Spotify's Price Hike Sparks Industry Surge: UK Subscription Spending Soars By 9.8% In 2023

In July 2023, Spotify implemented its first price increase in the UK and several other regions in its 15-year history. The individual monthly Premium subscription in the UK rose from £9.99 to £10.99, while the Family Plan increased from £16.99 to £17.99. The Competitions and Markets Authority (CMA) data from December 2021 indicated that Spotify held over 50% market share among all music streaming monthly active users in the UK.

Similar price hikes by Apple Music (October 2022), Amazon Music (January 2023), and YouTube Music/Premium (August 2023) also impacted market dynamics. These adjustments contributed to a nearly 10% year-over-year increase in industry revenue, prompting discussions on potential future price hikes for Spotify, Apple Music, YouTube Music, and Amazon Music.

Warner Music Group's CEO, Robert Kyncl, emphasized the need to enhance the value of music and explore pricing opportunities. This sentiment echoed four months after Deezer raised its prices for the second time in a year. Ackman, founder of Pershing Square Holdings, foresaw a trend of regular price increases in the audio streaming industry, citing recent moves by Apple Music and Amazon Music as watershed moments.

Goldman Sachs predicted a 3% annual growth in streaming subscription prices in developed markets. ERA's latest figures covered not only streaming revenues but also physical music sales and downloads. In 2023, UK physical music revenues (CD and vinyl) increased by 10.9%, reaching GBP £311.0 million. Download sales declined by 5.9% to GBP £42.7 million. The total recorded music sales for 2023, including subscription streaming, physical music, and downloads, amounted to GBP £2.2199 billion, marking a 9.6% year-over-year increase. ERA highlighted that this figure was just 0.08% below the all-time annual high of 2001, without adjusting for inflation.

ERA CEO Kim Bayley celebrated the industry's success, considering it a red-letter day and attributing it to the creativity of artists and the entrepreneurial drive of digital services and retailers. The figures showcased the indispensable role of streaming and the resilience of physical retailers, contributing to a thriving music industry despite challenges.