October 27

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Apple Music Increases Cost Of Individual Subscription — Will More Music Streaming Services Follow?

Apple Music, Finance

Apple increased the price of its individual Apple Music subscription for the first time since the platform launched. And now the music industry is hoping rival platforms like Spotify will follow suit.

Individuals will now pay $10.99 per month for a subscription to Apple Music, which is a $1 increase from the original $9.99 price point. Family plans now cost $16.99 instead of $14.99. Apple also increased the price for its Apple TV+ service as well as Apple One, a bundled service providing access to multiple platforms.

For many within the industry, the move is long overdue. 

Why Apple Music Is Now More Expensive

According to an Apple representative speaking to Deadline, "The change to Apple Music is due to an increase in licensing costs, and in turn, artists and songwriters will earn more for the streaming of their music." The rep also cited product enhancements to the overall platform. 

Apple frequently touts the platform's friendlier pay rates for artists, so it's no surprise the company wants to highlight the direct correlation between increasing its prices and payouts to artists and rights holders. The 10 percent increase just barely outpaces inflation, which created a 9.1 percent increase in consumer prices on average over the past 12 months.

As for Apple's claims about product enhancements, the platform's dedication to high-end audio and enhanced listening formats like Dolby Atmos is at the forefront of its marketing strategy. Apple Music also recently claimed the platform now has the largest music library of any platform after eclipsing 100 million songs. 

Will This Finally Make Spotify Follow Suit?

Spotify has curiously not raised their individual tier prices in the U.S. since the platform launched. But now, the company finally seems willing to take the step. Spotify CEO Daniel Ek mentioned the possibility on an earning's call recently, citing Apple's increase. YouTube is raising its premium plan for families from $17.99 to $22.99.

Deezer also increased prices internationally. Ek notes that Spotify has increased prices in countries outside the U.S. "more than 40 times," but in many cases those prices were already artificially low. With the U.S. being the largest global streaming market, anything other than a direct price increase in the U.S. still feels like a footnote. 

Spotify officially launched in the U.S. after a long beta period in July 2011. The price for a premium subscription? $9.99. Since then, the company also continually undercut its own pricing growth with loosely-regulated family plans, bundled services, and free trials lasting as long as 3 months. 

Curiously, while Ek said raising prices is something the company "would like to do" and "feel[s] good about this upcoming year," he mentioned they would discuss the possibility with their "label partners." That doesn't do a whole lot to inspire confidence in artists who say the platform treats major label and independent artists quite differently

Why It Matters

Spotify's refusal to increase its premium tier pricing has been a major point of contention for years. Not only is the company the leader in premium users (though other companies are reportedly gaining ground), it's also consistently at the forefront of the streaming revenue inequity conversation. 

It's not hard to liken Spotify's current growth strategy as "a race to the bottom," where the company is trying to acquire users at the expense of music revenue growth by competing on price at an unsustainable level. It's difficult for artists and songwriters to feel like Spotify has their interests in mind when it has publicly poured so many resources into other spaces (like podcasting) and refused to do the one thing that directly leads to a revenue increase for copyright holders.

Because the value of streaming music is determined directly by how much companies charge for subscriptions and ads, Spotify refusing to increase prices despite artists adding tens of millions of songs to the platform over the past 10 years sure feels like a slap in the face. 

Consider other streaming platforms. In 2011, Netflix had one plan and it cost $7.99 per month. Now, a standard plan costs $15.49 per month. In 2011, Netflix had roughly 24 million subscribers. A little over 10 years later, it has 223 million subscribers, despite a plethora of competitors and notable issues with up to one third of users not paying full price, or at all.

And here's the kicker — consumers express a willingness to pay more for music streaming services. Particularly if they know that money goes towards the artists they listen to. 

With Apple Music becoming the first major music streaming platform to increase its prices, it may also position itself to take a stronger lead in the industry.






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