Spotify Won’t Be Raising Its Prices Anytime Soon — At Least Not In the US

Top Executives Earn Millions, While Spotify Bleeds Money
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Top Executives Earn Millions, While Spotify Bleeds Money
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Spotify CEO Daniel Ek.

Daniel Ek has revealed that Spotify doesn’t plan on increasing the price of subscriptions in the United States anytime soon.

The Spotify cofounder and head disclosed this information to the Financial Times, following his company’s announcement-heavy “Stream On” livestream presentation. A number of investors have called for the platform to join Netflix (and other subscription-based entertainment services) in bumping its monthly cost for stateside subscribers.

But Stockholm, Sweden-born Ek pushed back against the possibility once again, invoking similar language as he did when addressing the subject during Spotify’s Q3 2020 earnings call. Ek stated this time that his company is “playing it very carefully” in terms of rolling out a price uptick for American users, as one component of a broader effort to capitalize upon the service’s quick-growing popularity in some parts of the country.

Importantly, the 37-year-old previously signaled that a price increase would arrive sometime down the line, albeit while emphasizing that he intended to “continue to tread carefully in these COVID times to ensure that we don’t get ahead of the market.”

This ongoing reluctance to boost U.S. pricing is especially significant because Spotify, which arrived in South Korea (population 52 million) without a free tier this month, said in its Q4 2020 earnings report that subscribers could reach 155 million to 158 million by Q1 2021’s end. The former figure is the same as Spotify’s paid-user total as of 2020’s fourth quarter.

And while a U.S. price increase – that is, for Spotify’s basic $9.99-per-month subscription – isn’t expected to arrive anytime soon, higher-ups spent much of the Stream On presentation discussing efforts to increase earnings and reach additional fans, including via a massive expansion into “80+ new markets around the world.”

“Spotify is available on more than 2,000 different devices – everything from smartphones to smart speakers and from car audio systems to gaming consoles,” Ek said towards the approximately 100-minute-long presentation’s start, before striking an optimistic tone when highlighting the company’s possible growth trajectory in the next half decade or so.

“Three years ago, Spotify had three million creators on our platform. Every year since, that number has increased, from four million to five million, to eight million at the end of 2020. I believe that by 2025, we could have as many as 50 million creators on our platform,” he proceeded.

Building upon the points, Dawn Ostroff, Spotify’s chief content and advertising business officer, described recent years’ growth to the number of artists that are earning over $1 million per year (or at least $100,000 annually) from Spotify. Her comments are particularly interesting given Spotify’s per-stream royalty rate and the quick-expanding community of artists whose music is available through the service.

“Over the last four years, the number of recording artists whose catalogs generated more than $1 million a year across recording and publishing is up over 82 percent, to more than 800 artists. And the number generating more than $100,000 a year, that’s up 79 percent, to more than 7,500 artists,” said Ostroff.

Ostroff also announced the debut of the Spotify Audience Network, “a first-of-its-kind podcast-advertising marketplace, where advertisers can buy across a network of original exclusive and independent podcasts.” Spotify dropped $235 million to acquire podcast publishing and advertising platform Megaphone in November of 2020, on the heels of several multimillion-dollar investments in exclusive programs.

And notably, given that many investors have struck a positive tone when discussing podcasting’s earning potential, Michael Mignano, Anchor cofounder and Spotify’s head of podcaster mission, indicated: “We want to help podcasters take full advantage, not only through advertising, but with the power to choose the best business model for themselves.

“In the next few months, we will be kicking off a limited beta in the U.S. via Anchor, giving creators the opportunity to publish paid podcast content on Spotify for their most dedicated fans,” finished Mignano.

Despite the income possibilities of the latter and the aforementioned expansion into new markets, however, Spotify’s stock has slipped substantially since Monday, from as high as $385.76 per share to as low as $318.53 per share this morning. At the time of this piece’s publishing, SPOT had rebounded to $335.34, a 4.16 percent decline from yesterday’s closing value.