A rising bill lifts all streamers… Spotify is hiking the cost of its paid subscription plan in the US for the first time since it rolled out back in 2011. The Swedish company, which reports earnings today, is now charging $11/month for its premium tier (up from $10). While a $1 bump may sound small, the new price could yield $2.5B in extra revenue a year as Spotify has 210M premium subs.
Spotify joins other major music streamers in upping prices. Apple Music bumped prices last fall, while Amazon, Tidal, and YouTube Music matched pitch this year.
Video streaming said ditto: Netflix is the only major streamer that hasn’t pumped its prices in the past year, and that’s because it made the change in spring ’22. Just last week, NBCUniversal’s Peacock announced plans to jack up its costs for the first time.
Your free trial is over… After battling for market share with lengthy free trials and extra-low prices, streamers appear to have ended their era of generosity. Feeling the burn of costly new investments in content (like live sports), companies are looking for ways to curb widening losses: Paramount+’s loss rose to $511M last quarter and Peacock’s is expected to total $3B this year. Profit-chasing streamers have turned to staff cuts, price hikes, and a broad content slowdown: this year’s 14% global content spend increase lags behind the 45% growth rate last year.
A well-trodden path is safer to follow… Despite being mostly unprofitable, streamers across industries have been hesitant to risk growth by raising prices — until now. After streaming leader Netflix passed costs on to users without significant consequences, more of its rivals have jumped on the cost-hiking bandwagon. When everyone else is hiking prices, it’s easier to follow suit.