Spotify (SPOT) is preparing to raise subscription prices again, as the music streaming giant adds new features and aims to reach one billion users globally, the Financial Times reported. The move is part of SPOT’s long-term strategy to boost profit margins and add value for consumers with new features.
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The report cited an interview with Spotify’s co-president and chief business officer, Alex Norstrom. He said that raising prices is now a regular part of its business strategy after years of maintaining flat rates.
SPOT began raising prices two years ago, which, combined with cost-cutting measures, helped the company achieve its first annual profit in 2024.
In fact, the news comes after the company disclosed a price increase earlier in August for its premium individual plan. The monthly price is set to rise from €10.99 to €11.99 in regions including South Asia, the Middle East, Africa, Europe, Latin America, and the Asia-Pacific.
SPOT’s New Features Justify Price Hikes
Norstrom assured that any price changes will come with added value for consumers. Thus, to enhance its service and “stickiness,” Spotify is developing new features.
Recent additions include customizable track transitions for user-created playlists and an expansion into audiobooks and podcasts. Also, the company is investing in artificial intelligence (AI) tools such as AI DJ and new creation features to make the user experience more engaging.
Importantly, Spotify’s subscriber base has grown by 12% over the past year to 276 million, with monthly active users up 11% to 696 million. While the company reported a net loss in the second quarter, Norstrom expressed optimism about future growth. He believes the target of one billion users is “not impossible at all. It’s certainly a goal.”
Is SPOT a Good Stock to Buy?
Turning to Wall Street, SPOT stock has a Moderate Buy consensus rating based on 20 Buys and seven Holds assigned in the last three months. At $767.12, the average Spotify stock price target implies 10.7% upside potential.
