Spotify's 13% price hike for its premium family plan could backfire, since its competitors are likely not under similar pressures to raise prices:
Likewise, its family plan, which lets up to five people use the service under a single subscription, is a much higher value compared with the single subscription offering, at $10. But while these offers drive uptake, they have actually lowered the average pricing of the service, and therefore steadily lowered Spotify's average revenue per subscriber in recent years.
The 13% price hike is likely the start of an attempt to counter this trend. And since the family plan is already such a high-value offering, the price hike may not seem as aggressive as on a single-user tier, and could help the company to boost revenue in countries where usage is already entrenched. But this move could backfire, since Spotify's music streaming competitors are likely not under similar pressures to raise prices, given that they're all subsidized by cash-rich parent companies. Spotify's only service is audio streaming — including music and podcasting — and its core business relies on and subscriptionHowever, its competitors like Amazon, Apple, and YouTube, which all offer music streaming services, do so in addition to their core businesses.
For comparison, Netflix — whose only business is SVOD, unlike some of its streaming competitors — has been introducing price hikes consistently over the past two years, and just recentlySpotify could face a price ceiling, but price hikes still might be its most viable route toward greater monetization in the short term. As Spotify diversifies the content on its platform — most recently with podcasts — it could roll out additional ad formats to boost its overall ad business.
However, even though increased ad load might benefit the platform, Spotify has always been hugely concerned with its listeners, and it seems unlikely that it would sacrifice user experience in favor of a higher cashflow: In the company's recent launch of its podcasting arm, CEO Daniel Ek
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