Spotify is currently testing consumer appetite for higher subscription fees in the UK for its Premium Individual, Duo and Family plans.
SPOT’s price hike tests in the market were spotted by Alex Hern, UK tech editor at the Guardian, after a consumer survey was sent to the music streaming company’s users in the country.
The survey finds that prices for the Premium Single, Duo and Family plans have increased by £ 10.99, £ 14.99 and £ 19.99, respectively.
Prices are currently £ 9.99, £ 12.99 and £ 14.99, respectively.
The market tests follow comments from Spotify Chairman and CEO Daniel Ek on the company’s fourth quarter 2020 analyst call in February confirming that price increases will be part of the company’s future growth strategy.
In Norway, SPOT ‘tested’ price increases of 10% for its Standard Reward, Student and Family plans in July 2018 and they have remained 10% higher since then.
In SPOT’s Q4 Investor Update, the company reported that it increased the price of the family plan in October 2020 in seven markets including Australia, Belgium, Switzerland, Bolivia, Peru, Ecuador and Colombia (alongside Duo in Colombia).
The early results of the increases are positive, says SPOT, after “seeing no significant churn or customer acquisition impact in these markets.
“We experimented with it [price rises] for some time. We started two years ago so we weren’t in a rush. But this may be the time when you see that it actually becomes part of the strategy. “
Daniel Ek speaks in February
Ek told investors in the company’s Q4 2020 analyst that “Spotify has three legs” to how Spotify can grow and stated, “First, we can improve our product offerings. Second, we can open up new markets, and third, we can raise prices. “
Ek added, “We are trying to optimize growth and there are three ways to grow. We are now adding the third part of the chair here too, but I don’t think you should read in it that growth is at its peak. It’s more like we’re flexing our muscles now and adding this third part as well. “
He continued, “We have experimented with it [price rises] for some time. We started two years ago so we weren’t in a rush. We did it in Norway two years ago, since then in Argentina, Australia and many, many other markets.
“But this may be the time when you see that it actually becomes part of the strategy. Mainly due to the positive response to the value we are already offering consumers. “
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