Spotify increased prices for its premium plans in the United States. This move comes as the music streaming service attempts to boost its profit margins.
The company raised prices across all tiers of its premium service: the individual plan went from $10.99 to $11.99, the duo plan increased from $14.99 to $16.99, and the family plan rose from $16.99 to $19.99 per month. These changes apply to Spotify’s largest market by revenue.
Previously, Spotify relied on promotions and high investments to attract new users. However, to improve profitability, the company has recently reduced marketing spending and implemented layoffs.
Following the price increase announcement, Spotify’s stock price rose more than 4% in morning trading. In an email to U.S. subscribers, Spotify explained that the price hike will allow them to “continue to invest in and innovate on product offerings and features.”
According to Spotify’s annual report, the company’s U.S. revenue grew nearly 11% to $5.69 billion in 2023. Spotify offers a free, ad-supported tier with limited features, alongside its premium subscription service that provides full functionality. The majority of Spotify’s revenue comes from premium subscribers.
Analysts predict that Spotify might achieve further growth by introducing subscription plans tailored to specific consumer preferences. These plans could focus on individual areas like music, audiobooks, or podcasts.
The company achieved a significant milestone in April when its quarterly gross profit surpassed 1 billion euros for the first time. This accomplishment came after Spotify cut back on marketing expenses.
On a positive note, Spotify’s premium subscribers increased by 14% to 239 million. Additionally, the company projects to have 631 million monthly active users in the second quarter.
