Music

Spotify Again Raising Prices in U.S. — With Families Seeing Biggest Increase

Spotify is asking users to take another hike, raising premium subscription prices in the United States for a second consecutive year. Starting in July, Spotify’s premium individual plan in the U.S. will increase a dollar to $11.99 a month and the duo plan will jump a buck to $16.99 a month, while the family plan will leap-frog $3 to $19.99 a month. The student plan will remain $5.99 a month.

“On Spotify, users discover and enjoy music, podcasts, and audiobooks,” the company said in its announcement on Monday (June 3). “So that we can continue to invest in and innovate on our product features and bring users the best experience, we occasionally update our prices.”

In July 2023, the company enacted similar increases though the family plan was raised just a dollar from $15.99 to $16.99. Last year’s bump in its individual subscription price was a change of pace for Spotify after holding steady at $9.99 in the U.S. for a dozen years. For most of its existence, the company focused on rapid subscription growth over profits, though the mood has since shifted, with major labels and others welcoming price hikes as streaming’s importance to their bottom lines continues to increase.

How important? In the U.S, subscriptions accounted for 59.3% of total recorded music revenues in 2023, up from 57.8% in 2022. Globally, subs accounted for 48.9% of recorded music revenue in 2023, according to the IFPI, up from 48.3% in 2022.

Label leaders are open about wanting higher subscription prices. In early May, Warner Music Group CEO Robert Kyncl called for “further increases” to subscription prices to “ensure that the value that music provides to these platforms is properly recognized,” and Sony Music Entertainment CEO Rob Stringer recently called on streaming services with ad-supported tiers — ie, Spotify — to start charging a “modest fee.”

In April, Bloomberg reported that Spotify would raise its prices in select markets, including the U.K. and Australia, and that the U.S. would soon follow. Spotify’s willingness to raise prices in consecutive years pleased investors, and shares jumped 17.6% that week. Today’s announcement that it would again raise fees in its largest market has Spotify’s stock up nearly 6% in pre-market trading.

The price increase comes at the end of a “period of relative peace” between Spotify and music publishers following the former’s decision to pay the latter — and songwriters — a discounted rate for streams on several tiers. Spotify reasoned that by adding audiobooks to premium offerings like individual, duo and family plans, these subscriptions are now “bundles,” a type of plan that qualifies for a discounted rate on U.S. mechanical royalties given that multiple products are offered under one price. According to Billboard estimates, that change will mean publishers and writers will earn about $150 million less in royalties over the course of its first bundled year.

In response, the NMPA sent the company a cease and desist for alleged unlicensed content and the Mechanical Licensing Collective (MLC) filed a lawsuit explicitly about the bundling. In addition, the Recording Academy, Association of Independent Music Publishers (AIMP), Nashville Songwriters’ Association International (NSAI) and more have made statements against the change.

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