Price increases at Spotify and other streaming music services could push people back to online piracy, the company has said.
As with competitors such as Apple Music and Amazon, Spotify has kept its prices firm at the now-standard £9.99 price point for years. It has introduced other packages – such as a more expensive family subscription, and an upcoming higher-quality tier – but not adjusted the basic price.
If it did so, it would run the risk of its customers moving back towards downloading music illegally, a representative said during an official hearing on the economics of streaming.
Horacio Gutierrez, head of global affairs and chief legal officer at Spotify, warned that it was important to make sure paid music streaming “doesn’t become unaffordable to consumers” otherwise it risks “pushing them back to online piracy”.
“Prices have gone up in some areas and have began to go up in some markets, particularly when you come to family plans and I think we would expect to do that,” he told MPs.
“Even if you look at Netflix, you will see in their history that price increases didn’t come about until many, many years after the streaming service was launched.
“The balance we have to strike is one in which music doesn’t become unaffordable to consumers and pushing them back to online piracy scenarios.”
Representatives from the three companies were also quizzed on the impact of Google-owned YouTube, which has the ability to make more content available for free.
Pressed on the matter, Elena Segal, global senior director of music publishing at Apple, said it is “challenging to compete with free”.
“It’s always been challenging whether it’s been legitimate or illegitimate,” she said.
“It’s challenging to compete on an unlevel playing field.
“They (YouTube) don’t necessarily have licences for all of the music that they use and they don’t need to.
“And even when they do have licences, the amount they pay, because of the way their business model works and the way the tariffs work is less.”
Elsewhere, Spotify was also asked about its podcast deal with the Duke and Duchess of Sussex.
Mr Gutierrez explained podcasts have a “completely different set of economics” compared to the music side of the business, but said investing in podcasts benefited music consumption on the whole.
“Like a lot of our services, there is a market for certain talent because they command a certain amount of consumption,” he told MPs.
“We don’t get to negotiate directly with artists the way we negotiate with podcasters or people who create podcasts so the structure of that market is very different.”
He added: “The product is valued based on how many users it can attract, how many streams it will attract, which in turn determines how many advertisers are willing to advertise on the podcast which determines the economic opportunity, there’s a market that’s emerging for talent in that regard.”
When asked by Steve Brine MP whether Harry and Meghan have saved the music industry, Mr Gutierrez responded: “That seems a bit premature.
“They’re not the only act that we’ve signed, we’ve signed dozens of those and we’ll continue to do that.”
Additional reporting by Press Association
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