Spotify is implementing a strategic pricing change to boost revenue and mitigate losses by raising the costs for its premium subscribers.
In the U.S., the monthly fee for premium users will be increased to $10.99, aligning Spotify with competitors like Apple Music and Amazon Music, which had raised their prices last year. However, YouTube Music remains slightly cheaper at $9.99 per month.
Additionally, Spotify's Premium Duo plan will see a $2 hike to $14.99 per month, while the Family plan and Student plans will increase by $1 to $16.99 and $5.99, respectively.
The decision reflects Spotify's efforts to adapt to market dynamics since its inception and aims to maintain value for both fans and artists on its platform.
Despite having 210 million global paying subscribers (a 15 percent year-over-year increase) and 515 million monthly active users as of March 31, Spotify has been operating at a loss. The company has been actively exploring cost-cutting measures, particularly after experiencing a "very modest underperformance in advertising" revenue in the first quarter of 2023.
The price adjustment is expected to benefit major label partners like Universal Music Group and Warner Music Group by enhancing the monetization of audio streaming from their artists.
Spotify pays 70 percent of subscription and advertising fees to rightsholders, and major labels accounted for 75 percent of all record label audio streams on the platform in 2022.