Spotify hikes price of memberships as it seeks to drive profits
Spotify subscriptions will become a little more expensive next month as the audio streaming service plans to raise its membership prices for the second time in less than a year.
Starting in July month, Spotify's individual plan will jump $1 to $11.99 a month and its Duo plan will increase $2 to $16.99 a month. The family plan will increase $3 to $19.99 while the student plan will remain $5.99 a month.
The increase will help it "continue to invest in and innovate on our product features and bring users the best experience," Spotify said in a statement Monday.
The increase comes after Spotify in April reported a record profit of $183 million for the first quarter of 2024 after growing its monthly subscribers to 615 million, up from 515 million the year prior. During an earnings call with analysts, CEO Daniel Ek said the company is focusing less on gaining subscribers and concentrating more on revenue growth.
"Next year, our focus may return to top-of-the-funnel user growth but in the near term, monetization remains our top priority," Ek said.
The Stockholm, Sweden-based company was founded in 2006 but has struggled to consistently turn a profit since going public in 2018. The company posted an operating loss of $81.6 million in the fourth quarter of 2023. The company raised its prices around the same time a year ago in a move it said at the time would help "deliver value to fans and artists."
During the same earnings call, Spotify's interim Chief Financial Officer Ben Kung said "our data shows that historical price increases have had minimal impacts on growth."
Spotify laid off hundreds of employees after overhiring during the pandemic. The company had taken advantage of lower borrowing rates between 2020 and 2021 and financed an expansion, investing heavily in employees, content and marketing, Spotify said in a December blog post.
But the company in 2023 implemented three rounds of job cuts, beginning in January of last year, when the company slashed 6% of jobs, bringing its workforce to 9,200 employees. Just four months later, it cut another 2%, or 200 employees, mostly in its podcasting division. Spotify let go another 1,500 in December 2023.
Spotify also hiked prices this year in Australia, Pakistan and the United Kingdom. Its stock price rose 4.5% in midday trading to $310 a share.