On Tuesday, Spotify Inc. (NYSE: SPOT) executives addressed concerns over pricing strategy during the company's second-quarter 2025 earnings call.
What Happened: During the call, analyst Rich Greenfield questioned why Spotify doesn't raise subscription prices more quickly in developed markets, especially when platforms like Comcast Corp's (NASDAQ: CMCSA) Peacock have done so despite lower engagement.
Spotify Chief Business Officer Alex Norström responded by stressing the company's "value-to-price" approach.
We've "always put subscribers on a pedestal," he said. "We've raised prices recently and seen very strong retention ... We will use [pricing] again when we feel it's appropriate for the business."
He added that pricing decisions are made on a market-by-market basis depending on engagement levels and perceived value. "We take a portfolio approach," Norström said. "Even developed markets are different from one to the other."
Spotify CEO Daniel Ek reinforced the strategy, saying, "The biggest thing to realize as you're operating a subscriber service at scale is really managing for retention...[it's] a lot better to keep the customer around for a longer time than to lose the customer and then try to reacquire the customer."
Why It's Important: Spotify reported a second-quarter loss of $0.48 per share, missing expectations of a $2.11 profit and posted $4.75 billion in revenue-up 10% year-over-year but below the projected $4.84 billion.
Here's a comparison of the latest U.S. price hikes for individual plans across major music streaming platforms - Spotify, Apple Inc.'s (NASDAQ: AAPL) Music, Amazon.com, Inc. (NASDAQ: AMZN) Music Unlimited and YouTube Music, a subsidiary of Alphabet Inc.'s (NASDAQ: GOOG) (NASDAQ: GOOGL) Google:
Service/ Date of Last Hike/ Old Price/ New Price
- Spotify/ June 2024/ $10.99/ $11.99
- Apple Music/ October 2022/ $9.99/ $10.99
- Amazon Music/ March 2025*/ $10.99/ $11.99
- YouTube Music/ July 2023/ $9.99/ $10.99
Price Action: On Tuesday, Spotify shares dropped sharply by 11.55% in regular trading, but edged up 0.16% after hours, according to Benzinga Pro.
Benzinga's Edge Stock Rankings show that SPOT maintains strong momentum across short, medium and long-term periods. While the stock has a solid growth score, its value rating remains relatively weak.