Spotify has launched a new subscription plan at a lower price for users in the United States, but it comes with a trade-off.
The ‘Basic’ plan will cost $10.99 per month and include all the regular features of the Premium plan, except for the audiobook monthly listening time.
Change comes The streaming giant has increased the Premium tier subscription from $10.99 to $11.99, with the hike set to contribute to the cost of audiobooks. Premium users can also listen to ad-free music offline, including the 15 hours of audiobook content allotted in the package.
Other premium price increases in the US, the company’s largest market by revenue, saw the Duo plan rise from $14.99 to $16.99 and the Family plan rise from $16.99 to $19.99.
spotify is on Ready to launch Later this year, a new premium plan that will target its most dedicated users will cost at least an additional $5 per month, called the “Supremium” subscription, which will include high-fidelity audio. It may also include additional tools for managing playlists and libraries.
Customer’s willingness to tolerate price increases
The introduction of the new Basic tier could be a harbinger of future changes as the company looks to increase its profit margins. In April, Spotify reported a 20% increase in revenue, as well as a 14% rise in premium subscribers and record quarterly profits.
The company is expected to announce its numbers for Q2 2024 on July 24.
Justin Patterson, managing director at KeyBanc Capital Markets, indicated Yahoo Finance Spotify’s subscriber base appeared ready to accept further growth, and there were no immediate signs of any growth slowing down.
The head of the investment banking and market analysis firm said, “We look at our last audio survey, which was published around the time of that price increase. We actually saw that consumer willingness to absorb another price increase remains very strong.”
“Spotify has added a lot of value to its service over the past year with new features around audiobooks and generative AI playlist recommendations, so it seems like this (increasing customer acceptance) will happen relatively easily,” Patterson said.
Image Credit: Via Ideogram
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