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CEO Daniel Ek also accused rival Apple of ‘constantly shifting the goalposts’ in App Store policies to hurt competition.
US users of Spotify may soon face a price hike after the streaming service reported that slow ad growth was affecting its business.
While it largely beat expectations in revenue and number of users in its latest quarter, Spotify’s margin was squeezed in part because of “slower-than-forecast advertising growth” – which forms a small part of its business.
CEO Daniel Ek told investors on its earnings call that Spotify had “significant churning power” when compared to competitors such as Apple Music, which recently raised its prices across the US and international markets.
In Ireland, the price of Apple Music increased by €1 to €10.99 a month for individual subscriptions, while the family subscription rose €2 to €16.99. Spotify currently charges €9.99 for its individual premium subscription and €17.99 for a family plan.
“Again, in specific, mostly to the US-based price increases, it is one of the things that we would like to do, and this is a conversation we will have, in light of these recent developments, with our label partners,” Ek said during the call.
“I feel really good about this upcoming year and what that means in pricing in relation to our service.”
Spotify reported a 20pc year-on-year increase in its total monthly active users, bringing the figure to 456m. It now has 195m premium, or paid, subscribers – which marks a 13pc increase on the same quarter last year.
Total revenue was up 21pc to a little over €3bn.
Apple accused of restricting competition
While Spotify competes with Apple Music in the streaming space, the Swedish company is not happy with some of Apple’s practices.
In a statement on the Spotify website, Ek accused Apple of restricting competition with its App Store policies, adding that it has been nearly four years since Spotify launched a complaint against Apple with the European Commission on this matter.
“And while we wait, Apple continues to dictate what online innovation looks like, doing serious harm to the internet economy, choking competition and the imagination of app developers,” said Ek.
“In the absence of government intervention – in Europe, the US or any other market around the world – Apple has shown time and again that it will not self-regulate and has no real incentive to change.”
In the context of Spotify’s recent launch of Audiobooks in the US, Ek said the App Store rules force the company to “make users work even harder to listen to an audiobook”.
He added that Apple has been “brazen” in its App Store rules by “constantly shifting the goalposts to disadvantage their competitors”.
Cost of streaming soars
Streaming services have been increasing prices across the board at a time when people around the world are facing a cost-of-living crisis. As well as Music, Apple is also raising the price of its TV+ subscription.
Meanwhile, Disney+ is increasing its monthly subscription price by $3 to $10.99 in December, while Netflix increased its prices earlier this year. However, both platforms are planning to introduce ad-supported services at a lower price for customers.
Nick Baker, TV and streaming expert at Uswitch.com, said that Apple’s decision to increase its TV+ price will be a “big blow” to customers at the moment.
“Apple’s decision to increase monthly fees also seems to be swimming against the tide, at a time when rivals Netflix and Disney+ are introducing new, lower-cost subscription tiers supported by advertising,” he said.
“Remember that if you feel you aren’t getting value for money from your streaming subscription, you can cancel penalty-free whenever you want.”
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