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Spotify Hits Play on Another Price Hike, Investors Love This Song


Spotify (SPOT) - ★★★★ - Ranked #37 in Q2 2024 Large Cap Equity Rankings


Spotify Technology (SPOT) announced another round of price increases for its premium subscription service on Monday, less than a year after hiking rates last July. Despite the potential for pushback from customers, investors responded favorably to the news, sending Spotify's stock up 5% in trading to close at $313.49.


The new pricing sees Spotify's individual premium plan jump $1 to $11.99 per month in the United States. This follows an increase last summer that took the monthly cost from $9.99 to $10.99. The latest price hike will go into effect for subscriber billing cycles starting next month.


In an email being sent to customers, Spotify explained that the higher prices will allow the company to "continue to invest in and innovate on product features that provide the very best experience for listeners everywhere." The streaming giant has been aggressively expanding into podcasts and other new content offerings beyond its core music service.


Investors seemed to approve of the move to extract more revenue from Spotify's premium subscriber base of over 180 million users. Shares closed Monday's session just shy of Spotify's 52-week high of $319.30, capping a remarkable run that has seen the stock surge 66% so far in 2024 and more than double over the past year.


The pricing power demonstrated by raising subscription fees twice in roughly a year underscores Spotify's dominant position in the streaming audio market. With competitors like Apple Music also increasing prices recently, consumers have limited lower-cost alternatives for premium ad-free streaming.


While the company risks some customer churn from the higher rates, Spotify is likely betting that its massive catalog of music, podcasts, and other content will keep the vast majority of premium users on board even at $11.99 per month.


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