Spotify to increase monthly price with $1 to $10.99

Spotify is planning to increase the monthly price of a standard subscription from $9.99 to $10.99 in the US, according to the Wall Street Journal.

Previously Apple Music and other competitors have raised their prices, so Spotify will not be pricing higher than competitors. Therefore it seems unlikely that there will be significant churn from this price increase, the first in the US since launch in 2011.

In the US Spotify had about 44 million subscribers earlier in 2023. They are on a mix of plans, e.g. standard, family, and student.

I’m assuming the majority of subscribers are on standard plans, say at least 30 million subscribers (68%). That means $360+ million in additional annual revenue, of which Spotify would keep $120+ million (30%) in gross profit.

If reports are correct, it seems likely that Spotify will increase prices in Europe too with about €1 per month. Which would bring in as much as in the US, for a total of $750+ million (ca 6%) in additional revenue and $250+ million in gross profit.

Price increases combined with underlying subscriber growth, lower costs (staff and podcast content spend) and hopefully ad sales holding up could push Spotify into being more solidly profitable on both IFRS and free cash flow basis.

Author: Henrik Torstensson

Partner at Alliance VC. Investing in Nordic early-stage tech startups.

Leave a Reply