In an effort to improve profitability amid economic uncertainty, Spotify Technology has raised the prices of its premium plans in various countries, including the United States and United Kingdom. The company implemented a $1 price hike for its U.S. plans, with the premium single plan now starting at $10.99, duo at $14.99, family at $16.99, and the student plan at $5.99. To enhance margins, Spotify has taken measures such as conducting significant layoffs and restructuring its podcast unit, which had been heavily invested in with substantial funds. This move comes as streaming services, both in the audio and video sectors, face mounting investor pressure to prioritize profitability after focusing on user growth for many years.
This year, Apple, Amazon.com, Tidal, and YouTube have all raised their prices, and last week, YouTube increased prices for its monthly and annual premium plans in the U.S. for the first time since its subscription service was introduced in 2018.
Number Spotify’s users is growing
Spotify Technology SA reported its second-quarter results, exceeding expectations for both monthly active users and subscribers. The company also forecasted that the number of listeners each month would reach 572 million in the next quarter. With ambitions to reach 1 billion users by 2030 and achieve $100 billion in annual revenue, Spotify has been experiencing significant growth.[1] However, its expansion into podcasts and audiobooks, while successful in terms of user acquisition, has impacted profit margins. The number of monthly active users reached 551 million in the quarter, surpassing Spotify's guidance, and analysts' predictions of 526.8 million. Additionally, premium subscribers, who contribute most to the company's revenue, increased by 17% to 220 million, exceeding estimates of 216.6 million.
[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing of future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.
