• The company aims to invest in product offerings and features through the price increase.

Source: REUTERS