Spotify, the world's largest music platform, will increase the price of its ad-free subscription plan by 8.2%. This is seen as a move to address poor performance in the second quarter of this year.
On the 4th, local time, Spotify announced that it will raise the price of its premium plan in some countries in Europe, the Middle East, Africa, Asia-Pacific, South Asia, and South America starting next month. Korea is excluded from this price increase.
In some countries excluding Korea, the monthly subscription fee will rise from the current €10.99 (about 17,000 won) to €11.99 (about 19,000 won), an increase of about 8.2%. Last year, Spotify also raised the monthly subscription fee for its premium plan in the U.S. from $10.99 to $11.99.
Spotify is believed to have implemented the price increase to overcome its recent poor results. In the second quarter of this year, Spotify's revenue was €4.19 billion (about 6.7223 trillion won), a 10% increase compared to the same period last year, but it fell short of Wall Street's forecast of $4.27 billion. The net loss was €86 million, indicating a return to a deficit. Following the disappointing earnings report, the stock price dropped by 11%.
Daniel Ek, CEO of Spotify, noted during the conference call for the second quarter earnings announcement, "I am not satisfied with the current situation, but we are moving quickly to go in the right direction."
As of the end of June, the monthly active users (MAU) reached 696 million, a growth of 11%. The number of paid subscribers increased by 12% to 276 million. The company stated that users who opted not to pay for subscriptions instead of listening to ads accounted for about 60% of Spotify's monthly users.
Spotify posted its first annual profit last year, thanks to cost savings and price increases. The company is expected to continue focusing on subscriber acquisition this year by investing in artificial intelligence (AI), podcasts, and audiobooks, and to work hard on securing profitability through an increase in the price of its subscription plans.
It is also accelerating the expansion of its business in Korea. According to market research firm WiseApp and Retail, as of May, Spotify's domestic MAU reached a record high of 3.59 million, the highest ever recorded. The increase in users followed the launch of the free subscription plan in October last year.
Currently, the monthly subscription fee for Spotify's premium plan in Korea is 11,990 won. A representative from Spotify said, "We calculate fees by comprehensively reflecting the standard of living in each country."