The recent price rise for Apple Music’s subscription and a foreseeable price increase for Spotify would enhance music sales in the United States and throughout the world and have an influence on library values.
Increased rates for Apple Music and Spotify’s individual plans can result in hundreds of millions of dollars more in subscription income each year in the United States.
What Is The Expected Revenue?
The expected incremental earnings from these pricing hikes for streaming services is around $650 million per year. That is predicated on a 7% increase in subscriber growth in 2023, no further churn, a whole year of price increases, and higher costs including both self-paid and promotional subscription plans.
Will Every Aspect Be Affected?
A tiny amount of churning is anticipated, though, and Spotify is not expected to increase its prices at the start of the new year. Not all subscription plans are liable to price increases, too. (For instance, Apple is not raising the cost of Apple Music Voice.) As a result, the actual impact is probably going to be less next year and during the years to come.
Let us Get Into Specifics
- Individual subscriptions for Apple Music now cost $10.99 per month instead of $9.99.
- The cost of the family plan went up $2 from $14.99 to $16.99.
- The price of Apple One, a package that includes services like Apple Music, Apple TV+
- Others increased by $2 for the solo plan and by $3 for the family (which includes Apple Arcade and iCloud+) and premier plans (which adds Apple News+ and Apple Fitness+).
How Will Apple Music’s Subscription Affect Spotify?
- In the United States, Spotify could follow with a $1 per individual membership price rise.
- It is prohibited from raising the cost of the family plan by more than the $1 it added in April, to $15.99.
- Student rates on Spotify are available for $4.99 per month.
- Billboard anticipates that the reduced plans will remain unchanged for these intents.
How Will Apple Music’s Subscription Affect Musicians?
A price rise essentially results in a pay hike for creators and copyright owners. The same portion of streaming services’ earnings would go to labels and publishers as royalties.
Although some churn is likely, higher costs wouldn’t affect listeners’ habits, thus the arithmetic would be in favor of musicians and rights holders: a bigger royalty pool would be split by the same number of streams to determine the per-stream fee owing to each track.
Songs and recordings would also be worth more if the two biggest subscription services in the US charged higher charges.
- A catalog’s current royalty income will rise with increased prices
- Streaming growth has a positive correlation with greater catalog values.
According to a recent study by Professor Larry Miller of New York University, streaming accounted for 62% of the typical multiple paid-for composition portfolios in 2021, Billboard reported this week.
While Spotify’s CEO Daniel Ek claimed the firm will likely follow Apple Music’s path when chatting to investors on Spotify’s Oct. 25 earnings call, the company has not yet announced a general price rise on its individual and family plan subscriptions.
Ek told investors that raising the price in the United States is “one of the things we would like to do” and that Spotify will speak with labels “in light of these recent events with our label partners.”
Expect prices to rise as a matter of course. In May, Amazon Music Unlimited increased its pricing. In its biggest market, France, Deezer increased subscription rates in January. Rate increases are also scheduled for December in Germany and the United States. According to Deezer CEO Jeronimo Folgueira, the price hike by Apple Music “opens the door for further price increases down the line.”
Numerous factors will influence just how much additional funds these price increases will bring in. In any scenario, musicians and owners of the associated rights can anticipate higher subscription payments through 2023.
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