Spotify hikes prices in US, its biggest market, following UK rises as it shifts from focus on user growth to expanding profit margins
Spotify is raising prices in the US, its biggest market by revenue, less than a year after its previous price hike and following shortly after a similar price increase in the UK.
The hikes come as Spotify turns its focus from boosting user growth to enlarging its profit margins through cutting marketing spending and slashing jobs.
The strategy helped its quarterly gross profit to top 1 billion euros (£780m) for the first time in April after it cut marketing expenditures.
The Spotify Premium Individual plan is to rise by $1 per month to $11.99, while the Duo plan will rise $2 to $16.99 per month and the Family plan will rise $3 to $19.99.
The Student plan for a single user, is to remain the same at $5.99 per month.
Monetisation ‘top priority’
The additional funds will allow Spotify to “continue to invest in and innovate on our product features and bring users the best experience”, the company said in a statement.
In April the firm brought in similar price increases in the UK with Individual rising £1 per month to £11.99, Duo rising £2 to £16.99 and Family rising £2 to £19.99.
Spotify in April reported a record profit of $183m for the first quarter of 2024 after monthly subscribers, its biggest source of revenue, rose to 615 million, up from 515 million a year earlier.
Chief executive Daniel Ek said at the time the company was focusing less on subscriber growth in favour of increasing revenues.
“Next year, our focus may return to top-of-the-funnel user growth but in the near term, monetisation remains our top priority,” he said.
Chief financial officer Ben Kung said on the same call that historical price increases had shown “minimal impacts on growth”.
Job cuts
Spotify took advantage of lower borrowing rates during the Covid-19 pandemic in 2020 and 2021 to finance expansion, investing in employees, content and marketing.
In 2023 it brought in three rounds of job cuts, slashing 6 percent of jobs in January, another 2 percent four months later and another 1,500 in December.
Spotify has also raised prices this year in Australia and Pakistan.
The company has struggled to consistently make profits since it went public in 2018.