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Business News Digital
Spotify increases prices, as CEO prepares to make bid for Arsenal
By Andy Malt | Published on Tuesday 27 April 2021
Spotify has formally announced that it is increasing prices on its Student, Duo and Family premium packages in the UK. In emails to affected users, the company says that the price hikes will allow it to “continue to bring you new content and features”.
For new customers, the price increases will come into force on 30 Apr, while existing customers will be given an extra month at the old prices. Students with discounted premium accounts will pay £5.99 per month, up from £4.99. Duo accounts – which allow couples to pay jointly for two premium accounts – will go up from £12.99 to £13.99. And the Family plan – giving up to six people in one household premium accounts – will increase from £14.99 to £16.99. So, still very generous discounts. Individual premium accounts will remain at £9.99 per month.
In a statement, Spotify says: “We offer a variety of subscription plans tailored to our users’ needs, and we occasionally update our prices to reflect local macroeconomic factors and meet market demands while offering an unparalleled service”.
There have been calls from some parts of the music industry for Spotify to increase its prices for some time now, of course. Because streaming is ultimately a revenue share business, subscription price increases will boost the pot from which everyone – including artists, songwriters, labels and publishers as well as the services themselves – take their share.
In most countries, the baseline price of a Spotify premium account hasn’t increased at all since launch. Meanwhile, the introduction of things like the student discount and the Family plan – as well as the company expanding ever more into countries where all subscription prices are lower than in places like Europe and North America – together mean that the average amount of revenue brought in by each paying user worldwide has fallen over time.
Those calling for price increases also often note that in the video streaming business, Netflix customers have become used to relatively regular price increases. Spotify has in the main resisted price hikes, mainly concerned such increases would slow the growth of its premium subscriber business, both by putting off potential new customers and making its subscriptions more expensive than those offered by rivals like Apple and Amazon.
That said, Spotify has actually instigated a number of price increases around the world in the last couple of years. Though outside of the Nordic region those increases – like those announced in the UK yesterday – have mainly focused on the discounted subscription packages. Possibly because it’s still nervous about increasing the 9.99 baseline price ahead of its main competitors.
The latest round of increases don’t just affect the UK. Customers in the US have also been informed that the prices are going up, but only seemingly on the Family plan. Increases in a number of other European countries will be in line with the changes in the UK.
Although the price increases have been a long time coming – and are widely supported in the music community – not all users have been happy to learn that they will soon be paying slightly more for continued access to the Spotify platform.
It doesn’t help that the price rises were announced shortly after Spotify founder and CEO Daniel Ek started chatting about plans to buy the Arsenal football club for £1.8 billion. Ek is reportedly working with former Arsenal players Thierry Henry, Dennis Bergkamp and Patrick Vieira on the bid, which is expected to be formally presented to the club in the next week.
Thousands of Arsenal fans protested against current owner Kroenke Sports & Entertainment on Friday, after the collapse of that very unpopular plan to create a Super League of elite European clubs. Off the back of that, Ek went public with his interest in buying the London football club, writing on Twitter: “As a kid growing up, I’ve cheered for Arsenal as long as I can remember. If KSE would like to sell Arsenal I’d be happy to throw my hat in the ring”.
There has been support for Ek’s proposal from some, including the Arsenal Supporters’ Trust, which welcomed an indication that the Spotify CEO would install fan representatives on the club’s board.
However, there has been a great deal of criticism from others who feel that Ek using his personal wealth to buy a top flight sports team is somewhat ill-timed. Not so much because it coincides with the Spotify price rises, but because it comes in the midst of the ongoing debate about the economics of music streaming, during which some have accused Ek’s company of constructing a business model that leaves musicians unable to pay their rent.
