Spotify is officially raising its Premium subscription rates in the US come July, following reports of the move in April. The platform is increasing its Individual plan from $11 to $12 monthly and its Duo plan from $15 to $17 monthly — the same jump as last year’s $1 and $2 price hikes, respectively. However, its Family plan is going up by a whopping $3, increasing from $17 to $20 monthly. The only subscribers getting a break are students, who will continue to pay $6 monthly.
Spotify announced the price hikes less than a year after its previous one last July. Before that, Spotify hadn’t raised its fees since launching a decade and a half ago. I guess it was too optimistic to hope the next increase would also take that long, especially with Spotify’s continued focus (and money dump) on audiobooks.
Premium subscribers should receive an email from Spotify in the next month detailing the price hike and providing a link to cancel their plan if they would prefer to do so. Users currently on a trial period for Spotify will get one month at $11 after it ends before being moved up to a $12 monthly fee.
The problem is that Spotify is losing money each year. They aren’t profitable. And if they are keep focusing on music, they never will. Their deal with the music labels says that they need to give 70 % of each subscription to the music labels. So by getting more people to signup, they only marginally increase their revenue. Same goes for raising their prices.
Thats why they tried focusing on Podcasts and Audiobooks. Those are a lot more profitable, either by adding ads (Podcasts) or by charging a premium (audiobooks).
It’s amazing to think how incompetent their management must be that they’re charging more, delivering lower audio quality, and paying less to artists than competitors like Tidal, yet still aren’t profitable.
There is an episode of Tech Won’t Save Us (2024-01-25) discussing how weird the podcasting play was for Spotify. There is essentially no way to monetize podcasts at scale, primarily because podcasts do not have the same degree of platform look-in as other media types.
Spotify spent the $100 million (or whatever the number was) to get Rogan exclusive, but for essentially every other podcast you can find a free RSS feed with skippable ads. Also their podcast player just outright sucks :/
Hang on. 70% of the subscription before any royalty / streaming costs?
So in a $10 payment, $7 is immediately removed, then another say $1 for streaming costs leaving only $2 for profits which Spotify takes 30%?
From each $10 only $1.40 goes to artists?
From the 10 Dollar, taxes will be deducted. Afterwards Apple or Google take their share (if you subscribe using the App). Of the remaining money the Music labels take 70 %, and Spotify keeps 30 %. The music labels pay a fraction of the 70 % to the artists, depending on the contract and the artist’s share of streams reported by Spotify.
Interesting. I wasn’t aware that they weren’t profitable.
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