October 25, 2022

Apple Music Prices Go Up – Will Spotify Follow?

After months of speculation about streaming music price increases, Apple Music becomes the first to raise its prices, although not as much as originally anticipated. The company announced that its price will go up $1 from $9.99 to $10.99 per month, and its Family Plan $2 to $16.99 per month. The big question now is if and when other streaming music companies will raise their prices now that Apple has set the precedent.

Apple Music price increase on the Music 3.0 Blog

The Reason For $1

What’s interesting here is the fact that most predictions offered that the bump in streaming prices would go from $9.99 to $14.99. It’s pretty strategic that Apple decided to raise the price by only a dollar, since the average user is unlikely to balk at the new price, especially given the way everyday prices are constantly rising due to inflation.

Another interesting point is that Apple said that the reason for the increase was because of increased licensing costs, but no new licensing deals have been announced.

The $1 increase seems like the company is testing the waters to see what kind of pushback they would get. Presumably the other streaming companies will do the same unless Apple Music sees a huge amount of outrage from its users.

Spotify Is Pleased

This is good news for Spotify as well since the company is the only one of the major music distributors somewhat at the mercy of Wall Street. Apple, Amazon and Google have deep pockets and their music offering is a very small part of the overall company. It’s almost like a loss leader in that it really doesn’t matter how well that part of the company does as it won’t affect its stock price.

Spotify is different though, since it makes most of its money from its music service (although podcasts are contributing more and more). Even a modest $1 per month subscription increase would boost its bottom line and make the Street happy.

And it’s good for artists and songwriters as well. Any revenue source that contributes to the overall royalty pool is ultimately good for their pocketbooks.

If Apple Music’s $1 increase flies without much pushback and other streaming services follow suit, it could be the first of many increases until the industry sits at its $14.99 per month target.

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