Spotify’s got 71 million reasons to test a price increase out. But will this little experiment work?
Spotify early investor (and longtime board member) Sean Parker may have said it best back in 2010. “You have no choice,” Parker said, while describing a method for roping users into paid subscribers. For Parker the strategy was simple: once you’ve created enough playlists and dedicated enough time to the Spotify platform, “we’ve got you by the balls.”
At the time, Parker was referring to the process luring users away from MP3 downloads and into the ease on-demand, ubiquitous streaming. Once that transition was far enough along, with endless playlists and preferences set, it was only a matter time before scrotum-clutched music fans subscribed.
Genius stuff. But can Spotify now squeeze the collective gonadal region its user base a little bit harder? For the answer to that question, we take you to Norway.
According to details tipped to Digital Music News, Spotify is now lightly testing price increases in Norway. This could be a country- or regional-specific experiment, and it current involves modest increases 10%. Importantly, it will only impact newer Norwegian customers, not existing ones.
That means most people won’t even notice — at least for this stage the test. But the ones that do will be important guinea pigs in Spotify’s pricing laboratory.
“In order to meet market demands and conditions, while continuing to fer a great personalized service, Spotify will be increasing the price our premium subscription in Norway,” a company spokesperson confirmed.
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Of course, Norway is among the most streaming-friendly markets in the world — if not the most streaming-friendly market, period. Alongside Sweden, Norway has led the way towards subscription streaming (despite also leading the way into pirated downloading way back when).
Layer in the very high living standards enjoyed by the typical Norwegian, and you have a test that could produce some interesting results. Compared to most other markets, the average Norwegian is probably price insensitive. That makes a 10% jump palatable, though let’s see.
Spotify may simply be testing out a higher end market, without broader designs on locales like Germany, the UK, or US. Importantly, existing users who are totally tethered to the service could be next. But let’s see how much chutzpah this company has when it comes to pricing.
Of course, the upside here is bigger than 5-10%. After all, a little price bump can go a long, long way towards improving margins. Which in turn can translate into billions in added value.
Written while listening to Joey Bada$$ and Playboi Carti on Shinola headphones (review coming soon). Send confidential tips to email protected]!