Spotify is gearing up for a significant overhaul of its subscription plans and pricing structure, as indicated by a recent report from Bloomberg. The revamp entails price adjustments in select key markets and the introduction of a new subscription tier devoid of audiobooks.
According to the report, individual plans will see an increase of approximately $1 per month, while family and duo plans in the UK, Australia, Pakistan, and two undisclosed markets will witness a $2 per month increment. In the US, the largest market for Spotify, a price hike is anticipated “later this year,” as per sources familiar with the matter.
The purported price adjustments are purportedly aimed at offsetting the costs associated with audiobooks, a recent addition to Spotify’s offerings. Subscribers currently enjoy up to 15 hours of monthly audiobook listening. However, Spotify must compensate audiobook publishers for this service, even though revenue from audiobooks is generated only from listeners exceeding the aforementioned limit.
In addition, Spotify purportedly plans to introduce a new subscription tier exclusively focused on music and podcasts, excluding audiobooks. This tier is expected to be priced equivalently to the existing individual premium plan, requiring users to separately purchase audiobooks. Essentially, Spotify’s strategy appears to be integrating audiobooks into the premium plan, raising its price, and simultaneously launching a new plan devoid of audiobooks.
Furthermore, reports suggest the impending introduction of a “supremium” plan, offering high-fidelity audio and other undisclosed features. This long-rumored plan may finally come to fruition in 2024.
Spotify’s recent efforts to diversify its offerings beyond music, notably with podcasts and audiobooks, seem driven by a desire to reduce its reliance on music-related expenses, which currently consume approximately 70% of its revenue. Paradoxically, this move has sparked concern among its music industry partners, who fear diminished returns. Allegedly, their apprehension has spurred Spotify to implement price hikes.
Despite these developments, last year’s price adjustment, the first since the inception of its premium tier, had no apparent adverse effects. In fact, Spotify experienced its most significant user growth, adding 113 million users, totaling 602 million by the end of 2023, with 236 million being paying subscribers. This successful price adjustment has emboldened Spotify’s management to proceed with similar measures.
