Why it matters: Despite having over 108 million subscribers, Spotify is still operating in the red. Having gone public over a year ago, the music streaming service is still struggling to turn a profit. It wants to see if it can raise rates without driving away business.
Spotify is reportedly set to test a price hike in some markets. Bloomberg notes that sources close to the company said that it would increase the subscription cost of the family plan by about 13 percent. It will test that price point in Scandinavia.
The Stockholm-based company is likely trying the rate increase in the Northern European region first since it has a strong foothold there.
“The test doesn’t mean Spotify will raise prices elsewhere or do so permanently in Scandinavia,” the sources said. Much will depend on how the test goes.
Spotify has declined to comment on the matter.
A family plan currently costs $15 and allows up to five people access to the subscription. A 13-percent hike would equate to about a $2 increase.
The potential rate increase could be due to the downward trend seen when looking at revenue per listener (above). Since 2015, that ratio has dipped roughly 2 euros per user. This trend is due at least in part to the family plan gaining ground.
Additionally, the company began testing Spotify Duo back in March which it offers for €12.49 ($14), which is only one euro less than the family plan. The price hike would widen the gap between the two subscription types without jostling the current subscribers too much.
Image credit: norazaminayob / Shutterstock