Spotify has announced a controversial price hike. Will musicians see any of it?

(Image credit: Spotify)

Many users were left aghast when, for the first time ever, Spotify announced that they are raising their subscription prices for many users. Users across the UK, US and in parts of Europe can expect to see a considerable increase to their Spotify bill. 

In the UK, a Premium Student account will increase from £4.99 a month to £5.99, while the two-person Duo offering will increase from £12.99 a month to £13.99. While the price of an individual account remains steady at £9.99, it is families who will experience the biggest blow, as Spotify’s Premium Family plan is set to sky-rocket from £14.99 a month to £16.99. 

In the US and Europe, only the price of the Premium Family plan will be affected, increasing from $14.99 to $15.99, and from €14.99 to €17.99 respectively. This is thought to be Spotify’s latest attempt to crack down on family plans being shared between groups of friends or individuals. In September 2019, Spotify began to ask for proof that all members on a family plan are resident at the same address - unsurprisingly, this resulted in a string of privacy complaints

How does this compare to other streaming services?

These prices make Spotify seem distinctly less competitive compared to other streaming services. Taking family plans as an example, Amazon Music, Apple Music and YouTube Music are now all cheaper alternatives, with their plans all priced at the old Spotify rates of $14.99 / £14.99. 

You can check out TechRadar’s guide to the best music streaming services, for a more in-depth comparison. 

How has the price increase been received?

While some may argue that a price increase is long overdue, it’s a strange time for Spotify to announce the hike. 

In the UK, Spotify (and other streaming services) have come under intense scrutiny, resulting in a high-profile inquiry into the economics of streaming in the House of Commons. Representatives from across the UK music industry – from label managers to working musicians – submitted impassioned evidence that they feel that Spotify’s current rates of payment (between $0.03 - $0.05 per stream) is not fair recompense for their work, and that Spotify’s current operating model creates a toxic ‘winner takes all’ market, where superstars are rewarded with vastly inflated profits while smaller artists struggle to make a living. 

In the US, The Union of Musicians and Allied Workers orchestrated a “Justice at Spotify” campaign, which mobilized protests at Spotify offices in 31 cities across the world. Their open letter – which demands a penny per stream rate, and would put Spotify payments on par with Apple Music – has gained over 28,000 signatures thus far. 

In response, Spotify launched Loud and Clear: a communications initiative which was supposed to “increase transparency by sharing new data on the global streaming economy.” However, many campaigners were left with unresolved questions around the details of the deals Spotify has struck up with major labels, and whether (as many users suspect) Spotify takes payment for playlisting or preferential algorithmic treatment. 

Many members of the music industry will be left wondering whether there is any chance that Spotify’s price increases will trickle down to musicians – or whether it will merely line Spotify’s own pockets. 

In an even more bizarre twist, Spotify’s price increase was announced as Daniel Ek, Spotify co-founder and CEO, readies a bid of £1.8 million to take control of Arsenal Football Club. 

Unsurprisingly, news of this exorbitant bid occurring at the same time as increasing prices for users and spiraling tension over the fairness of Spotify’s pay-outs for artists has been met with widespread frustration. As Tim Burgess, lead singer of indie-rock outfit The Charlatans, summed it up in a tweet: “So many artists are forced to take second jobs, give up flats because they can’t pay their rent all while getting decent numbers of plays on @spotify – yet the owner has enough to bid for a premier league team. It just doesn’t seem ethical to me.”

Some commentators have debated the ethics of raising prices at all during a pandemic – especially considering that Spotify has tripled in value during the pandemic, as streaming numbers surged over lockdown.

Spotify’s decision has been soundly criticized by Deezer COO Laurence Miall d’Aout, who made the following statement to journalists: “We just wanted to let you know that Deezer isn’t going to raise prices in the middle of the pandemic. Music, podcasts and radio help people cope and we don’t feel this is the time to make things harder for them. If we ever were to increase prices, we would give our users a 3 month heads up to make sure that it doesn’t come as a surprise."

However, it’s worth noting that Spotify’s prices have remained static for over a decade, and that other streaming services – including Netflix  – have managed to raise prices during the pandemic with a fraction of the outcry Spotify’s hike has prompted. The issue is timing – and announcing a significant price hike while Spotify is weathering various other controversies over its working practices and financial decisions maybe wasn’t the savviest move. 

What has Spotify said? 

Not a great deal: “We offer a variety of subscription plans tailored to our users’ needs, and we occasionally update our prices to reflect local macroeconomic factors and meet market demands while offering an unparalleled service."

Only time will tell whether this price hike is part of a wider strategy by Spotify to make payments fairer for musicians. But considering that Spotify has recently been heavily investing in its podcasting capabilities, including launching a podcast subscription service to rival Apple’s, it seems like music streaming is at the bottom of Spotify’s priority list, for now.