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The Case For — and Against — Higher Streaming Subscription Prices


by Glenn Peoples, Billboard Pro, April 6, 2023


JPMorgan Chase analysts estimate a Spotify rate increase for U.S. individual plans would create incremental annual revenue of about $200 million.


With some high-flying markets falling to single-digit recorded-music revenue growth in 2022, there are rising expectations that Spotify will follow Apple Music and Amazon Music and raise the price of its individual plans in the United States and other major markets.


(...) the industry could get even more: Spotify, the largest subscription service, raised prices on family plans in the United States in 2021 but has kept the individual plan at $9.99 since the platform launched in the United States in 2011.


Raising rates will create new revenue for rights holders, creators and digital services just as growth is slowing in many major markets. Barclays estimates that a 10% price bump by all subscription services would increase the earnings per share of Universal Music Group by 13% and add 400 million euros ($430 million) of revenue and 240 million euros ($258 million) of gross margin annually.


Barclays believes the same price increase would improve Warner Music Group’s earnings per share by 21% and add $256 million of revenue and $158 million of gross margin. JPMorgan Chase analysts said in a March 8 report that a Spotify price increase for U.S. individual plans — expected “in the coming months” — would create incremental annual revenue of about $200 million.


(...) But Spotify also takes the stance that keeping rates low is good for business. As CEO Daniel Ek explained in a Jan. 31 earnings call, Spotify has two strategies to choose from: grow the number of subscribers or increase the revenue per subscriber.


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