Price Hike on the Horizon: Spotify Plans to Increase Rates in 2022

In light of the rising costs of streaming services, Spotify’s announcement of another price increase shouldn’t be surprising. This latest development comes shortly after the introduction of lossless audio, adding an interesting twist to the timing.

Reported by the Financial Times, Spotify is set to raise subscription fees in the first quarter of 2026 in various countries, including its largest market, the US. The extent of the price hike remains uncertain, but analysts view the US adjustment as essential for Spotify’s financial performance, demonstrating its ability to sustain profitability.

The previous significant price adjustment for the music streaming platform occurred in mid-2024, initially affecting the UK, Australia, and Pakistan before reaching the US, where the monthly fee now stands at $11.99. Subsequent to that, Spotify announced price increases in multiple global markets, hinting at what US consumers can anticipate in the near future.

Renewal of licensing agreements often leads to increased operational costs for streaming services, prompting providers like Spotify to either absorb the expenses or transfer them to subscribers. Major record labels have been advocating for fee hikes on platforms such as Spotify and Apple Music, citing inflation and the comparatively low cost of music subscriptions compared to video streaming services like Netflix.

Even Apple Music faced a subscription fee adjustment from $9.99 to $10.99 per month in October 2022, briefly making Spotify the more affordable option until its own price increase in July 2023, aligning it with Apple Music and subsequently surpassing it in July 2024 with another hike.

Spotify’s introduction of lossless audio likely contributed to cost escalations, especially given the intricate financial considerations involved. Initially planning a premium-tier offering akin to Tidal’s model, Spotify had to revise its strategy following Apple’s announcement of free lossless audio across its entire music catalog, swiftly followed by Amazon’s similar move. This compelled Spotify to rethink its approach, eventually including high-quality audio at no extra charge.

While some viewed Spotify’s decision as a response to market trends, reports indicated the platform explored a “Music Pro” service concept in 2024 to provide enhanced features and justify a higher price for lossless audio.

Despite potential consumer apprehension amid economic conditions, the impending price increase poses challenges for Spotify users, already facing a higher cost than Apple Music. The prospect of further widening the price gap and potentially prompting Apple Music to adjust its fees looms large.

Contextually, Spotify maintained its $9.99 monthly rate from its 2011 launch until 2023, resisting inflation adjustments over a 12-year period. Similarly, Apple Music preserved its $9.99 fee for four years following its launch, making changes only in late 2022.

Notably, the music industry’s benchmarking of Netflix, the priciest video streaming service, as a pricing standard for music platforms like Apple and Spotify implies potential pressure for more substantial price hikes beyond the incremental $1 increments observed in recent years.