Spotify, Amazon Music, Apple Music… will cheap streaming soon be a thing of the past?

By raising prices, Apple could take a hit and the days of cheap music streaming could be numbered. At the end of October, the individual subscription to Apple Music rose to 10.99 euros per month (+ 1 euro), the family subscription to 16.99 euros per month (+ 2 euros), and the annual subscription to 109 euros (+ 10 Euro) . Note that Apple TV + has also seen its prices increase, from 4.99 to 6.99 euros. This increase applies to all new subscribers and will affect current subscribers from their next bill.

Apple justifies this significant price increase (the first for its music streaming service) with higher licensing fees for Apple Music; and of the need to expand the catalog of Apple TV+, which paled in comparison to Netflix. In this regard, note that Apple TV + now costs more than Netflix’s “Essential Offer with advertising” formula (6.99 euros against 5.99 euros).

If this news did not please Apple customers, this was not the case for artists, who should have paid better, and investors in the Universal Music Group: the title of the major has actually increased by 8% at the end of October, because if the license costs are higher for Apple, UMG (which has The Weeknd, Billie Eilish and Taylor Swift in its catalog) should receive more money.

Apple Music’s price increase is also a delight for its competitors, Spotify and Amazon Music, whose prices (9.99 euros per month) have suddenly become more attractive and competitive. Notably, Spotify’s share price rose by +9.4% after Apple’s announcement, an unprecedented increase. But will Spotify and Amazon Music keep their current prices much longer?

Spotify and Amazon Music are likely to follow Apple and Deezer

The problem of higher licensing fees is not just for Apple Music: from 2023, Apple Music, but also its competitors, will have to pay 15.35% of music revenue to songwriters and copyright holders, an increase of 0.25% from the current rate, and almost 5% compared to the old rate.

More generally, it’s a safe bet that the rise in prices for this last service may well signal the start of a more global rise, like what’s happening in the video streaming market. In addition to Netflix raising its prices a year ago and Apple TV+ as we said above, Amazon Prime Video has revised its prices upwards in September 2022 and Disney+ intends to raise the price of its subscription by 38% in 2023; in the United States to begin with.

“These price differences may not last long — I wouldn’t be surprised if Apple’s decision results in similar price increases at Spotify and Amazon. Between inflation and licensing fees, this seems inevitable,” writes l streaming audio expert Ariel Shapiro in The Verge. In fact, Spotify’s business in particular is not doing so well. Although Spotify dominates the sector with 195 million paying subscribers (compared to 80 million for Apple Music and 55 million for Amazon Music), the Swedish company’s shares have been in constant decline for a year. And despite the recovery due to Apple’s price increase, Spotify’s losses reached 166 million euros.

Apple Music isn’t the only music streaming service to see prices rise, either. Deezer did this in January 2022 to offer subscribers, for 10.99 euros per month, an option with High Fidelity (HiFi) sound, which provides “perfect definition of instruments and better sound than ever”. While YouTube Premium Family recently raised its prices due to a slowdown in YouTube’s revenue growth.

A “strategy” inherent in music streaming platforms?

It is this phenomenon that Daniel Ek, CEO of Spotify, has visibly joined… to justify the imminent possibility of a price increase for the platform’s Premium subscriptions in 2023. According to him, if the increase is general and affects all platforms, its subscribers who “generally remain loyal” to Spotify should not go to the enemy. The company has so far only mentioned an increase in the US, but it should logically have consequences elsewhere in the world; especially in France where the government wants to tax music streaming.

Should we also see a more global strategy, decided in good time? “At the launch, the platforms make little money from the users, because they seek to attract them and make them captive. But once the consumers are locked in, the platforms increase the price of the subscription, and this is what is happening today”, Marianne analyzes Lumeau, teacher-researcher at Rennes I University and specialist in the digital economy, at Europe’s microphone 1. So prepare mentally to pay more than 10 or 11 euros a month, whatever service you choose: the wave should soon hit all platforms.

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