[STOCKHOLM] Spotify Technology shares gained in premarket trading after the company announced it is raising premium subscription prices across many markets outside the US.
The Swedish music streaming company is updating prices across South Asia, the Middle East, Africa, Europe, Latin America, and the Asia-Pacific region, according to a statement on Monday (Aug 4). Over the next month, customers will receive an email outlining the new price plan. Subscription prices vary by country, but the statement included a sample email describing a price increase of 1 euro per month to 11.99 euros (S$17.87).
Spotify shares have risen about 40 per cent so far this year.
Investors and record labels have been encouraging Spotify to raise prices further to capitalise on demand. The company has shown it has fiercely loyal listeners, who have spent sometimes years building music and audio libraries. Spotify listeners are the least likely to cancel among the major video or audio streaming services in the US, according to a report from research firm Antenna last year.
The company raised prices in the US twice last year, up to US$11.99 a month. In the second quarter, Spotify reported that subscribers increased 12 per cent from a year earlier to 276 million, reflecting “growth across all regions.” The company has 696 million monthly active users.
The price hikes follow a disappointing earnings release last week, where the company reported it had swung to a loss due to high-than-expected expenses related to employee compensation. The platform has introduced audio books as part of its premium subscription plan and has spent this year focused on expanding its video and advertising business.
Spotify executives said last week that the company is run to “optimise for long-term, not short-term gains.” Chief Business Officer Alex Norström said Spotify would raise prices “when it’s appropriate for the business.” Speaking to analysts after the earnings report, he said Spotify essentially raises prices all the time. In the last quarter, the company increased subscription costs in France, Belgium, the Netherlands and Luxembourg.
“And I can report to you that, on churn, we did not see anything out of the ordinary for Spotify.” REUTERS
