Spotify Technology SA is set to introduce a higher-priced premium plan later this year, targeting its most devoted users. According to a Bloomberg report, subscribers will pay an additional $5 per month to access superior audio quality and new tools for playlist creation and song library management.
This new option, referred to internally as “Supremium,” will be an add-on for existing customers. While most users will remain on their current plans, those who opt for the upgrade will provide additional revenue streams for Spotify and its business partners. The pricing for the new tier will vary based on the user’s base plan, averaging out to about a 40% increase.
In early New York trading, Spotify shares rose by 2.9%.
A key feature of the upgraded plan is access to high-fidelity (HiFi) audio. Spotify initially announced the HiFi feature in February 2021, but its rollout was delayed. Since then, competitors such as Amazon Music and Apple Music have started offering higher-quality audio as part of their standard subscriptions.
Historically, Spotify charged a single price for its service, irrespective of user consumption. However, the company has recently begun creating multiple pricing tiers to cater to different user segments. This strategy follows a series of global price hikes, including a $1 per month increase for U.S. users starting in July, raising the standard tier to $11.99 per month. Last year, the subscription price was increased from $9.99 to $10.99 after remaining unchanged for over a decade.
The new premium plan is projected to generate hundreds of millions of dollars in additional revenue, benefiting both Spotify and music rights holders. However, it remains uncertain how many users will be willing to pay extra for enhanced playlist tools and higher fidelity audio, especially since similar features have not significantly boosted other services.
Subscribers to the new tier will also enjoy the ability to instantly generate custom playlists for various activities, dates, and times of the year. These playlists will adapt to user behavior, eventually developing personalized playlists without user prompts.
By introducing this high-fidelity audio plan with advanced features, Spotify aims to strengthen its market position and appeal to audiophiles and serious music enthusiasts who seek the best possible streaming experience.