Spotify to raise US prices in first quarter of next year

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Spotify is preparing to raise US subscription prices in the first quarter of next year, according to three people familiar with the matter.

The price rise in its largest market will come as Spotify pushes to show sustained profitability. Its share price has jumped more than 30 per cent this year, compared to the broader S&P 500 index’s increase of about 14 per cent. 

Spotify has increased prices in several other countries in recent months, including the UK, Switzerland and Australia, but it will be the first price rise in the US since July 2024.

Wall Street analysts have framed a US price increase as critical to Spotify’s stock.

“Questions around the timing of the potential US pricing step-ups . . . have taken a toll on sentiment,” Deutsche Bank analysts wrote last month. 

JPMorgan analysts have projected a $1-a-month US price rise would boost Spotify’s annual revenue by $500mn. Spotify declined to comment.

The major record labels have been pressing Spotify, Apple Music and other music-streaming platforms to increase their fees, arguing prices have lagged inflation and subscriptions remain cheap compared to video services such as Netflix. 

A US Spotify subscription costs $11.99 a month, compared with $9.99 when it launched in the country 14 years ago. 

The move comes as a decade-long growth spurt in the music industry slows. Global revenue growth in the music sector halved last year, according to the IFPI trade group. 

When asked about US pricing on an earnings call this month, incoming co-chief executive Alex Norström told analysts: “We will act when the time is right for each specific market, and we’ll do it at the appropriate price based on those market dynamics.”

In September, Spotify chief executive Daniel Ek said he would step down and become executive chair of the company he co-founded two decades ago.

At the start of next year, he will hand over the CEO job to two top lieutenants: Norström and Gustav Söderström.