Spotify’s Price Rise Makes Apple Music More Appealing

Who said inflation was moderating? Spotify on Monday announced its second price increase in less than a year: The two price rises together total between 20% and 30%, depending on the tier. Jacking up prices so much in such a short period of time is a gutsy move by CEO Daniel Ek, whose company has long struggled to make any real money, due to its need to pass on most of its revenue to the music companies that own the rights to the songs it streams. If Spotify pulls this off without a surge in cancellations, we will have to put to rest the idea that it is somehow at a disadvantage to Apple, its main rival in streaming and the controller of a major digital platform. After all, Apple Music is now indisputably cheaper than Spotify.

Chances are, Ek will be fine. Sure, there’s likely to be a few people who defect to Apple Music as a result of this price rise. But they’re likely to be a small minority, if only because of inertia. It takes a very disciplined chief financial officer of a family to stay on top of small increases in subscription plans that slide through monthly credit card statements. Switching to a rival service is a nuisance, particularly when the tiers aren’t identical—for one thing, Spotify has a “duo” offering that suits couples, whereas Apple doesn’t. Perhaps more importantly, Spotify’s service is now much broader than Apple’s, with a robust podcast and audiobooks offering that has proved popular. Indeed, Bloomberg reported yesterday that Spotify’s listeners were the least likely to cancel among major video or audio streaming services.