Although music rightsholders are certainly happy with the price hikes seen at streaming services of late, it’s no secret that recording companies and publishers want to see more – and Warner Music Group (WMG) is counting on it.
During the company’s latest earnings call, held on Tuesday (August 8), CEO Robert Kyncl said he was “pleased” to see that all the major music streaming services – including, most recently, Spotify – have raised prices on their individual subscription plans, calling it “the fiscally responsible thing to do.”
Yet Kyncl made it clear that he expects to see streaming price hikes become a regular part of the music landscape going forward.
“We see these initial price increases as an encouraging start,” he said on WMG’s fiscal Q3 (calendar Q2) earnings call. ”There’s no evidence that the services are experiencing elevated levels of customer churn. We believe the market will bear further price increases in the future, and we’re expecting that they’ll arrive on a more regular cadence than in the past.”
Kyncl has been arguing for streaming price hikes almost since the moment he assumed the position of CEO of Warner, having come to the company from YouTube (where, as Chief Business Officer, he was on the other side of payment negotiations with music rights holders).
Reiterating an argument he made earlier this year, Kyncl noted that, had Spotify’s $9.99 monthly subscription price grown with inflation since the service launched in the US in 2011, it would now cost $13.25.
The Warner chief also noted that in 2011, the standard price for Netflix in the US was $7.99, and today it’s $15.49. If the streaming services that – until recently – charged $9.99 per month had raised their prices proportionally to Netflix, they would cost $19.37 today.
“Now, let me be clear, I am not suggesting that we go to $19 today,” Kyncl clarified later in the earnings call.
“What I’m pointing out is the innovation that is happening in the entertainment space around [pricing], the value that we all provide to users, and the elasticity that is there. And… we obviously want to make sure that we’re working collaboratively together with our DSP partners to innovate over the next decade around this point.”
Kyncl may yet get what he’s hoping for.
In one of the first solid hints that streaming services themselves are looking at recurring price hikes, Deezer CEO Jeronimo Folgueira told listeners on the DSP’s earnings call last week (August 3) that the company had experienced little negative impact from its price hike in early 2022, “which has clearly demonstrated that music is highly undervalued and that platforms like us have more pricing power than initially anticipated.”
Folgueira added that, given that all the other major streaming services have hiked their prices since Deezer’s own hike, the streaming platform has “the opportunity to review pricing again in the near future.”
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