Spotify announces new price hikes – and share price soars

Spotify shares jumped on Monday (August 4) after the company announced subscription price hikes in numerous markets outside the US.

In a brief blog post, the Sweden-headquartered streaming service said Premium subscribers will soon receive an email explaining the price change, which applies to “multiple markets across South Asia, the Middle East, Africa, Europe, Latin America and the Asia-Pacific region.”

“To continue to innovate on our product offerings and features and bring users the best experience, we occasionally update our prices,” Spotify explained.

The company didn’t say which countries in particular would see a price hike, but The Verge used archived internet pages to confirm that the listed price for a Spotify Premium individual subscription has already been raised by EUR €1 per month in Italy, Portugal and Spain. The listed price is now €11.99 in Italy and Spain, and €8.99 in Portugal.

Countries that saw a price hike earlier this year appear not to have been affected by the latest round, The Verge reported.

The announcement led to an immediate spike in Spotify’s stock. Update: At close of trading on Monday, Spotify shares were up 5% on the New York Stock Exchange, trading at around $659 per share.

This means Spotify has clawed back a large part of the losses it saw last week when it released its Q2 earnings, spooking investors with softer-than-expected profit guidance.

The company saw its shares drop 11.5% on Tuesday (July 29), closing at around $620 per share.

With Monday’s spike, Spotify shares are up 46% so far this year.

This is the latest in a series of price hikes at Spotify over the past two years, after a prolonged period when the DSP kept subscription prices flat amid a drive to grow its customer base.

That reluctance to raise prices put Spotify under pressure from many in the music business, who argued Spotify’s policy was suppressing artists’ and record companies’ earnings.

“To continue to innovate on our product offerings and features and bring users the best experience, we occasionally update our prices.”

Spotify

In the wake of the price hikes over the past two years, some music industry insiders have kept up the pressure, pointing out that Spotify’s price hikes haven’t kept pace with either inflation or price hikes at other streaming platforms like Netflix.

Spotify’s price hikes – which have seen the price of a US individual Premium subscription rise from $9.99 in 2022 to $11.99 in 2024 – haven’t suppressed Spotify’s subscriber growth.

In its Q2 earnings release last week, Spotify said it had added 8 million net Premium subscribers during the quarter, for a total of 276 million. The company reported strong growth in Europe, North America and Latin America.

The growth of the subscriber base is a key metric that Spotify CEO Daniel Ek has said he looks at before deciding on further price increases. Demand for Spotify has proven to be inelastic, with research firm Antenna reporting last year that Spotify subscribers are the least likely to cancel their subscriptions among customers of major video and audio streaming services in the US.

Spotify has also benefited from a court-ordered change to how the Apple app store operates in the US. Apps in the store are now able to direct customers to external websites to make purchases, allowing those apps to avoid fees charged by Apple.

In May, Spotify said the change led to “a significant increase” in conversion from free to paid users in the US.Music Business Worldwide