Spotify and other streaming services are locked in a prisoner’s dilemma Throughout that period, Netflix continued to grow subscribers and retain its global market leadership, proving that there is pricing elasticity for its product. An inflation-adjusted $7.99 would be just $10.34. Crucially, this 63% price increase is above and beyond inflation. Since its launch, Netflix has made four major increases to its main tier product, lifting it from $7.99 in 2010 to $12.99 in 2019. This means an effective real-term price reduction of 26%.Ĭompare this to Netflix. Or to look at it a different way, Spotify’s $9.99 price point is actually the equivalent of $7.40 in today’s prices when inflation is considered. Applying annual inflation to Spotify’s 2009 price point, we end up at $13. Over the same period, global inflation has averaged 2.95% a year. Its effective price is even lower due to family plans, trials, telco bundles etc., but we’ll leave the lid on that can of worms for now. But now, nearly exactly ten years on, Spotify’s standard price is still $9.99. Incidentally, Spotify racked up an initial 30,000 subscribers that month – it has come a long way since. So, when its premium tier was launched in May 2009, it was priced at $9.99. When Spotify launched in 2008, the industry music standard for subscription pricing was $9.99. The debate will certainly continue long after this latest ruling, but there is a way to mollify both sides: price increases. Spotify has only ever once turned a profit, while virtually all other streaming services are loss making. The issue is so complex because both sides are right: songwriters need to be paid more, and streaming services need to increase margin. The fact that the challenge is being portrayed as ‘Spotify suing songwriters’ epitomises the clash of worldviews. The current debate over Spotify, Amazon, Pandora and Google challenging the Copyright Royalty Board’s proposed 44% increaseillustrates just how deeply feelings run. Songwriter royalties have always been a pain point for streaming, especially in the US where statutory rates determine much of how songwriters get paid.
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