Spotify is planning to market a more expensive version of its music service in Scandinavia in an effort to see whether it can raise prices in other territories, a report in Bloomberg claims, citing people familiar with the matter. A source has confirmed the news to Variety.
The streaming giant will raise the price of its family plan by about 13%, the sources said, stressing that the effort is a test and the company has not locked in a price rise in Scandinavia or anywhere. It was unclear whether the company would add assets to the subscription plan to accompany the price hike.
A rep from the company declined Variety’s request for comment.
Scandinavia — Spotify’s home base and the countries where it has the strongest presence — is the safest market for the company to test such a price hike. Its current family plan costs around $15 a month and allows up to five people; it has also tested a plan called Premium Duo that offers two subscriptions for 12.49 Euros (around $14) a month.
The company has raised prices in the region before, with a hike in Norway a couple of years ago. CFO Barry McCarthy answered a question about it in a July 2018 earnings call, using wording similar to that of Bloomberg’s sources on the latest reported price increase. “You should not expect to see price increases from us across markets,” he said. “We’re playing a market share game. We’re not playing a margin game. There may be opportunities for us in individual markets to test price elasticity like we’re doing in Norway, but don’t expect a shift in strategy. Now specifically, with respect to Norway, we saw a brief slowdown in growth. And a few weeks later, growth reverted back to its historic level, with no adverse change in churn. So it appears to have been well received in the marketplace.”
And while the subscription prices of all streaming services vary across the globe and it’s easy to be alarmist about an increase anywhere, the fact remains that even though Spotify is the world’s largest DSP, with nearly 110 million paying customers, it is many years away from turning a profit, with music companies clamoring for a bigger share of its revenue. Unlike Apple or Amazon, music is not a secondary business for Spotify, and it needs to find more routes to profitability. It is not surprising that a price hike in certain markets could be one.