Spotify is raising prices for the second time in two years, upping the monthly rate for its ad-free premium plan by $1 starting in July.
When the new price of $11.99 takes effect, it will be 20% higher than it was in 2022. In a blog post, the Sweden-based streaming audio company said it is making the move in order to “continue to invest in and innovate on our product features and bring users the best experience.”
The increase will apply to other plans. The monthly cost of Duo, the setup for two people sharing a premium plan, is going up $2 to $16.99. Family subscription plans are increasing by $3 to $19.99.
The previous round of price increases was introduced last July.
Over the past couple of years, Spotify has been leveraging its market position by raising prices while also streamlining its operations, trimming expenses and undergoing layoffs. It has also stepped back from a range of pricey investments in podcast talent, shifting to a more creator-focused model and sharing certain rights to previously exclusive hosts like Joe Rogan.
In the first quarter, the company’s premium subscriber tally jumped 14% over the prior-year period to reach 239 million. There are nearly twice as many monthly users of the company’s free, ad-supported service.
As the news of the price increase was breaking, a new report from research firm Antenna also found that Spotify’s churn rate remains strikingly low at around 2%. Streaming companies all prize low churn given the cost of acquiring and keeping customers. The 2% churn rate is comparable with that of Netflix, the standard-bearer in streaming.
Investors responded favorably to the latest hikes, boosting Spotify shares 5% in pre-market trading Monday.