Netflix: Actions prior to the announcement
As Harbingers of the pricing announcement, in March 2022 we saw Netflix’s testing of two features: the first enabling users to create an additional sub-account for those living outside their primary residences, and the other deterring users’ loss of recommendations under the circumstance of having to lose their account, whereby the member can, via a profile transfer feature, transfer their watch history, recommendations, and basically all their account data to a new, independent account.
Netflix: Motivations for the decision
The latter was opened to the world a day prior to announcing the news of the new fee for account sharers, motivated by Netflix’s unprecedented loss of subscribers, a tragedy Netflix attributes to password sharing and rising competition from similar service providers. The decision was also motivated by Netflix’s statement that the sharing undermines their long-term ability to invest in and improve Netflix, as emerging from its discovery of approximately 100 million households sharing accounts. The fee, as Netflix envisions, will then allow it to maintain its revenue.
Netflix: What and when to expect
While the fee will be put into practice by the end of March, a world-wide rollout may not happen so soon. As per the fee option, members will be able to make an additional payment if they wish to share their account with people outside their homes. Though the exact figures have not been revealed yet, the test-version of the feature in Latin America cost somewhere between $3 and $4. Until then, the company already requires members in some parts of the world to verify their account sharers, but even after doing so, it shows recurring prompts until the member pays for the account.
Netflix: Blast from the past
Netflix’s fee-charging decision is a U-turn from their prior and very public point of view that password sharing was something that the former CEO Reed Hastings called “something that you have to live with,” even going as far as denying any intentions of charging users for password sharing in 2016.
Nevertheless, the times have certainly changed, and an additional fee may be knocking at the door.
Spotify: The why behind the price hike
The reason behind the price hike is none other than the burgeoning difficulty of managing expenses in light of the deteriorating state of the world’s economy.
Spotify: All that could be done, was done
The increase in pricing is not the company’s first reaction to the global economic decline, for it was preceded by Spotify’s removal of around 6% of its total employee count, which equals a whopping 600 staff members. A move not unlike many other tech giants in the game, with companies like Amazon, Microsoft, Meta and Alphabet carrying out similar large-scale lay-offs.
The company also tried to salvage what it could by beginning with cost-cutting before finally resorting to cost-increasing. In the year 2022, it removed 11 original podcasts which it had taken up during the time of the podcasting industry’s boom.
Spotify: But is the price increase justified?
The price increase is also accompanied by a similar increase in subscription fees for other renowned music streaming services, for example Apple Music and Amazon Music.
However, it is integral to note that while a price hike in such circumstances is understandable for the world, it may also be questionable if one is to weigh the quality of the compression format content as opposed to the other streamers like Amazon and Apple Music that offer high-res audio among other features.
Thus, all things considered, Spotify might not be bringing enough to the table to justify the price increase, though, under the current circumstances, music listeners might as well just let the change come through. Afterall, everything including literally eggs, is getting expensive, so why not music?