Spotify (SPOT) shares dropped more than 5% on Monday after announcing plans to raise its premium subscription prices to follow competitors like Apple Music and YouTube Music.
Spotify stock (SPOT) dropped more than 5% on Monday following the company’s announcement of plans to raise its premium subscription service prices to follow hikes by competitors like Apple Music, Amazon Music, Deezer, Tidal, and YouTube Music. The news comes a day before the company announces its second-quarter earnings, but despite the decline, shares of Spotify are still up 100% year-to-date.
The music streaming platform said it plans to raise US prices by as much as $2 or 20% for some of its offerings. Thus far, the company has announced that a one-person premium subscription will increase from $9.99 to $10.99 per month, while student plans will go up from $4.99 to $5.99 monthly. The “Duo” option is increasing by $2 to $14.99, and the six-account family package will go from $15.99 to $16.99.
The Swedish company says it has more than 200 million premium subscribing users who will be given a “one-month grace period” before the increased pricing goes into effect. These changes have already gone into effect for ad-supported accounts upgrading to premium.
In addition to the US, price increases will be implemented in the UK, Mexico, Australia, New Zealand, Canada, Brazil, Denmark, Finland, France, Italy, Ecuador, Spain, Singapore, and Thailand, to name a handful.
Spotify said the price hikes are in reaction to the market landscape evolving since its inception in 2008 and launching its premium service in 2011. The company’s price hike follows similar hikes by competitors Apple Music and YouTube Music. Apple announced plans to increase its premium subscription prices in October, while YouTube recently sent emails to subscribers detailing its plans to do the same.
In its first-quarter earnings report, Spotify said its premium subscriber count grew 15% year-over-year globally to 210 million, while its total revenue grew by 14% to $3.32 billion (€3 billion).
