Photo credit: Heidi Fin
Spotify (SPOT) shares fell more than 5% on Monday after the company announced plans to hike premium subscription prices to follow rivals like Apple Music and YouTube Music.
Spotify Stock (SPOT) down more than 5% on Monday, after the company announced it would raise prices on its premium subscription services to follow price hikes from competitors including Apple Music, Amazon Music, Deezer, Tidal and YouTube Music. The news comes a day before the company reports its second-quarter results, but despite the drop, Spotify’s shares are still up 100% year-to-date.
The music-streaming platform announced that it plans to increase US prices by up to $2, or 20%, on some of its offerings. So far, the company has announced that a premium one-person subscription will increase from $9.99 to $10.99 per month, while student plans will increase from $4.99 to $5.99 per month. The Duo option goes up $2 to $14.99 and the six-account family pack goes up from $15.99 to $16.99.
The Swedish company says it has more than 200 million users with premium subscriptions who will be given a “one-month grace period” before the increased prices take effect. These changes are already in effect for ad-supported accounts upgrading to Premium.
In addition to the US, price increases are also being implemented in the UK, Mexico, Australia, New Zealand, Canada, Brazil, Denmark, Finland, France, Italy, Ecuador, Spain, Singapore and Thailand to name a few.
Spotify said the price hikes are in response to the market landscape that has evolved since its inception in 2008 and the launch of its premium service in 2011. The company’s price increase follows similar increases by rivals Apple Music and YouTube Music. Apple announced plans to raise premium subscription prices in October, while YouTube recently sent out emails to subscribers detailing the company’s plans to do the same.
In its first-quarter earnings report, Spotify said its global premium subscriber base grew 15% year over year to 210 million, while its total revenue grew 14% to $3.32 billion.