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HomeHardwareTechGet Ready to Pay More: Spotify Raising Prices for Monthly Plans.

Get Ready to Pay More: Spotify Raising Prices for Monthly Plans.

In order to achieve long-term profitability, Spotify Technology SA intends to increase the cost of its well-liked audio service for the second time in a year in a number of important areas.

By the end of April, the streaming behemoth would raise fees by around $1 to $2  per month in five nations, including Pakistan, Australia, and the UK, according to sources with knowledge of the situation. Later this year, it will increase pricing in the US, which is its largest region, according to persons discussing sensitive plans and who wished to remain anonymous.

At 9:35 a.m. in New York, Spotify shares surged 4.6 percent to $281.92.

The expense of audiobooks, a well-liked service that was launched late last year, will be partially covered by the higher pricing. As part of their subscription plan, Spotify allows users to listen to audiobooks for up to 15 hours each month. Although the corporation compensates book publishers for their publications, it has only received extra money from listeners who over the cap thus far.

According to the sources, the Swedish audio startup is also planning to launch a new basic tier for the current $11 monthly price of an individual premium membership, which will include music and podcasts but not audiobooks. Audiobooks under that strategy will not be free.

The first of Spotify’s planned multiple new price tiers is the new basic tier. As Bloomberg revealed last year, the business has also been developing a “supremium” plan that would charge users extra for access to services like high-fidelity audio.

For many years, Spotify gave its users two choices: a premium listening product with unlimited access or a free music service with limited functionality and advertising.

However, since going public in 2018, the company has lost money every year, mostly due to the royalties it pays to the music industry, which amount to around 70% of its revenues. Last year, Spotify made $13.2 billion in revenue, of which more than $9 billion was paid to record labels, artists, and other parties.

The management has made an effort to lessen Spotify’s dependency on the music business by providing alternative entertainment options.

Before settling to concentrate on providing a wide variety of audio, the company experimented with video. Initially, it invested billions of dollars in podcasts, a newly-emerging on-demand audio industry. Although the management has stated that podcasts will be profitable this year, Spotify has also reduced its investment in original audio programming and let go of thousands of staff.

The business unveiled significant intentions for the audiobook market last year, which is dominated by Audible from Amazon.com Inc. While almost all books on Audible require payment, Spotify offers its users free, restricted access. Thus far, the outcomes have been impressive, at least concerning consumption.

Spotify’s expansion into other content categories has worried its music business partners, who fear the company may try to lower their royalties. Major record labels have therefore been pressuring Spotify and its rivals to increase their rates.

In contrast, Spotify only increased pricing in major regions last year for the first time since launching its premium audio service in the US in 2011. Netflix Inc. has doubled the cost of its most popular plan in recent years. With 113 million new users signing up for both its paid and free services, the business reported its highest year of user growth ever, all the while allaying fears that some subscribers may cancel.

By the end of 2023, there were 602 million Spotify users, 236 million of whom were paid members.

The management now feels confident enough to pursue even more due to the price increase’s success. Individual plans will see a monthly increase of roughly $1 under the new pricing structure, while family plans and so-called duo plans for couples would see an increase of $2.

The two largest rivals of Spotify, Apple and Amazon.com, have recently increased the cost of their music services.

Companies that provide audio services and music are also talking about methods to make more money from their diehard followers. Listeners currently pay the same price to access a musician’s back catalogue. However, as seen by the growing costs of concert tickets, merchandise, and even vinyl for Korean musicians, some fans are prepared to pay far more to support an artist they adore.

Streaming firms have talked about charging customers extra for early access to new music among the many options. However, the businesses are hesitant to make major changes to their flagship premium offering, like Spotify’s all-you-can-listen service, which costs $11 a month. The price of that primary service will only go up, regardless of whether management discovers a way to profit off the more devoted followers.

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