Now, Spotify, and the other DSPs, will wait and see what the measurable impact is of increasing prices during the global economic squeeze on a subscriber base who are looking to shave costs lives here and there. Another pegged the average US family as having 12 monthly subscriptions, with Millennials averaging 17 each.Īs we mentioned yesterday: there’s a surprising amount of socio-economic interests, pressures and perspectives to keep in mind when discussing a relative small hike in individual-platform subscription fees, which – again – is why Spotify held out until it was sure that the price rise would not be considered a consumer problem. One piece of research in 2022 indicated that, in the US, the average family spent $219 on monthly subscriptions, although this included internet and mobile-phone subscriptions. That’s nearly $100 a year more: not enormous, but perceptible – and that’s if you subscribe to only five services. With some (more!) rough calculations, based on US pricing, a person who subscribed to the cheapest options from Netflix, Disney+, YouTube Premium, Spotify, and Xbox Game Pass a year ago would have paid $48.95 per month ($587.40 per year) in total, but they would be paying $56.95 per month now. This streaming-industry-wide move to increase prices is a part of the reason that Spotify’s price increase has not caused that much in the way of a negative reaction from consumers, but it gives us a moment to reflect on how small increases across the board could have a bigger impact. While this is a purely finger-in-the-air figure, it’s easy to see how a small increase in subscriptions costs could nudge the company towards recording regular profits, and please impatient shareholders. (Warning: some very rough maths follows.) With 210 million premium subscribers, and a hypothetical ARPU of €5 per month, Spotify could generate €1.05 billion in monthly revenue from these paying users. Spotify also announced in Q1 of this year that it was growing faster than expected, although still reported an operating loss of €156m for the quarter. These price rises will lift that figure somewhat closer to the €5 mark. So what will that increased revenue look like? Spotify’s ARPU – its average revenue per paying user – was reported as €4.32 in its Q1 2023 report. Artists and songwriters, many of whom have long campaigned for increased or changed royalty systems, are perhaps understandably not falling over themselves to praise Spotify – but increased revenue should mean some increase to the payouts to them, too. Spotify’s share price dipped by 4.6%, although in general shareholders are presumably happy with an increase to the company’s income stream. So what was the fallout from the Spotify subscription price rise announcement? Well, judging by social media reactions, there was no enormous revolt by subscribers, at least. Spotify has waited a long time to raise prices from the fabled $9.99-per-month mark, in the US, at least.
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