Spotify U.S. Prices Increase for Second Time in a Year

Spotify is in hot water again, and not for good reasons. The company’s CEO, Daniel Ek, recently drew heavy criticism from the creative industry with his tweet: “Today, with the cost of creating content being close to zero, people can share an incredible amount of content.” Many see this as downplaying the effort artists put into their work, reducing it to mere “content.”

Now, Spotify is making headlines again by raising its U.S. prices for the second time in one year. This move makes it more expensive than Apple Music. The Spotify Premium Individual plan is going up by $1, from $10.99 to $11.99 per month. The Premium Family plan, which covers up to six household members, is increasing by $3, from $16.99 to $19.99 per month.

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This isn’t the first time they’ve hiked prices in 2023. The main reason behind these increases is Spotify’s drive for profitability. Daniel Ek has openly stated that 2024 is their “year of monetization.” To boost margins and profits, Spotify has been cutting costs through layoffs and reduced marketing budgets.

The strategy seems to be working. Gross margins rose from 25.2% to 27.6% in a year, partly due to higher profits in their podcast business. For the first time, their quarterly gross profit exceeded 1 billion euros.

However, Spotify has faced massive criticism over the past few years for its royalty distribution to artists. Despite being the largest streaming platform, many feel Spotify doesn’t pay artists fairly. Yet, from a business perspective, Spotify continues to grow.

The question now is whether this price hike will lead to better royalty distribution for artists in the coming years. Only time will tell.