It’s About Time Spotify Raised Subscription Prices in the U.S. (Opinion)

What can you realistically purchase for $11.99 in today's economy? The options are often underwhelming: a few sodas, a partial tank of gasoline, a single slice of pizza, or a handful of subway rides. Yet for that same price, a monthly subscription to Spotify provides access to the world's largest licensed music library, a value that arguably surpasses all other options. While music won't fill your stomach, it nourishes the spirit in a way material goods cannot. The recent confirmation that Spotify will increase its U.S. subscription fee by one dollar to $12.99 is a welcome development for the music economy's financial health. The critical question, however, is whether the estimated $500 million in additional annual revenue will be distributed in a manner that genuinely benefits the artists and songwriters who create the content, rather than just music corporations, Spotify, and its investors.

The evolution of music consumption has been marked by revolutionary devices—the gramophone, the transistor radio, the Walkman, the iPod—each transforming how and where we listen. Spotify, founded in 2006, represented the ultimate fulfillment of this progression: an almost limitless, on-demand library that realized every music lover's fantasy of having a record store's entire inventory in their pocket. Its true innovation, however, was convincing a generation accustomed to illegal file-sharing that music was worth paying for. This shift singlehandedly rescued an industry in freefall; the global music business had seen its value halved, plummeting from $14 billion to $7 billion in just a few years, but began to see profits rise again within three years of streaming's widespread adoption.

Despite this recovery, the streaming economy is fundamentally flawed for creators. The revenue from streams is minuscule, with artists earning an average of just $0.003 to $0.004 per play. From that amount, approximately 25% is further divided among the song's writers and publishers. This system means only the most streamed artists can earn a living, while the vast majority see dramatically reduced income compared to the era of CD and vinyl sales. As one industry analyst noted, "The current model creates a winner-take-all market, leaving the long tail of artists struggling to monetize their work despite providing the platform's core value."

Spotify often bears the brunt of public criticism for this inequity, with detractors pointing to the lavish spending of its co-founder and chairman, Daniel Ek, whose personal net worth is estimated at $8.5 billion. The company is known for extravagant offices, high-profile sponsorships like its $300 million deal with FC Barcelona, and ambitious marketing stunts such as transforming a New York subway station into a David Bowie museum. However, the primary architects of the payment structure are actually the major music labels—Universal Music Group, Sony Music Entertainment, and Warner Music Group. These entities, which own or distribute the vast majority of music on the platform, are the direct recipients of most subscription revenue and ultimately determine how much trickles down to artists. Ek himself had to grant these labels equity in Spotify to secure the licensing deals necessary to launch in the U.S., a move that paid off handsomely for the labels when Spotify went public in 2018.

The payment system for songwriters is arguably even more broken, as their rates are largely determined by government regulations. While organizations like the National Music Publishers' Association (NMPA) and Songwriters of North America (SONA) have fought to increase these paltry sums, the compensation remains insufficient. The entire streaming model, which bases payouts on an artist's share of total global streams, disproportionately favors superstars. Alternative models, such as the user-centric "per subscriber" system where your subscription fee only funds the artists you actually play, have been proposed but face challenges in implementation and resistance from stakeholders who benefit from the status quo.

Unlike its deep-pocketed competitors—Apple, Amazon, and YouTube, which have massive parent companies that can absorb music streaming losses—Spotify's primary business is audio. Its forays into podcasts and audiobooks are attempts to build additional revenue streams, but music remains its core offering. This context makes the price increase a necessary step for the platform's sustainability. The plea from the music community is simple: as Spotify implements this change, it must leverage its position to ensure that a greater portion of this new revenue reaches the musicians and songwriters who are the foundation of its entire ecosystem. The future of a healthy music industry depends on a more equitable distribution of the immense value streaming creates.