Do you listen to all the recent investor presentations from the world’s biggest music companies? Of course you didn’t. You saw Netflix with your evening, like a normal person.
But at MBW, we can’t have enough biz CEOs to talk the news.
And we’ve certainly noticed that, in the end, one of the most frequent news headlines when analysts question music leaders is this: Spotify (and other streaming services) will increase their prices for the rest of 2022.
At this point, it should remind you that Spotify really has ready price increases – when it comes to multi-user plans like the Family Plan – in many marketsincluding the UK and USA, in the last 12 months.
THE POINT also increased its individual premium tax rates in markets like Brazil, Argentina and Sweden last year, as MBW mentioned in our analysis last week.
However, the classic price of $9.99 / €9.99 / £9.99 per month – for individual premium Spotify subscriptions in the service’s largest markets – remains unchanged in the US, UK and in the biggest European markets like Germany.
However, speaking to Warner investors about the company’s scheduled Q1 (fiscal Q2) 2022 earnings call, Levin added: “We continue to incentivize [other music streaming services] see pricing as an opportunity to improve the economic performance of streaming. ”
And then there’s Pershing Square Holdings, led by billionaire Bill Ackman.
One 10% of shareholders In Universal Music Group (along with its affiliates) – and thus an important player in the global music business – Pershing Square is optimistic that further price hikes will come to the biggest players in the field. music streaming in the coming months.
Ryan Israel, a partner at Pershing Square, told Pershing investors last month: “One of the unique things about music streaming is our view that it’s a valuable form of entertainment. High, lowest cost you can find.
“Thus, the hourly cost for [music] very cheap streaming; the total monthly subscription you pay for Spotify, Apple Music or Amazon [Music] generally very low compared to… a lot of other forms of entertainment. ”
“Given that inflation in the broader economy is in the high single digits, [music streaming] the company did not [raised] pricing. And we think it’s very likely that in the future, they might decide [raise] some prices. “
Ryan Israel, Pershing Square Holdings
Israel added: “Given that inflation in the broader economy is running at single-digit highs, these [music streaming] the company did not [raised] pricing. And we think it’s very likely that in the future, they might decide [raise] some prices.
“And because Universal is really the one that pays the royalties for the total streaming revenue, whatever price the music takes [streaming] supplier will [increase] will flow directly into the revenue of Universal and the artists as well. “
Denis LadegaillerieCEO of Paris listed Believeto be also rated by analysts on online prices on Believe . Q1 earnings call last month – but put your full trust in people like Spotify to make the right decisions, at the right time.
“All of our dealings with DSPs are based on revenue sharing, and it is in our view that it is in the interest of DSPs to maximize the value of their user base,” said Ladegaillerie. .
“[The streaming services] much smarter than we are in knowing whether to increase the subscription price by one Euro, two Euro, three dollars or four dollars”.
Denis Ladegaillerie, Trust
“[The streaming services] much smarter than we are in knowing whether to increase the subscription price or not[s] equals one Euro, two Euros, three dollars or four dollars.
“They have the data and they [know] whether that will create disturbance, create value or not. ”
Standing next to Spotify EVP/CFO, Paul Vogel, Ek has been an analyst – Mark Zgutowicz of Benchmark – why pricing wasn’t discussed for three hours before Spotify presented.
Zgutowicz mentioned that Spotify has been adding new types of content to its premium service in recent years – especially with podcasts and now audiobook on the road – but says “we’re still at $10 [per month] Subscription price”.
Zgutowicz further noted that consumers have seen monthly price increases “beyond music” — a clear nod to Netflix, which, in the video world, has raised standard prices in the US. many times over the past few years.
However, the analyst also acknowledges that current macroeconomic trends (inflation, rising interest rates, energy prices) could make any bullish announcement a fragile process for Spotify. .
Zgutowicz asked: “Why not pull that lever [because of] a dollar or two? ”
Daniel Ek replied: “We agree. Right now, we think Spotify has an amazing value-to-price ratio, and that’s what gives us the opportunity to increase our ARPU over time. [via price rises] also.
“We definitely think there is pricing power with this model [and] The more we bring to the platform, the more value we bring to our users, which of course means we have more opportunities to increase prices over time. It is absolutely part of our strategy.
“That said, we’re in a very uncertain macro environment at this point.”
“The more we bring to the platform, the more value we bring to our users, which of course means we have more opportunities to increase prices over time. It is absolutely part of our strategy. That said, we are in a very uncertain macro environment at this point. ”
Daniel Ek, speaking yesterday
Explicit reference to Netflix’s disappointing 1st quarter performance – and forecast that it will lost 2 million net subscribers in Q2 – Ek added: “I personally look at what’s happened in the video streaming business and I wonder if that industry is ahead.
“Because honestly, yes, it did drive up the price, but now it is also in a position where it is increasingly difficult to find future growth.”
Added Spotify’s Vogel at yesterday’s event: “If you look at what we’ve done in the past, we’ve been constantly experimenting with different price points. We start with the standard plan, then the family plan, the student plan, the Duo plan.
“We have different prices in different markets [and] Plans vary in some markets – we have daily and weekly subscriptions in some markets.
“We will continue to iterate and innovate around different pricing opportunities and different pricing opportunities.”
The first of those plans was Amazon Music Unlimited Personal plans – i.e. streaming on-demand, all-you-can-eat – are available to customers who are also members of Amazon Prime.
Former Prime members were able to sign up for this plan in the US for $7.99 every month. Since May, this price has increased $8.99 every month.
In addition, individual Full Members in the States can now sign up annually to Amazon Music Unlimited Because $89 per year, increasing from $79 each year.
Amazon has increased the price of Amazon Music Unlimited Personal Plans (for Prime members) in the US, UK, and Canada, according to Amazon’s FAQ pages in each of these markets.
In addition, Amazon has increased the price ofAmazon Music Single Device Bundle, gives users access to the full Amazon Music Unlimited service, but is locked to an eligible Echo or Fire TV device.
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