Apple has hiked its prices for its music and TV services for the first time ever this week, perhaps signalling things to come for its biggest streaming rivals.
The tech giant said it would be increasing the price of Apple Music globally by $1 to $10.99, and breaking away from the standard ‘9.99’ price level that providers have traditionally adopted since Spotify was first formed in 2008.
The move not only makes the service more expensive than both Amazon Music and Spotify, but it also raises potential alarm bells for its streaming arm, which is due to post results later this week.
Apple said the music changes were driven by “an increase in licensing costs”, which are are distributed to rights holders.
It said the bump would mean “artists and songwriters will earn more for the streaming of their music”, which estimates suggest could give a 10 per cent boost to industry streaming revenues.
The US firm said Apple TV+ would also see a price rise, up from $4.99 to $6.99, retaining its competitive pricing edge over the likes of Netflix.
The iPhone maker has made a slow but steady push into streaming in recent years, now generating nearly a quarter of the company’s total sales.
JP Morgan said it did not expect the changes to increase churn rates for the company’s music arm thanks to “inelastic demand”, and predicted that its biggest rivals, including the likes of Amazon and YouTube Music Premium, would follow suit in the coming months.
“Unlike video services, where prices have risen and there is high churn as they don’t have the same content, most music fans use just one digital service provider and can use that to stream all the songs they are ever likely to want to listen to,” analysts said.
“Music still provides a relative bargain, particularly in real terms given that Spotify set the price at ‘9.99’ back in 2008.”
Spotify shares climbed nearly 10 per cent this morning following the news, giving the stock a welcome boost before the Swedish streaming giant posts its quarterly results later today.