“The market landscape has continued to evolve since we launched,” Spotify said, acknowledging uncertain market conditions. “So that we can keep innovating, we are changing our Premium prices across a number of markets around the world,” it added.
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The price increase will affect users in about 50 countries including the United Kingdom, much of Europe, as well as Thailand and Singapore. The increase has not been implemented in India, a key growing market for the streaming giant.
All existing users will get a month-long grace period before the new price comes into effect. Spotify’s shares closed down more than 4.5 percent on Monday, and the announcement came ahead of the company’s second-quarter earnings reports on Tuesday.
Spotify’s decision brings it price in line with other music streaming services that offer individual plans for $10.99. YouTube Music and Tidal increased their pricing earlier this month, Amazon Music had done so in January and Apple Music had announced a hike last year. (Washington Post owner Jeff Bezos is the founder of Amazon.)
Daniel Ek, Spotify’s chief executive, had said in an April earnings call that the company would like to raise prices in 2023.
“But when the timing is right, we will raise it. And I think that price increase will go down well because we’re delivering a lot of value for our customers,” he had said.
In the first quarter, the company performed better than forecasts. It grew its subscribers to 210 million, a 15 percent year-on-year jump, and curtailed its operating losses to $172 million from a projected $214 million.
But there have also been two rounds of layoffs this year, most recently in June, when it eliminated 200 roles after an overhaul in its podcast strategy. Aggressive spending to develop its podcast segment shot up company expenditures, leading investors to push for cutbacks.
The company also faced backlash for working with conservative podcast host Joe Rogan after he spouted misinformation about the coronavirus, and it ended a podcast deal with the production company of Prince Harry and Meghan, Duchess of Sussex, after the lackluster performance of “Archetypes.”
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“Running a music streaming platform is an extremely low-margin business,” Patrik Wikstrom, a professor of computational communication at the Queensland University of Technology in Australia, wrote in an email. The only way to become profitable, he added, is scaling up and becoming very large.
Wikstrom, who studies how digital technologies shape music cultures and economies, said Spotify prioritized growth — and growth is expensive.
“The plan is that the company soon enough should hit a plateau and grow more slowly, reduce costs and become more profitable,” he added.