Why Spotify isn’t increasing it’s subscription prices
Despite Apple Music and YouTube Music recently increasing their individual-plan prices, Spotify has not increased there’s – a smart move according to New Constructs CEO David Turner. He believes it is an effective way for the streaming giant to outmaneuver its competitors due to its “relative competitive weakness”. With that in mind, being able to offer lower prices could help keep them at the top of consumers’ list. When they’re shopping around for music subscriptions.
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Apple Music and YouTube Music recently implemented steep price increases for their streaming services. But Spotify has yet to follow in suit. For individuals, Apple’s subscription rate jumped from its standard monthly fee of $9.99 to a pricey new charge of $10.99 per month. While the cost for families on YouTube skyrocketed from a flat rate of $17.99 up to an expensive total more than 25% higher at $22.99 each month! As we all wonder whySpotify is resisting raising prices like its competitors did. Perhaps they are still focused on providing quality music listening experiences without breaking the bank?
Despite its global success, Spotify could be facing an uphill battle to proliferate and make profits. Other companies offer similar services but with a much wider range of additional features – making competition steep.
“Firms like Google and Apple are making tons of money. They can afford to lose a lot of money in streaming music and podcasts without even blinking an eye. Spotify can’t,”
Spotify’s user base has seen impressive growth, with subscribers now at a total of 500 million. However, the company is taking steps to invest in efficiency and quality over sheer expansion by increasing their operating expenses 44% year-over-year. Daniel Ek emphasized that this shift would “require us to live up to our own expectations.”
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In early 2021, Spotify’s stock was flying high but in the following year it tumbled significantly. Despite delivering strong subscriber growth and improving margins over time. Investor sentiment has failed to keep up with these developments as the company remains unprofitable – burning through a considerable amount of cash. Analyst John Trainer refers to this discrepancy between valuation and fundamentals as “a disconnect”.
