Spotify price hike looks more likely than ever after CEO comments around layoffs

Date:
Mon, 23 Jan 2023 21:24:02 +0000

Description:
Spotify is the latest tech firm to announce mass job cuts, and the companys pain could result in higher streaming costs

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Music streaming giant Spotify has announced it would be cutting 6% of its staff, with around 600 employees in total departing the company.

Spotifys move is the latest in series of mass layoffs at large tech firms, with Microsoft, Amazon, Facebook parent Meta, and Google parent Alphabet all having recently announced job cuts in response to the current economic downturn. Tech companies had earlier been on a hiring spree as
pandemic-fueled spending drove increased need for consumer goods and
services.

But Spotify isnt the only entertainment streaming service to make staff cuts Netflix trimmed 2% of its workforce back in May of last year as part of a larger cost-saving effort where it canceled a number of projects in development, many of them in the companys animation department.

Spotify had previously made its own content cuts in a bid to scale back
costs. Back in October 2022, the company axed 11 original podcasts, most from the Gimlet and Parcast studios the company had acquired as part of its aggressive push into the podcasting sector. Spotify had spent billions of dollars building up its podcast presence, dropping 200 million alone on its contract with Joe Rogan, the platform's number one audience draw.

How Spotifys woes will affect future pricing is unclear, but subscription costs for the best music streaming services are generally rising, with Apple Music having hiked the price of an individual plan from $9.99 / 9.99 to
$10.99 / 10.99 per month (and $4.99 / 4.99 to $5.99 / 5.99 for a student
plan) back in October 2022, followed by similar announced price hikes for Amazon Music Unlimited .

CEO Daniel Ek commented in the companys layoff announcement that in 2022, the growth of Spotifys operating expenses outpaced our revenue growth by two times, and that the situation was unsustainable long-term in any climate. Spotify is clearly in hot water, and Eks statements seem to indicate that costs for the service, which has maintained a stable $9.99 / 9.99 individual pricing plan since its early days, will soon be going up as the company scrambles to cope with rising expenses and falling revenues.

As reported by Variety , Spotifys CEO had said previously in an October 2022 earnings call that a price increase is one of the things we would like to do and its something we will [discuss] with our label partners. Analysis: A more expensive Spotify will be a hard sell

Streaming prices are going up for all manner of services, and a price hike
for Spotify is something that can be easily swallowed by music listeners who have long used and depended on it. After all, Apple Music and Amazon Music Unlimited are now both more expensive, and the cost of everything is going up from eggs to airline tickets.

Right?

Not so fast. Compared to Apple Music and Amazon Music Unlimited, Spotify was already a bad value. For their $10.99 / 10.99 per month cost, both Apple
Music and Amazon Music Unlimited offer lossless and high-res audio, while Spotify continues to stream using a lossy compression format that reduces sound quality. The company had announced plans for a Spotify HiFi tier with lossless high-resolution audio, but that was back in 2021 and were still waiting on it. (Its unclear if the higher-quality tier would be priced significantly more than the companys current Premium offering.)

Apple Music and Amazon Music Unlimited also both provide tracks and full albums in Spatial Audio essentially Dolby Atmos for music and so does
Tidal, another music service that delivers lossless streams, and does so at a $9.99 / 9.99 per month cost. Spatial Audio, which can be experienced on
either headphones or a full home theater speaker system, continues to impress us with its sound quality and is one of the more exciting advancements to
come to music listening in decades.

The cost for both Apple Music and Amazon Music Unlimited can also be lessened by buying into either of those companies larger bundled subscription
services. Apple offers its Apple One bundle, which includes Apple Music,
Apple TV Plus, Apple Arcade, and 50GB iCloud Plus cloud storage for $16.95 / 16.95 for an individual plan, and $22.95 / 22.95 per month for a family plan with up to five accounts. If youre an Apple user, youre getting a lot there for your money.

Amazon Music Unlimited, meanwhile, is available at a reduced price to Amazon Prime members (currently $8.99 / 8.99, though that may rise to $9.99 / 9.99 when the price for the service rises in February).

When you add everything up, Spotify isnt really providing enough to music
fans to justify any potential price increase. It does offer exclusive
podcasts and, in the US at least, audiobooks , but most listeners gravitate
to its platform for music. Well see what happens over the next few weeks or months as the smoke clears from the companys workforce cuts, but a more expensive Spotify at this point seems inevitable.



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Link to news story: https://www.techradar.com/news/spotify-price-hike-looks-more-likely-than-ever- after-ceo-comments-around-layoffs


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