Spotify signals price hikes along with new features - FT

Bence Bezeredy

Spotify (NYSE:SPOT [https://seekingalpha.com/symbol/SPOT]) plans further price increases for customers as it invests in new features and pursues a goal of 1 billion users, according to a senior executive.

Alex Norström, co-president and chief business officer, told the Financial Times that price rises were “part of our toolbox now” after many years of keeping them flat.

The music streaming company began raising prices two years ago, a move that helped it achieve its first annual profit in 2024 through a combination of price increases and cost-cutting, the FT said. Earlier this month, Spotify announced that monthly prices for premium subscriptions would increase in some markets starting in September, which sent its shares up by almost 10%.

Norström stated that the company would “keep adding value” for customers alongside any price adjustments, adding, “essentially we want the consumer to win.” He noted that people were converting to the service despite the increases and that the company was “grabbing more market share.”

Spotify is developing features to provide more value and “stickiness” for subscribers. The company recently added a way to customize transitions between tracks on its nearly 9 billion user-created playlists. It has also expanded its services to include audiobooks and podcasts, as well as tools like an AI DJ. Norström said Spotify would continue investing in AI to “allow you to create in a more interesting and lower friction way” as part of its “ubiquity strategy” to expand across devices.

The company’s subscriber numbers have risen 12%in the past year to 276 million, with monthly active users up 11% to 696 million, according to the FT. Despite this growth, it reported a net loss in the second quarter. Norström expressed confidence in future expansion, stating that reaching 1 billion users is “not impossible at all. It’s certainly a goal.”

Details have not yet been revealed about a “superfan” subscription tier aimed at the biggest fans of artists, which would reportedly cost an extra $6 a month. Norström said on a recent earnings call that the company is “making progress ... but it’s taking time.”

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