Spotify’s Premium Plan Price Hike Results in $6 Billion Market Cap Loss: Report

Spotify's price increase of its individual Premium plan is not sitting well with consumers or investors. 

On Tuesday, July 25th, the Swedish streaming giant etched its second consecutive day of tumbling market losses after increasing the price of the plan from $9.99 to $10.99. The company's stock dropped 11% on Tuesday, the largest single-day fall since last October, Forbes reports.

In the company's quarterly earnings report, Spotify communicated a more optimistic outlook by highlighting its strongest-ever monthly active user growth and best second quarter for paid subscriber growth. Even with those boons, the company reportedly lost $6 billion in market capitalization this week. It's currently valued at $28 billion. 

Spotify lost a cool $225 million and $330 million in Q1 and Q2, respectively. It reported a $3.5 billion quarterly revenue, falling short of consensus analyst estimates, per Forbes. Spotify attributed its losses to its efforts to "streamline operations and reduce costs."

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Spotify is increasing the price of its Premium plan from $9.99 to $10.99.

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Spotify co-founder and CEO Daniel Ek.

Despite the disappointment among investors and subscribers, Universal Music Group CEO Lucian Grainge welcomed Spotify's price increases. The Premium tier price hike will boost streaming revenues for UMG's roster, which includes Taylor Swift, BTS, Justin Bieber, Drake and more.

"We see more alignment between the labels and the music platforms that we've ever seen before," Grainge said. "That allows us to make sure the artists are better compensated and everyone is rewarded for the engagement that those artists drive."

Grainge added there is still work to do with the current streaming model because it isn't fair to artists, who he says remain "undervalued."

Tagsterms:Stock MarketSpotifyBy Lennon Cihak

Lennon is a music journalist who has contributed to for over five years. A seasoned music business reporter, his writings bridge the gap between education and technology through a musical lens. He is also the host of the music business podcast “When Life Hands You Lennons” and founder of his own electronic music website, EDM In a Soda.

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