According to Financial Times News, Spotify is planning to raise US subscription prices in the first quarter of next year. The company’s share price has already jumped more than 30% this year compared to the S&P 500’s 14% increase. This would be the first US price hike since July 2024, following recent increases in the UK, Switzerland, and Australia. JPMorgan analysts project a $1 monthly increase would boost Spotify’s annual revenue by $500 million. Major record labels have been pressing streaming services to raise fees, arguing prices have lagged inflation. Current US subscriptions cost $11.99 monthly, up from $9.99 when Spotify launched 14 years ago.
Wall Street wants this move
Here’s the thing – Wall Street analysts have been practically begging for this price increase. Deutsche Bank analysts said questions around timing have “taken a toll on sentiment.” When your stock performance is this closely tied to whether you’ll charge customers an extra dollar per month, you know you’re in a tricky spot. But Spotify‘s in a tough position – they need to show profitability after years of heavy investment in podcasts and other content. The market’s clearly rewarding them for moving in this direction, with that 30% stock jump this year. Basically, investors see price increases as low-hanging fruit for revenue growth.
What this means for subscribers
So what does a dollar more per month actually mean for regular users? For individuals, it’s probably not going to cause mass cancellations – we’re talking about the cost of one fancy coffee per month. But here’s where it gets interesting: this comes as music industry growth is slowing globally. Revenue growth actually halved last year according to industry data. And let’s be real – how many subscription services are people paying for these days? Between video streaming, music, cloud storage, and everything else, the monthly bill keeps climbing. Spotify’s betting that their service is sticky enough that people will absorb the increase without thinking twice.
The bigger picture
This isn’t just about Spotify trying to make more money. The major record labels have been pushing all streaming platforms to raise prices, arguing that music subscriptions remain cheap compared to video services like Netflix. They’ve got a point – when you consider the hours most people spend listening to music versus watching video, the value proposition is pretty compelling even at higher prices. Meanwhile, Spotify’s going through a leadership transition with Daniel Ek stepping down as CEO and handing over to two top executives. New leadership often means new approaches to pricing and profitability. The question is whether this becomes a regular thing or if we’ll see another long gap before the next increase.
