Spotify Premium is the best bargain in the history of media, and it's time for that to change.
Earlier this week, Spotify laid off 6% of its workforce after being "too ambitious" in its hiring numbers during the pandemic. This is hardly a news story anymore. You could swap any Silicon Valley company in for Spotify in that sentence and the statement would probably still be largely accurate.
But this wasn't the only Spotify news this week. The company also announced that Dawn Ostroff, its head of content, is leaving the firm. Ostroff joined Spotify in 2018 to be its resident advertising and podcasting Yoda, and she made immediate waves, striking podcasting deals with the likes of Joe Rogan, Kim Kardashian, and the Obamas. The company hoped podcasting would be a much more reliable and lucrative audio form than music, which was proving difficult to glean much cash off of. Yet in Q1 2022, podcasts on Spotify made up only 7% of total listening, which isn't going to cut it for a business segment that's supposed to be a load-bearing wall for the balance sheet.
Even as the siren call of audiobooks continues to tempt Daniel Ek, I can't help but think the solution here to becoming profitable is stupid simple.
Raise your freaking subscription price.
Spotify Premium launched in 2009. It costed $9.99/month at launch. It is now 2023. Spotify is still charging $9.99/month. 15 years later. Name literally any other subscription in your life that has never once increased prices in a 15-year period. Good luck finding one that hasn't raised prices in a two-year period.
And on top of all this, find me another product that offers even remotely the same consumer surplus as Spotify Premium. If I were to ask my friends how much they would reasonably pay per month for Spotify Premium, I bet the majority would pay $20/month without blinking an eye, many would stay in for $30/month, and more than you think would take a $50/month deal. And if you told a bunch of 20-year-olds that they can only pick one and need to choose between keeping Spotify or keeping Netflix, I bet many of them would say, "Both," because both products feel almost like utilities now and you just sort of have to invest in them or risk getting entirely disconnected from society. There's no reason Spotify should be priced as affordably as it is.
Sure, Spotify might come along and say, "We can't raise our prices because Apple Music only costs $10.99/month, and being much above that would keep us from being competitive." I think that's BS. Spotify has by far the best brand, credibility, and community of users among any music streaming service. Command that premium. You think people who have spent full months of their too-short lives making the perfectly curated Spotify playlists are just going to jump ship to Apple Music when Spotify ups its price to $15/month? No. Because people are inherently too lazy to want to do that. You don't hear Netflix complaining about how they can't compete with Disney+ because Disney+ is half the price. If you want to command a premium price, then offer a product worthy of a premium price. Spotify has all the tools in its toolkit to do exactly this. They just haven't.
And keep in mind: Spotify wouldn't be ripping the consumer off by raising its price for Premium. Even if the price of Spotify Premium adjusted with the inflation rate it would be around $14/month today. Spotify is just a ridiculous bargain.
My dearest Daniel Ek: podcasting isn't your future. Audiobooks aren't your future. Your future is music, but charging the right amount for it. Now do that.
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