Written by Mark Gurman
Apple Inc. has raised prices for its music and TV+ services for the first time, citing rising licensing costs that risk giving competitors an edge in the fiercely competitive streaming industry.
The company increased the price of Apple Music to $10.99 a month from $9.99 for individuals, effective immediately, making it more expensive than Spotify Technology SA and Amazon.com Inc.’s services. Spotify rose 9.4% to $97.07 in response to the news. , the biggest intraday rally in nearly three months.
With its TV+ video plan, Apple will continue to offer a lower price than companies like Netflix Inc. or Warner Bros. Discovery Inc., but the service is slowly gaining the same following as competing platforms. The price of Apple TV+ will rise to $6.99 from $4.99, while the standard Apple One bundle will increase by $2 to $16.95.
Apple’s push into streaming in recent years is part of a broader effort to generate more revenue from the service. The category now accounts for nearly a quarter of the company’s sales — nearly $20 billion in the June quarter — up from less than 10% in 2015. Apple will release its latest quarterly results this week.
The company said in a statement that the increase in music prices was due to “increased licensing costs” and that artists and songwriters will now earn more money. That was good news for investors in Warner Music Group Corp., a major record company whose shares rose 15% on Monday.
Apple is also increasing its annual music plan from $99 to $109 and its annual TV+ subscription from $49 to $69. Apple One family bundles will go up to $22.95 from $19.95, while the Premier bundle, which adds News+, Fitness+ and extra storage in addition to Arcade, Music and TV+, will go up by 3 to $32.95 dollars.
Apple shares rose less than 1% to $148.56 on Monday. Although the stock is down 16% this year, it’s less of a rout than the broader indexes. The S&P 500 fell by more than 20%.
Explaining the increase in TV+, Apple said that the service was introduced “at a very low price” because it started with a few shows and movies. It’s now “home to a wide selection of award-winning and critically acclaimed series, feature films, documentaries, and children’s and family entertainment from the world’s most creative storytellers,” Apple said.
However, the service’s viewership hasn’t compared to other major streaming platforms. While Apple TV+ has had a string of critically acclaimed hits, including the Oscar-winning Coda and series like Severance and Ted Lasso, it also remains popular in the fiercely competitive video streaming space. The latest Nielsen report found that Americans spent more time watching at least five other paid services, as well as ad-supported videos from YouTube and Pluto TV.
Apple is increasingly relying on services to boost hardware sales in an environment where device upgrades have become more expensive and less frequent. The Cupertino, Calif.-based company has accelerated the rollout of new digital offerings in recent years, including credit cards and, most recently, savings accounts.
On Monday, Apple also released the first version of iPadOS 16 with multitasking software Stage Manager, as well as an update to macOS Ventura for Mac desktops and laptops. It also released iOS 16.1 with shared iCloud photo libraries and new smart home features.
The company is not alone in raising prices for the stream. The cost of Walt Disney Co.’s flagship service. Disney+ will rise 38% to $11 later this year. The company is introducing a new ad-supported tier that will cost $8 per month, just like the previous offerings. This follows a 43% increase in the price of its ESPN+ streaming service to $10 a month in August. Netflix, which raised prices earlier in the year, is also introducing an ad-supported plan, although at $7 a month it will be cheaper than existing offerings.
– Assisted by Christopher Palmer
