The recent spate of price hikes at music streaming services is gathering steam.
“To help us bring you even more content and features, we’re updating the prices of select Amazon Music Unlimited plans,” the company announced on its Amazon Music FAQ page.
Amazon Prime members will see their monthly fee for Music Unlimited rise from $8.99 to $9.99 as of September 19. Prime members who sign up for a new account will be charged the new higher price as of Tuesday (August 15).
For those paying on an annual basis, the price will rise from $89 per year to $99. The Amazon Music Unlimited Family Plan – which allows up to six family members per account – will rise from $15.99 to $16.99 on a monthly basis, or from $159 to $169 per year.
Amazon still has a version of its music streaming service that is free for Prime subscribers, called simply Amazon Music. (A Prime subscription currently costs $14.99 in the US, and offers members free or reduced shipping costs on items bought on Amazon, along with access to Amazon Video and Amazon Music.)
However, as part of a large expansion of the free-for-Prime-members service’s catalog last year – from around 2 million tracks to the full 100 million tracks available to Music Unlimited subscribers – users of the free service were limited to shuffle mode when listening to selected artists, albums or playlists.
Amazon was among the first to hike prices among DSPs, and has been among the most aggressive so far.
In May of 2022, it raised the monthly individual price of Music Unlimited for Prime members from $7.99 to $8.99. Annual subscriptions rose from $79 to $89, and the company also implemented concurrent price hikes in the UK and Canada.
And in January of this year, Amazon announced a price increase for Music Unlimited for customers who aren’t Prime members. The standard individual monthly subscription price rose from $9.99 to $10.99 in the US, and from £9.99 to £10.99 in the UK.
Amazon’s price changes come amid heightened inflation in many key markets for DSPs over the past several years – inflation that had, until recently, not been reflected in the prices consumers were paying for music streaming services.
“We believe that streaming subscriptions have been undervalued and are pleased that the lead set by certain DSPs in increasing prices is being matched by the rest of the market.”
For some music recording companies and publishers who depend on streaming revenue, this was beginning to take a toll on the bottom line.
In a regulatory filing earlier this week, UK-headquartered music rights holder and label owner Beggars Group reported a 20.5% YoY decrease in operating profit for 2022, which it attributed to rising costs combined with stagnant prices at streaming services.
“We believe that streaming subscriptions have been undervalued and are pleased that the lead set by certain DSPs in increasing prices is being matched by the rest of the market,” Beggars Group said in the regulatory filing.
(The streaming service price hikes seen in 2023 would not have been reflected in Beggars Group’s 2022 numbers.)
The recent price hikes appear to be part of a “snowball effect” among the DSPs, where a price increase at one service emboldens another to make a similar move.
“Deezer was the first player to raise prices in early 2022, with pretty much no impact on churn, which has clearly demonstrated that music is highly undervalued and that platforms like us have more pricing power than initially anticipated.”
Jeronimo Folgueira, Deezer
That dynamic was recently made explicit by Deezer CEO Jeronimo Folgueira on the company’s latest earnings call, in which he told analysts that price hikes at competing services give Deezer breathing room to consider further price hikes of its own.
“Deezer was the first player to raise prices in early 2022, with pretty much no impact on churn, which has clearly demonstrated that music is highly undervalued and that platforms like us have more pricing power than initially anticipated,” Folgueira said.
“Since then, all other global platforms have followed our move, which gives us the opportunity to review pricing again in the near future.”
The notion that music is undervalued as a commercial entertainment product has become widespread within the industry amid heightened inflation, with everyone from Universal Music Group Chairman and CEO Sir Lucian Grainge to Tidal CEO Jesse Dorogusker making some variant of the argument.
For many, the key was to see a price hike at Spotify, the heavyweight among music streaming services. That came to pass last month, when the DSP announced an increase to its individual premium subscription plan in the US – from $9.99 to $10.99 per month – as well as price hikes in more than 50 other markets.
In its earnings report, released a day after the price hike announcement, the company revealed a 17% YoY increase in premium (paying) subscribers, with the total number reaching a record 220 million.
However, the company also reported a 13% YoY increase in its operating costs – a clear indication that DSPs can no longer afford to ignore inflationary pressures.Music Business Worldwide