Spotify Premium has cost subscribers $9.99 per month since it launched in the US back in 2011.
From then to now, factoring in inflation, that same amount of money in real terms is worth just $8.73 (or, to put it another way, $9.99 in 2011 is now worth $11.43).
As Spotify’s ARPU rates continue to decline, pressure from rightsholders is being exerted on the company to consider raising its prices, but, so far, SPOT has resisted.
The firm’s outgoing CFO, Barry McCarthy, infamously (and irritably) said last year that queries regarding a potential subscription price rise amounted to “one of the really dumb questions I get”.
Recent MBW research, however, based on industry data, suggests that questions on this matter are actually anything but dumb.
Following a ‘test’ price rise of 10% for Spotify Premium in Norway – launched in July 2018 – MBW found there hadn’t been any subsequent slowdown in music streaming subscription uptake in the market.
Indeed, streaming revenues actually accelerated in Norway in the year that followed SPOT’s price hike.
So it was interesting to hear Spotify CEO, Daniel Ek, directly address a question centered on these price rises in SPOT’s Q3 earnings call on October 28.
Daniel Ek, speaking during SPOT’s Q3 earnings call
He confirmed: “There are local nuances that happen such as… inflation and pricing, [or] tax related things, and sometimes it’s even down to market maturity. And in those cases, you should expect us to accordingly adjust the [Spotify Premium] prices.”
This is the important bit: Ek then added that, “specifically related to the Nordic countries, we haven’t yet – it’s early days – we haven’t yet seen any material impact in either gross adds or churn [from the price rise].”
That sentence could be music to the ears of labels and publishers keen for Spotify to ‘test’ price rises in other parts of the world (especially if such a ‘test’, as with Norway, lasts over 16 months, with no sign of being reversed…).
Evidence, it appears, is mounting that the streaming music market could withstand a general raise in prices.
Another way streaming services can raise their prices, of course, is by layering on additional tools and services for customers – especially when it comes to those music fans with less mainstream tastes.
Amazon, for example, is trying this with its new $15-per-month hi-def music streaming service, Amazon Music HD.
Now a new survey suggests there might be mileage in others, like Spotify, following suit.
Dutch-American classical music streaming service Primephonic commissioned YouGov PLC – a third party, professional research and consulting organization – to poll the views of 1,000 individuals who agreed to take part.
Field work was undertaken online between May 24-27, 2019 and June 10-11, 2019. The figures have been weighted and are representative of all US adults (aged 18+).
Respondents were asked if they would be prepared to pay more than the standard $9.99 subscription fee for a service ‘that truly meets their needs’.
More than half (52%) of currently paying subscribers answered yes, with some indicating that they’d even be prepared to hand over more than $20 a month.
The survey also found that fans of specialist genres were more likely to pay extra for a service that specifically catered to their tastes, with two thirds of classical music fans stating that they’d pay more than $9.99.
Primephonic, which was launched in September 2018 and offers 1.5 million tracks, suggests that major streaming companies are yet to win over older listeners and fans of niche genres.
“Americans who listen primarily to niche genres like jazz or classical music face a lot of issues when streaming,” states the survey.
“Often, they cannot find what they are looking for, receive uninspiring recommendations, and find the audio quality lacking.
The survey adds that 9% of Americans, or 25m in absolute terms, would prefer to use a streaming service that specializes in their favorite genre.
“Assuming a revenue per subscription of $100 per year, this would imply a $2.5M market opportunity,” adds Primephonic.
“It has become very clear that the ‘one platform fits all genres approach’ of major streaming services such as Spotify and Apple Music is increasingly causing frustrations with music lovers.”
Thomas Steffens, Primephonic (pictured)
Primephonic CEO Thomas Steffens, said: “It has become very clear that the ‘one platform fits all genres approach’ of major streaming services such as Spotify and Apple Music is increasingly causing frustrations with music lovers.
“They want a streaming service that truly understands and embraces their genre by making relevant recommendations, flawless search, etc.”
He added: “Major streaming services have ignored the specific needs of niche genres, and classical music in particular. Worldwide around 4% of all music consumption is classical, but classical is only 0.7% of all streamed music.
“Many classical music fans are ignoring major streaming services because they can’t find the works and recordings they are looking for, do not get recommendations that excite them, are not offered audio quality that classical music fans need, etc.
“That is why we have developed a streaming service, designed for classical from scratch, offering much better search, recommendations and audio quality.”Music Business Worldwide