Spotify shares plunge as it hikes prices after pressure on revenue
Subscription rises to €10.99 a month as firm makes €112m loss
ADRIAN WECKLER
Music streaming service Spotify is raising the prices of its most
popular premium subscriptions.
The standard ad-free price will rise from €9.99 to €10.99 per month,
while the 'Duo' variant for two people goes from €13.99 to €14.99 per month.
A family subscription for up to six users stays unchanged at €17.99
while student pricing also remains unchanged at €5.99.
Spotify also operates a free service with ads and restrictions on controls.
The world's largest online music streaming service reported a 27pc rise
in its total user base to 551 million.
Paying 'premium' subscribers rose 17pc to 220 million. In Ireland, it is
estimated to have over 200,000 paying users.
Spotify shares fell as much as 13pc in New York trading after results
came up short of expectations and it issued a forecast that also
disappointed investors.
Spotify has not made a net profit in recent years, recording an
operating loss of €112m in its earnings announcement. It announced a 6pc
cut in staff earlier this year.
It has invested heavily in podcasts, including a reported €18m to
English royals, Harry and Meghan.
Other music streaming services, such as Apple Music, Amazon Music and
Tidal, have also recently put prices up.
"The market landscape has continued to evolve since we launched," the
company said in a statement about the price rises.
"So that we can keep innovating, we are changing our Premium prices
across a number of markets around the world. These updates will help us
continue to deliver value to fans and artists on our platform."
Subscription hikes have followed general inflation, with mobile phone
operators in Ireland setting regular rises every spring of at least 3pc.
Shares of Spotify fell as low as $141.99 in New York, the worst intraday
decline since October.
The company, which bought Mark Little and Áine Kerr's content moderation
business Kinzen last year, expects to reduce its headcount in the
current quarter, chief financial officer Paul Vogel said on a call with
investors.
Spotify is also reducing its real estate footprint.
Staffing will "actually be down in Q3", Mr Vogel said.
Higher subscriber growth isn't translating into revenue as average
revenue per user continued to decline.
CEO Daniel Ek said his preference has been to increase revenue through
growth in customers and new businesses, but that is changing.
"There will come a time when price increases become a more important
tool in the toolbox," he said.
Irish Independent
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