Spotify is Planning Test of a Higher-priced Plan

Spotify plans to sell a more-expensive version of its music service, with a test starting in Scandinavia to see whether it can raise prices around the world.

The Swedish company will raise the price of its family plan by about 13%, according to sources familiar with the matter. The test doesn’t mean Spotify will raise prices elsewhere or do so permanently in Scandinavia, they said.

Raising prices could boost revenue in markets where Spotify already has a strong presence. The company is based in Stockholm and its music service is the dominant player across Northern Europe.

The current family plan costs about $15 a month and lets up to five people use the service. Spotify has also tested a plan called Premium Duo that offers two subscriptions for €12.49 euros ($13.91) a month.

Higher prices might help placate music companies, which have complained about falling revenue per user. Some have questioned why Spotify doesn’t use its market-leading position to raise rates.

The average price paid by Spotify subscribers has declined for a few years because of discounts to draw in new customers and growing use of family plans.

With 108 million paying customers, Spotify is the largest paid music service in the world. The company says it’s growing faster than its closest competitor, Apple Music, which also charges $15 a month for a family plan and had about 60 million customers at midyear.

But Spotify still loses money. The company has been reluctant to increase prices because it’s still in a growth stage, relying on discounts to keep customers and attract new ones as people become accustomed to streaming on-demand.

Edited from Bloomberg