During the Warner Music Q2 2023 financial earnings call, CEO Robert Kyncl says ‘we’re just getting started’ with price hikes for music streaming services. Here’s why.
Kyncl says when he arrived at Warner Music Group, one of his first priorities was pushing for increases in music subscription prices. “I’m pleased with the traction that we’re getting. Last month, Tidal, YouTube, and Spotify all followed Apple, Amazon, and Deezer by upping their prices. This is the fiscally responsible thing to do for themselves and for the creative community. I’d like to thank them all for taking this important step.”
“Back in March, I said that if we adjusted for inflation since 2011, the year that music streaming was introduced in the United States, the price of a monthly music subscription in the U.S. should be $13.25,” Kyncl reiterates from a previous earnings call. He also illustrates how video streaming services like Netflix have kept pace with inflation while music streaming has not. “I’d like to point out that in 2011 the price of a standard Netflix plan was $7.99. It has since increased to $15.49 today.”
“If the monthly price of a music subscription had gone up by the same proportion, it would have increased from $9.99 where it was in 2011 to $19.37 today,” the Warner Music CEO adds. “Let’s remember that music subscription services give you access to all the music ever released and a continuously growing library. For roughly the price of a single CD.”
“You need to subscribe to three or four movie and TV services for roughly $45 a month to get anywhere near a comprehensive offering, so we see these initial price increases as an encouraging start.”
Will customers cancel their accounts on the news of an increased price? Kyncl thinks not. “There’s no evidence that the services are experiencing elevated levels of churn. We believe the market will bear further price increases in the future, and we’re expecting that they’ll arrive on a more regular cadence than the past.”