Netflix Raises Its Prices For the Sixth Time Since 2014 — Is Spotify Next?

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Photo Credit: Magnus Höij / CC by 2.0

With Netflix (NASDAQ: NFLX) having raised its prices once again, some are asking whether Spotify (NYSE: SPOT) – the premium version of which still costs $9.99 per month in the United States – will soon follow suit.

Los Gatos-headquartered Netflix just recently announced the increased subscription prices for users in the United States and Canada, ahead of a Q4 2021 earnings call that’s scheduled for this Thursday, January 20th.

Stateside, the video-streaming giant’s standard plan now costs $15.50 per month, according to Movieweb, and $19.99 per month for the 4K Ultra-HD tier. These heightened prices have already gone into effect for new subscribers, but existing users will receive at least 30 days’ notice before they’re billed at a higher rate.

Netflix has upped its monthly charge six times since 2014, also per Movieweb – in a stark contrast to Spotify and other music streaming services, the single-user premium subscription options of which have cost $9.99 per month from the outset in the U.S.

Of course, Netflix (as well as competing film and television platforms) creates exclusive shows and movies in an effort to attract fans and justify price jumps. But as the major labels did away with streaming exclusives years back, arguing that they damage the subscriber market, Spotify, Apple Music, and Amazon Music have turned to HD audio, merch stores, podcasts, remixes, and special versions of projects to stand out from the crowd.

Notwithstanding the largely identical song libraries that have compelled music services to continue charging $9.99 per month in the U.S., Spotify last April raised certain plans’ prices.

Though the jump affected Student, Duo, and Family plans alike throughout Europe and the UK, stateside subscribers only saw the price of the Spotify Family option increase, from $14.99 to $15.99. Moreover, Spotify CEO Daniel Ek acknowledged that his company would keep on “playing it very carefully” in terms of boosting premium subscription costs in America, to take advantage of ongoing subscriber growth in various regions.

Now, nearly one year later, it’s possible that Spotify could be planning to hike the pricing of domestic subscription packages once and for all.

The timetable associated with the Stockholm-based company’s possible stateside cost increase(s) might depend in part upon the number of subscribers that the service boasted as of Q4 2021.

Spotify is set to unveil its Q4 2021 (and full-year) performance specifics on Wednesday, February 2nd, having forecasted 400 million to 407 million MAUs (from 381 million) and 177 million to 181 million premium subscribers (from 172 million) for the quarter. However, it bears noting with regard to this relatively ambitious guidance – Q3 2021 delivered just 16 million new MAUs – that Spotify’s monthly cost varies dramatically by country.

Consequently, surpassing the subscriber and MAU milestones won’t necessarily bring a material revenue improvement for Spotify – and missing the targets could expedite the arrival of the long-rumored price boosts because of the resulting income.

And in a broader sense, it’s worth noting that Spotify’s per-stream royalty rate has declined in recent years – as Daniel Ek anticipates as many as 50 million on-platform creators by 2025.