The world’s leading audio streaming platform, Spotify, recently announced changes to its subscription tiers in the United States.

According to a press release published recently, the company is introducing a new plan called Basic that will allow users to have unlimited access to the platform’s musical library excluding audiobooks.

The move is seen as a response to the latest wave of criticism prompted by Spotify for bundling its offering of songs, audiobooks, podcasts, and other types of content, which results in an immediate reduction in the royalties it pays to music production companies. But is this new plan right for you? Let’s find out.

The New Basic Plan: A Stripped-Down Option for Music Lovers

The new Basic plan for United States users will be priced at $10.99 per month and offers almost the same benefits as the Premium plan except for one thing: no audiobooks. Hence, the new offering would include:

– Ad-free music listening.

– Unlimited skips.

– Offline playback.

– Access to Spotify’s entire music and podcast library.

Unlike the Premium plan, Basic subscribers will not have access to the 15 hours of audiobook listening time per month from Spotify’s catalog of over 250,000 titles.

Naturally, if you never listen to Spotify’s audiobooks, this basic plan is probably best for you.

Why is Spotify Launching This New Subscription Package?

Launching the Basic plan appears to be a strategic move primarily driven to offer a lower-priced option for budget-conscious consumers while the company raises the price of other tiers.

Moreover, there’s a large group of people who may not be interested in audiobooks but who love to listen to music and podcasts – the bread-and-butter of Spotify’s value proposition. They may prefer to enroll for the Basic package without feeling the absence of audiobooks at all.

Moreover, the Basic plan showcases that Spotify is aware of how higher prices could prompt users to unsubscribe from a service at a point when the global economy continues to suffer from the sting of persistently high inflation rates.

The move could help Spotify (SPOT) retain a significant number of users who may otherwise shun the service if they are not provided with a cheaper option that leaves their budgets untouched. At the same time, the company can charge a higher fee to subscribers who are willing to spend a little bit more to access the platform’s audiobook offering.

Finally, and perhaps the most significant reason of all, Spotify could be responding to criticism from participants within the music industry who are discontent with its bundling practices.

A standalone music streaming alternative at a lower price would give users exclusive access to Spotify’s music library, which produces higher royalties for musicians and record labels.

This move may help alleviate some of the legal and regulatory pressures the company has faced lately while it also demonstrates its willingness to adapt its business model in response to stakeholder feedback.

Price Adjustments to Existing Plans

At the same time, Spotify is introducing this new cheaper plan, it is also raising the prices of its flagship tiers. Here’s a summary of the changes made to the company’s existing subscription packages:

Premium Individual Plan

Spotify Premium plan

The price of its Premium Individual plan moved from $10.99 to $11.99 per month. This plan includes:

  • Ad-free music listening.
  • Unlimited skips.
  • Offline playback.
  • 15 hours of audiobook listening time per month.

Premium Duo Plan

The Premium Duo plan, designed for two people living together, now costs $16.99 per month (up from $14.99). It offers:

  • Two separate Premium accounts.
  • Ad-free music listening for both users.
  • 15 hours of audiobook listening time for the plan manager.

Premium Family Plan

The Premium Family plan, which covers up to six family members living in the same household, has increased from $16.99 to $19.99 per month. It includes:

  • Separate Premium accounts for up to six users.
  • Ad-free music listening for all members.
  • 15 hours of audiobook listening time for the family plan manager.
  • Access to Spotify Kids.

Audiobooks Access Plan

Spotify also offers a standalone Audiobooks Access plan for $9.99 per month, which includes:

  • 15 hours of audiobook listening time per month.
  • Music listening on the free, ad-supported tier

Implications for Consumers – Families Will Now Spend $36 More on Music Streaming

The new Basic plan and these latest price adjustments have major implications for Spotify’s customers. First, they now have a wider range of choices when it comes to costs and features that they can access. This enables users to have more personalized streaming experiences while protecting their finances at the same time.

Also read: Spotify Stock Pops On Price Hikes Despite CEO Controversy

Although a $1 saving may not sound as much, they are also escaping from a price hike that would otherwise eat up their wallets. Since the company may take at least a year to perform another revision to its pricing, this is a good deal that keeps the price of the service unchanged for at least the next 12 months or so.

spotify user demographics

That said, even though this may not be the norm, a portion of Premium users who did enjoy audiobooks is now facing a $1 increase to their subscription cost to maintain their privileged access to this library.

Moreover, family subscriptions, which thousands of users rely on to give their relatives access to the service are increasing by $3 – resulting in a $36 increase to the household’s annual budget.

Since price increases are occurring not just in the streaming space but also in several spending categories like food, utilities, and healthcare, consumers will have to weigh if they are willing and able to keep adding additional dollars to the budget without experiencing a corresponding increase in their income.