Analysis Report on the Impact of Spotify's U.S. Market Price Increase

Based on collected data and market information, I present to you a

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Item	Current Price	New Price	Increase Rate
Spotify Premium Individual	$11.99/month	$12.99/month	8.3%
Effective Date	-	February 2026	-

This is Spotify’s second price increase in the U.S. market in less than a year, following price adjustments implemented in multiple international markets in 2024 [1][2].

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Based on industry research data and Spotify’s historical performance, I have established the following elasticity analysis model [3][4]:

Retention Rate Scenario	User Churn Rate	North American Paid Users (Estimated)	Revenue Change
Optimistic (98%)	2%	98M	+6.17%
Base Case (95%)	5%	95M	+2.92%
Moderate (92%)	8%	92M	-0.33%
Conservative (90%)	10%	90M	-2.49%
Pessimistic (85%)	15%	85M	-7.91%

• Break-even Point
  : The user retention rate needs to be maintained at approximately
  91.7% or higher
  to ensure positive revenue growth
• Spotify’s current user stickiness (average daily listening time of nearly 2 hours) and brand loyalty [3] indicate that the retention rate will most likely remain around 95%
• Based on industry experience, a moderate price increase of 8-10% typically results in 3-5% user churn

• Spotify holds the largest global market share of music streaming users (31.7%) [4]
• Powerful algorithmic recommendations and personalized experiences form a moat
• Continuous expansion of the podcast content ecosystem (exclusive original content)
• Established user usage habits and music library assets

• The price is now higher than all major competitors (Apple Music $10.99, Amazon Music $9.99)
• Consumers are more price-sensitive during economic downturns
• Entry-level users may switch to the ad-supported free version

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Based on the following assumptions:

• North American paid users: approximately 100 million
• Average retention rate: 95%
• Price increase: $1.00/month

Scenario	Annual Revenue Enhancement
95% Retention	+$1.14 billion/year
90% Retention	+$1.08 billion/year
85% Retention	+$1.02 billion/year

This price increase is an important part of Spotify’s “profitability-first” strategy [1]. From the financial data:

• Q3 2025 Earnings Report
  : Revenue reached $5 billion, exceeding expectations by 0.74%; EPS was $3.83, exceeding expectations by 67.25% [0]
• Profitability Improvement
  : Net profit margin was 8.32%, and operating profit margin was 11.67%, both reaching historical highs [0]
• Management Change
  : Co-CEO Daniel Ek is about to step down, and the new management will focus on balancing growth and profitability

This price increase, combined with continuous improvements in operational efficiency, is expected to significantly boost Spotify’s profit margins and shareholder returns.

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Rank	Service Provider	Market Share
1	Spotify	31.7%
2	Tencent Music	14.4%
3	Apple Music	12.6%
4	Amazon Music	11.1%
5	YouTube Music	9.7%
-	Others	20.5%

Service Provider	Monthly Fee	Price Difference vs. Spotify
Spotify	$12.99	-
Apple Music	$10.99	-$2.00
YouTube Music	$10.99	-$2.00
Amazon Music Unlimited	$9.99	-$3.00
Tidal	$9.99	-$3.00

• ✅
  Enhanced Brand Positioning
  : Price is linked to quality, strengthening the high-end positioning
• ✅
  Improved Revenue Structure
  : Increase user value per unit while maintaining market share
• ⚠️
  Churn of Price-Sensitive Users
  : Some users may switch to cheaper alternatives
• ⚠️
  Competitive Pressure
  : May force competitors to follow with price increases or strengthen differentiated competition

• 📊
  Upward Shift in Industry Pricing Benchmark
  : As an industry leader, Spotify’s price increase may drive the overall industry price level upward
• 🎯
  Intensified Differentiated Competition
  : Competitors may justify their pricing through content (exclusive copyrights), features (AI recommendations), or bundled services (Amazon Prime integration)
• 📈
  Accelerated Market Consolidation
  : Small and medium-sized service providers face greater pressure, which may trigger mergers and acquisitions

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Indicator	Value
Consensus Rating	Buy (58.8% of analysts recommend)
Median Target Price	$750.00
Current Stock Price	$528.92
Upside Potential	+41.8%
EPS Forecast (Q4 2025)	$3.20

• Higher-than-Expected User Churn
  : Price sensitivity is higher than expected
• Macroeconomic Pressure
  : Spread of consumption downgrade trends
• Rising Copyright Costs
  : Artist royalty negotiations may lead to increased costs
• Intensified Competition
  : Apple Music and Amazon Music increase marketing investment

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Dimension	Assessment	Confidence Level
Short-Term Revenue Impact	Positive (+$1.0-$1.1 billion annually)	High
Impact on User Growth	Moderately negative (churn <5%)	Medium-High
Profitability Improvement	Significant improvement in profit margins	High
Impact on Competitive Landscape	Upward shift in industry pricing benchmark	High

This price increase is a for Spotify. Considering its strong position in the North American market, brand loyalty, and continuously improving financial performance, user churn is expected to be within a controllable range, and the revenue enhancement will be directly reflected in the income statement. At the current stock price level (approximately $529), there is approximately 42% upside compared to the analyst target price ($750). It is recommended that investors pay attention to the Q4 earnings report to be released on February 10, 2026 [0].

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[0] Jinling API Data - Real-time Spotify Quotes, Company Profile and Financial Data

[1] EDM.com - “Spotify Raising U.S. Subscription Prices in 2026 as Profitability Push Continues” (https://edm.com/industry/spotify-raising-us-prices-2026-as/)

[2] Spotify Support - “Price updates” (https://support.spotify.com/us/article/price-updates/)

[3] Research Nester - “Music Streaming Market Size & Share, Forecast Report 2035” (https://www.researchnester.com/reports/music-streaming-market/4383)

[4] Evoca.tv - “Streaming Service Market Share (2026)” (https://evoca.tv/streaming-service-market-share/)