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Home » Spotify CEO clarifies controversial remarks over the subscription price hike

Spotify CEO clarifies controversial remarks over the subscription price hike

by Simon Jones Tech Reporter
12th Jun 24 2:32 pm

Spotify CEO Daniel Ek clarified his recent remarks after facing backlash. His comment on X, formerly Twitter, about the minimal cost of content creation sparked criticism.

Ek tweeted: “Today, with the cost of creating content being close to zero, people can share an incredible amount of content,” Ek recently tweeted, drawing criticism for suggesting that creative works like music are merely “content.”

He wrote, “While much of what we see and hear quickly becomes obsolete, there are timeless ideas or even pieces of music that can remain relevant for decades or even centuries.”

“While much of what we see and hear quickly becomes obsolete, there are timeless ideas or even pieces of music that can remain relevant for decades or even centuries,” Ek said.

The remark about content creation costs being “close to zero” didn’t sit well with numerous users on X.

One user asserted, “Music will still be valued in a hundred years. Spotify won’t.” Another criticized, “Your short-sightedness and financial tunnel vision are showing.”

Ek later admitted, “I was far too vague in the post, including with my clumsy definition of content. My focus was on exploring the staying power of the most creative, most thought-provoking ideas.”

Analysts positive despite mixed reactions to price increase

Following Ek’s clarification, Spotify announced a forthcoming increase in subscription prices.

Ek explained, “Just to clarify – my original point was not to devalue the time, effort, or resources involved in creating meaningful works, whether it’s music, literature, or other forms of creative expression.” The premium individual subscription will rise from $10.99 to $11.99 monthly, with similar increases for Duo and Family plans.

The Swedish company has around 615 million users globally and has invested heavily in growing the brand since its initial launch in 2006. However, profit reports come after a year of the brand cutting costs and laying off staff.

Spotify layoffs

Late last year, Spotify announced that it was cutting 17 percent of its workforce to save costs. That was after an earlier decision to lay off another 6 percent of its staff at the start of 2023, which at the time it said was to promote “speed.”

While reactions to the price increase varied on X, some Wall Street analysts saw it positively. Benchmark and JPMorgan raised their price targets on Spotify, highlighting its competitive edge. Deutsche Bank analyst Ben Black suggested that the earlier-than-expected price hikes might be connected to an audiobook service launch. He predicted a significant boost in gross profit and margin from the US price hike, indicating a promising future for Spotify’s finances.

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