Spotify to Raise Prices and Expand into Audiobooks, Shares Surge 4.6%

Spotify hikes prices in key markets including the U.S., aiming for profitability amid expansion into audiobooks.

By Bill Bullington

4/3, 14:42 EDT
Spotify Technology S.A.

Key Takeaway

  • Spotify to raise prices by $1-$2 in key markets including the US, aiming for long-term profitability; shares rose 4.6%.
  • Expansion into audiobooks and podcasts diversifies Spotify's revenue, challenging platforms like Audible with new service tiers.
  • Launches audiobook pilot program with major U.S. publishers, exploring additional revenue streams beyond music streaming.

Price Adjustments Across Markets

Spotify Technology SA is set to increase the price of its popular audio service in several key markets, marking the second price hike in a year. The adjustments, which will see prices rise by approximately $1 to $2 a month, are slated for the UK, Australia, Pakistan, Sri Lanka, Ghana, and later in the U.S., Spotify's largest market. This move is part of Spotify's strategy to reach long-term profitability. The company's shares responded positively to the news, with a notable jump of 4.6% in New York trading following the announcement. This pricing strategy is seen as a crucial step towards achieving consistent profitability, a goal underscored by Spotify's recent layoffs of some 2,300 employees in an effort to streamline operations.

Expanding Audio Offerings

In a bid to diversify its revenue streams and reduce reliance on the music industry, Spotify has expanded its service offerings to include podcasts and audiobooks, transforming from a music-streaming platform to a comprehensive audio company. The introduction of audiobooks is particularly significant, with Spotify offering up to 15 hours of audiobook listening per month as part of its paid plans. This expansion into audiobooks is aimed at challenging incumbent platforms like Audible and diversifying Spotify's content offerings. The company has also introduced an audiobooks-only tier priced at $9.99 in the U.S., alongside a new service tier excluding audiobooks for $10.99, reflecting its strategic focus on broadening its audio content.

Audiobook Market Exploration

Spotify's foray into the audiobook market includes a pilot program offering up to 20 hours of audiobooks a month at no additional cost to paying subscribers. This initiative, developed in collaboration with major U.S. publishers, aims to gauge customer interest in audiobooks and explore new revenue sources beyond music streaming. Spotify's entry into the audiobook space was marked by the acquisition of global audiobook distributor Findaway and a partnership with Storytel, further emphasizing its commitment to becoming a leading provider of audiobook content. The company's approach to audiobook pricing and compensation models for publishers indicates a strategic effort to cultivate this emerging market.