Daniel Ek, the chief executive of Spotify Technology S.A. (Spotify stock), suggested on Tuesday hiking rates in the United States after the music-streaming service predicted worse profitability due to a slowdown in advertising growth.
Ek stated during the results conference call for the firm that he thought Spotify ( NYSE:SPOT ), -12.24% has “considerable pricing leverage,” in part because of lower churn than competitors like Apple Music, which recently increased its own streaming costs.
In light of these recent changes, he stated, “Again, in specific, largely to the U.S.-based pricing hikes, it is one of the things that we would like to do, and this is a dialogue we will have with our label partners.”
I feel pretty positive about this next year and what that entails in terms of price in respect to our service, he continued.
According to Ek, over the last two years, Spotify has implemented over 46 price hikes in markets all over the world.
In other parts of the discussion, executives emphasized that the revenue from Spotify’s ad business was a minor fraction, and that outside of that sector, they had seen minimal impact from more general concerns about the state of the world economy. Although they claimed that expanding the business would hurt profitability, more users had been attracted.
However, after the company’s projection and a larger-than-expected third-quarter loss, shares fell.
Spotify Stock Losses
The Luxembourg-based business recorded a net loss of 166 million euros ($165.5 million) , or 99 cents per share, for the third quarter, as opposed to a profit of 2 million euros, but a loss of 41 cents per share, in the same period last year.
Sales totaled 3.036 billion euros ($3.03 billion), up from 2.51 billion euros in the same period last year. The...
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