Spotify towards a new tariff increase: starting from five markets

Spotify towards a new tariff increase: starting from five markets

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A is prepared second increase of the rates of Spotify, the streaming audio giant.

Bring back the Bloombergwhich cites sources familiar with the Swedish company’s strategy, which an increase in the order of 1 or 2 dollars per month is being studied, starting with five markets and with a horizon of the end of April. Among the countries cited by the financial agency are the United Kingdom, Australia and Pakistan. The United States, the main market, will only be affected later in the year.

Spotify needs to improve in terms of profitability and the increase in fees would serve to cover the costs of the service of the audobooks, which arrived last year and were immediately popular: the platform offers up to 15 hours of listening time per month. The problem is that Spotify pays publishers upstream for the lyrics, while downstream it only collects from users who exceed those guaranteed hours of listening. Evidently, too little.

This is why the new offer structure seems to revolve around the “audiobooks” variable: Spotify should maintain the price of 11 dollars per month for the individual premium plan with music and podcasts included, but excluding audiobooks for which there would be an additional cost .

Compared to its origins, when only two options were available (free with advertising and limited listening functions, or a paid premium service), Spotify is therefore moving towards greater depth and diversification of its offering (and related costs). The same Bloomberg he had already spoken in the past of a “supremium” plan to access, for example, higher quality audio standards.

It’s all about trying to achieve a budget balance that is still missing. Spotify paid out $9 billion in royalties last year, as described here from Italian Tech. An item that accounts for 70% of its revenues and which overall sent every budget into the red from 2018 onwards, the year of its listing on the stock exchange.

Shareholders and the music industry as a whole have been pressing on pricing, fearful – the latter in particular – that sooner or later the Swedish company would have needed to reduce the share of revenue redistributed along the entire supply chain to stay afloat. On the other hand, unlike Netflix, for example, which has practically doubled the prices of the most popular plans in recent years, Spotify has only recently lowered its price list and this hasn’t happened since 2011 with the introduction of the premium subscription.

Spotify’s action reacted to the report by Bloomberg with growth exceeding 5% by mid-afternoon.

According to the financial agency, the next move should lead to an increase of 1 dollar for the individual plan and 2 dollars for the family and duo plan. In Italy, Spotify provides 10.99 euros per month for the individual premium plan, then there is the offer for students at 5.99 euros and then the duo (2 premium accounts) for 14.99 euros and the family ( 6 accounts and explicit content control) from 17.99.

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