Apple Inc. raised rates for its music and TV+ services for the first time, citing growing licencing costs, a move that might give rivals an advantage in a crowded streaming market.
Apple Music is now $10.99 per month for individuals, up from $9.99 previously, making it more expensive than subscriptions from Spotify Technology SA and Amazon.com Inc. Spotify jumped 9.4% to $97.07 in response to the announcement, its greatest intraday gain in over three months.
Apple’s TV+ video plan will continue to be less expensive than competing platforms like as Netflix Inc. and Warner Bros. Discovery Inc., but the service has been reluctant to gain traction.
Apple TV+ will cost $6.99, up from $4.99, and the normal Apple One bundle will cost $16.95, up $2.
Apple’s recent push into streaming is part of a larger strategy to make more cash from services. That segment now accounts for over a quarter of the company’s revenue — nearly $20 billion in the June quarter — up from less than 10% in 2015. This week, Apple will release its most recent quarterly earnings report.
According to the corporation, the price increase is due to “an increase in licence expenses,” and artists and songwriters will now earn more money. This was welcome news for investors in Warner Music Group Corp., a major music company, whose stock rose as much as 15% on Monday.
Apple is also raising the price of its annual music plan to $109 from $99 and the price of its TV+ yearly subscription to $69 from $49. Apple One family bundles will cost $22.95 instead of $19.95, while the Premier package, which includes News+, Fitness+, and more storage in addition to Arcade, Music, and TV+, will cost $32.95.
On Monday, Apple’s stock increased less than 1% to $148.56. Though the stock is down 16% this year, it is still down less than the broader indexes. The S&P 500 Index has dropped by more than 20%.
In defending the TV+ price rise, Apple stated that the service was launched “at a very cheap price” because it began with only a few series and movies. According to Apple, the service is now “home to an enormous range of award-winning and widely regarded shows, feature films, documentaries, and kids and family entertainment from the world’s most creative storytellers.”
Nonetheless, the service’s viewership has lagged behind those of other major streaming providers. While Apple TV+ has enjoyed a string of critically praised hits, including Oscar winner Coda and series like Severance and Ted Lasso, it remains an afterthought in the crowded streaming video space. According to the most recent Nielsen data, Americans spent more time watching at least five other premium services, as well as ad-supported video from YouTube and Pluto TV.
In an environment where gadget upgrades have become more expensive and less regular, Apple has increasingly depended on services to supplement hardware sales. In recent years, the Cupertino, California-based corporation has accelerated the rollout of additional digital goods, including a credit card and, more recently, savings accounts.
On Monday, Apple also published the first version of iPadOS 16 with multitasking software Stage Manager, as well as the macOS Ventura update for Mac desktops and laptops. It also released iOS 16.1 with shared iCloud photo libraries and additional smart home features.
The firm isn’t the only one raising streaming costs. Later this year, the price of Walt Disney Company’s flagship Disney+ subscription will climb 38% to $11. The company will launch a new ad-supported tier at the same price as its previous one, $8 a month. This follows a 43% hike in the price of its ESPN+ streaming subscription to $10 per month in August. Netflix, which upped its fees earlier this year, is also releasing an ad-supported plan, albeit at $7 per month, it will be less expensive than its current choices.
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