American families now spend $70 each month on streaming services. That’s $22 more than last year. Families must choose: keep all their apps or cancel some. The subscription market faces a breaking point.
Research shows 60% of music listeners stopped paying in 2024 because prices went up. Industry experts call this “The Great Unsubscribe.” Can Spotify survive the next wave of price increases? The company thinks it can.
The Profitability Turn
Spotify hit a major milestone in 2024. For the first time since 2011, the company made a profit. That profit was $1.5 billion for the full year. The company earned $4 billion in just the third quarter alone.
Spotify cut costs everywhere: fewer workers, lower marketing spending, and bigger margins at 31.1%. Leaders made a clear choice: shift from “get more users” to “make more money per user.” Profit gave them new options.
Twelve Years of Stability Shattered
From 2011 to July 2023, Spotify charged $9.99 per month. That price never changed for 12 years. It felt like a promise: music costs less than coffee. Then July 2023 came. Spotify raised the price to $10.99.
This was the first increase ever. A second hike followed in June 2024: now $11.99 per month. Each increase was smaller, but they added up. Co-CEO Alex Norström said price hikes in 150 countries showed strong user loyalty.
Competitors Circle
Spotify now charges $12.99 per month. Apple Music costs $10.99. So does Tidal. Amazon Music Unlimited also charges $10.99. Spotify costs $2 more per month than its competitors. That’s $24 extra per year.
For families, it’s worse. Apple Family Plan costs $16.99. Spotify Family costs $21.99. That’s $5 more per month. Amazon bundles music with a Prime membership for $8.99. Spotify’s advantage—great playlists and search—now costs extra money.
Third Hike Confirmed
On January 15, 2026, Spotify announced its third price increase in 30 months. Changes start in February billing cycles. The Individual Premium increases from $11.99 to $12.99 (up 8.3%). Duo goes from $16.99 to $18.99 (up 11.8%).
Family goes from $19.99 to $21.99 (up 10%). Student goes from $5.99 to $6.99 (up 16.7%). All four major tiers increased. Spotify tested prices in 150 markets first. The new co-CEOs took over on January 1 and approved this within three weeks.
Revenue Math on a Vast Scale
Spotify has 281 million Premium users worldwide. A $1 increase per user generates $425- $ 500 million in extra revenue annually. When you add the $2 increases for Duo and Family, some analysts project $1 billion in new revenue.
The company made $1.5 billion in profit in 2024. This price hike could boost profits by 36% to 71% in one move. Wall Street banks like JPMorgan raised their forecasts. Spotify’s stock rose briefly before falling 4% as traders worried about customer losses.
The Household Squeeze
American families are facing serious financial problems right now. A November 2025 poll shows that 67% of music listeners say they cannot afford everything they want. Families now spend $70 monthly on streaming, up from $48 a year ago.
One family with Spotify Family ($21.99), Netflix ($15.49), Disney+ ($7.99), and Apple TV+ ($9.99) pays $55.46 monthly. Adding a student plan adds $6.99 more. Entertainment now takes 10% of family budgets. Families must cancel something during tough times.
The Retention Gamble
Spotify’s new leaders trust historical data. When prices rose in July 2023, Spotify added 12% more users by June 2024 (reaching 246 million). Polls showed people complained briefly, then stayed. Alex Norström claimed price hikes in 150 countries kept most users.
But times are different now. In 2023, jobs were stable, and prices were falling. In 2026, people carry more debt and have more choices. Spotify’s stock fell 4% after the announcement. Some hope music videos and audiobooks will keep people happy.
The Content Bundle Defense
Spotify raised prices but also added new features. In December 2024, the company launched music videos for Premium users only. Audiobooks started rolling out in late 2023. Now, Premium members get 15 hours of free time per month. Regular audiobooks cost $10 to $30 each.
That makes the audiobook benefit worth real money. Podcasts make huge profit margins (over 90%) compared to music (around 30%). Spotify says it’s now an entertainment platform, not just a music platform. But many users don’t watch videos or listen to audiobooks.
Subscription Fatigue Reframes Everything
One big problem threatens all of Spotify’s plans: subscription fatigue is real and growing. Goldman Sachs research shows video streaming prices rose 15% every two years. Music stayed at $9.99 for years until now. Goldman predicts prices will jump every 12 to 24 months.
But this assumes people don’t cancel. Real numbers show differently. Two-thirds of U.S. subscribers cancelled at least one service in the past year. One-third stopped because costs were too high. Spotify might not survive if families pick only 2 or 3 services.
Internal Inflexion: New Leadership at a Pivotal Moment
Spotify recently made a major leadership change. Founder Daniel Ek stepped down as CEO on January 1, 2026. He became Executive Chairman instead. Two presidents got promoted to co-CEO: Gustav Söderström (Chief Product Officer) and Alex Norström (Chief Business Officer).
Both had 15+ years at Spotify and pushed the profit strategy. But timing looked odd. The new co-CEOs approved the biggest price hike three weeks into their jobs. Ek didn’t warn them to be careful about losing customers. Wall Street didn’t know what to expect.
Investor Confidence vs. User Skepticism
Wall Street reacted with mixed feelings to the price news. JPMorgan and Morgan Stanley raised their profit forecasts. Spotify predicted 678 million active users and 265 million Premium subscribers for Q1 2026. But regular users felt different.
Polls showed 19% might cancel and 4% said they definitely would. YouTube Music became the top alternative. The gap was clear: banks relied on outdated data; users faced real financial stress. Spotify’s stock fell 4% right after the announcement. Over three months, the stock dropped 23%.
Recovery Bets: Audiobooks and Beyond
Spotify fights back against cancellation fears with new features. Audiobooks represent the biggest product upgrade in years. Premium members get 15 hours monthly. Audible costs $14.99 per month on its own. Music videos launched in December 2025 and match YouTube.
New AI playlists and artist tools add value. But real numbers on user adoption remain secret. Music Business Worldwide reported strong early adoption of audiobooks. Yet we don’t know if this keeps price-sensitive families loyal. Features help engaged users. Families are cancelling subscriptions to watch budgets before trying new features.
Sceptics and Ceiling Questions
Experts disagree on Spotify’s pricing limits. Goldman Sachs says music streaming costs too little versus video services. This suggests room for higher prices. But other analysts worry. Mark Mulligan at Midia Research notes music labels get 70% of Spotify revenue. That leaves only 30% for costs and profit.
Price hikes help margins, but don’t solve core math: paying artists per stream loses money. If families cut budgets faster than expected, cancellations could surge in spring/summer 2026. Apple Music and Amazon Music Unlimited gain ground. One expert asked: “Is $12.99 the limit, or will Spotify try $14.99?”
The Unresolved Question
Spotify starts collecting higher prices in February 2026. Q1 earnings reports will come soon. One question stays unanswered: Did Spotify find the right price, or is it headed toward failure? In 12 years, Spotify changed from a cheap music app ($9.99) to a premium product ($12.99-$21.99).
Cable TV used to cost this much. Spotify reports 281 million users and $1.5 billion in profit. But subscription fatigue grows. Competitor prices stay lower. Family budgets get tighter. The next 90 days matter greatly. Churn numbers will show if the new co-CEOs made the right call. The answer affects the entire music streaming industry.
Sources:
- Music Business Worldwide, Spotify posts $1.5bn annual operating profit for 2024, 24 Nov 2025
- Spotify Newsroom, Spotify Reports Third Quarter 2024 Earnings, 12 Nov 2024
- Reuters, Spotify to raise Premium subscription price, 15 Jan 2026
- YouGov, How will Spotify subscribers react to another price hike?, 11 Jan 2026
- LA Times, Consumers spend $22 more a month for streaming, 21 Nov 2025
- MarketBeat, Spotify’s Price Hike: Why Subscribers Will Pay Up, 18 Jan 2026