Spotify is set to raise its monthly subscription prices in various countries around the world, particularly in Europe and Latin America, as the music streaming giant seeks to drive profits and subscriber growth globally. According to a report by The Financial Times, the price hikes are expected to take effect by June, with individual subscription costs increasing by around €1 across users' boards.

The move has triggered a 1.3% surge in Spotify's shares, reflecting investors' enthusiasm and confidence in the company's pricing strategy. This development comes as the music streaming business experiences rapid growth, with global revenue growth in the sector halving in 2024. Despite this slowdown, Spotify remains committed to expanding its user base and increasing revenue.

Notably, Spotify does not intend to raise prices in the United States, its largest market, this June, given the recent July 2024 increase to $11.99 a month. However, the company is looking to create a 'super-premium' tier that would cost an extra $6, on top of the $11 a month subscription fee in the United States. This new tier is expected to offer additional features and benefits to justify the higher price point.

Spotify has already implemented new pricing in certain European countries, including the Netherlands and Luxembourg, although the company has refused to publicly confirm this to The Financial Times. The tiered pricing strategy is based on economic conditions, with lower fees in developing countries. In Africa, where Spotify has seen impressive growth, particularly in Nigeria, the monthly premium subscription costs around $1.08 (₦1300), whereas in South Africa, users pay significantly more at $3.33 (R59).

The price hikes are likely to have varying impacts on different regions. In Africa, where Spotify has a large following, there are currently no indicated plans to hike plans for subscription prices. This contrasts with other regions, where the company is seeking to increase revenue through price increases. The move is likely to be closely watched by competitors and industry analysts, who will be keen to see how users respond to the price changes.

Spotify's growth in Africa has been impressive, with Nigerian artists generating over ₦58 billion in royalties in 2024, marking a significant increase from previous years. The consumption of Nigerian music surged by 206% locally, and global streaming hours for Nigerian artists topped 1.1 million. The company's expansion into Africa has been driven by its tiered pricing strategy, which offers lower fees in developing countries.

The introduction of a 'super-premium' tier is likely to be a key area of focus for Spotify in the coming months. The company will need to balance the need to drive revenue growth with the risk of alienating users who may be unwilling to pay higher prices for additional features. As the music streaming market continues to evolve, Spotify's pricing strategy will be closely watched by industry analysts and competitors alike.