Sources indicate Spotify will increase subscription prices once again in select international markets this month. While price hikes aim to boost the bottom line, they also seem tightly linked to Spotify’s ambitions expanding beyond music playback.
Specifically, Bloomberg reports that premium individual plans will go up $1 USD, and family plans by $2, in the UK, Australia, and Pakistan. Prices in the US will reportedly follow later in 2022. However, new subscribers will have the option of choosing a stripped down package excluding trial access to audiobooks.
Since its inception, Spotify has sought to evolve past simply delivering songs. Executives reasoned greater profits lay in hosting additional media types like podcasts and audiobooks. However absorbing start-up costs for new ventures dug into margins.
Music royalties guzzle 65-70% of subscription cash. Non-music content requires independent revenue streams, yet ad sales and one-off book fees progressed slowly. This left audiobook and podcast investments funded by the slim 30-35% cut of subscriber money, slowing the pivot.
Last year Spotify offered a concession; 15 hours monthly of audiobook listening with premium plans. But royalty obligations to publishers meant offsetting those costs. Separating audiobook access with its own added fee could create a dedicated funding pool.
Industry insiders advocated higher baseline prices for years, and unsatisfied revenue was shared proportionately with labels and artists. The first increase to USD 10.99 held subscriber retention. Repeated inflation-matched bumps aim to satisfy music partners.
Yet multiplying plan options, including distinct packages supporting non-music outlets, complicates matters. Spotify surely hopes to appease music stakeholders too through special offerings generating revenue tied to star artists. More details on Spotify’s revamped costs and subscriptions are expected to be out later this month.
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