Spotify (POINT) shares fell more than 5% in intraday trading on Monday after announcing plans to raise the prices of its premium subscription plans.
KEY SHOTS
- Spotify said it will raise the prices of its premium subscriptions by up to $2 a month starting in August.
- Shares of the streaming service fell more than 5% in intraday trading after the announcement.
- The move follows the rise of competitors such as Apple Music.
The music streaming platform said it will increase the prices of some of its offerings by up to $2, or 20%, in the US. One premium subscription will increase to $10.99 per month from $9.99, while student plans will increase to $5.99 per month from $4.99.
Spotify says it has more than 200 million premium subscribers and will be given a “one-month grace period” before the price increase takes effect. The price increase will also be implemented in other countries including the United Kingdom, Mexico, Australia, Canada, Ecuador and Spain.
The Swedish company said the price increase is a response to market developments since its founding in 2008 and the launch of the premium service in 2011.
Spotify’s price hike follows that of rival Apple Music. Last October, Apple (APPL) has decided to raise the prices of its premium subscription plan by a dollar to $10.99 from $9.99.
In its first-quarter earnings report, Spotify said its premium subscribers rose 15% year-on-year (y-o-y) to 210 million, while its total revenue rose 14% to €3.0 billion ($3.32 billion).
Despite Monday’s drop, Spotify shares are still up more than 100% year-to-date.
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