Spotify has launched a new subscription plan for users in the United States with a lower price, but it also comes with a trade-off.
The ‘Basic’ plan will cost $10.99 per month and includes all the regular features of the Premium plan except no Audiobook monthly listening time.
The change comes soon after the streaming giant pushed up the Premium tier subscription from $10.99 to $11.99, with that increase reportedly set to contribute toward the cost of audiobooks. Premium users are also able to listen to ad-free music offline, with an allocated 15 hours of Audiobook content included in the package.
In the States, the company’s largest market by revenue, other price increases to Premium included the Duo plan from $14.99 to $16.99 and from $16.99 to $19.99 for the Family Plan.
Spotify has been tipped to launch a new premium plan later this year, targeting its most devoted users with an additional charge of at least $5 per month, dubbed a “Supremium” subscription that would include high-fidelity audio. It could also contain additional tools for managing playlists and libraries.
Customer willingness to absorb price increases
The introduction of the new Basic tier could be a forerunner to further changes as the company seeks to boost its profit margins. In April, Spotify filed a 20% increase in revenue, combined with a 14% jump in Premium subscribers and a record quarterly profit.
The company is expected to announce its figures for Q2 2024 on July 24.
KeyBanc Capital Markets managing director Justin Patterson indicated to Yahoo Finance that Spotify’s customer base appeared prepared to accept further increases, with no immediate sign of a tipping point.
The investment banking and market analysis firm’s chief stated, “We look at our last audio survey, which was published just right around the time of that price increase. We actually saw that consumer willingness to absorb another price increase remained very strong.”
Patterson added, “Spotify has added a lot of value to its service over the past year with audiobooks and with new features around generative AI playlist recommendations, so it looks like this (customer acceptance of increases) should be going through relatively easily.”
Image credit: Via Ideogram
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