Spotify may be set to increase its prices as it mulls Scandinavia test

Is Spotify about to raise its prices? Sources claim a test in Scandinavia will see it sell a more expensive version of its music service to see whether it can raise prices around the world.

The music streaming service’s family plan is set to rise by about 13 per cent, unnamed sources said. The current family plan costs €15 a month and lets up to five people use the service. Spotify has also tested a plan called Premium Duo that offers two subscriptions for €12.49 a month and offers a discounted premium subscription for students.

But although Spotify plans to test the increaseds rates, the sources said it doesn’t mean Spotify will raise prices elsewhere or do so permanently in Scandinavia. Spotify declined to comment.

Raising prices could boost revenue in markets where Spotify already has a strong presence and help placate music companies, which have complained about falling revenue per user. The Stockholm-based music service is the dominant player across Northern Europe, and with 108 million paying customers, Spotify is the largest paid music service in the world. Despite competition from Apple Music, which has about 60 million customers, and Google's YouTube Music, it's unlikely to surrender that crown any time soon.

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But the average price paid by Spotify subscribers has declined for a few years because of discounts to draw in new customers and growing use of family plans, and Spotify still loses money.

The company has been reluctant to increase prices because it’s still in a growth stage, relying on discounts to keep customers and attract new ones as people become accustomed to streaming on-demand. While the company has grown quickly, only a minority of music listeners around the world have adopted the technology, and Spotify executives have said the addressable market is at least 1 billion people.

Biggest Markets

North America, Latin America and Europe account for more than 80 per cent of Spotify's customer base. The company is making a big push in Asia, where it has sold its service at low prices to compete with local players and free alternatives such as YouTube.Spotify is also under pressure from competition. It offers more or less the same product as Apple, YouTube and Amazon. com – millions of songs available on-demand, as well as playlists and podcasts.

But Apple, YouTube and Amazon don’t need to make money on music. They can use their music services to profitably sell other products, whether it’s iPhones, advertising or toilet paper. Spotify doesn’t have that luxury. – Bloomberg