Why do Spotify penalise their UK customers?

I love music, but gave up buying CDs years ago, when I decided I already owned enough possessions for a lifetime. I still don’t know how to get rid of my old vinyl collection and I don’t want to clutter the place with another obsolescent music format if I can help it.

So, when Spotify launched their music streaming service in the UK in 2009, it seemed the obvious way to go. Their content wasn’t comprehensive, by any means, but it has improved over the years. Despite Radiohead’s criticisms of the business model, I assume the artists who remain on Spotify are satisfied with the arrangement, so I listen with a clear conscience. 

I upgraded to the Unlimited version for £4.99 a month to avoid the adverts and I was considering stepping up to the Premium account so I could also listen through my TV, which is in another room. That was before I discovered that we in the UK have to pay 56% more than our friends in the US, for the same service. 

How do Spotify justify charging £9.99 ($15.63) in the UK, compared to $9.99 in the US?

They don’t; they won’t; they can’t.

Does it cost them any more to deliver digital data to one place than another?

You jest.

Do they charge as much in any other countries?

Not that I can find. The Eurozone pays €9.99 (£8.58) and other areas are charged in local currencies. Users in Canada, Australia and Sweden all pay more than the US but less than the UK at today’s exchange rates.

Is this pricing policy common to similar online businesses?

Some quick price comparisons suggest that Amazon charge identical prices for e-books, wherever you are. I presume they are calculated dynamically, compensating for daily currency fluctuations. iTunes show some price discrepancies, but less dramatic than Spotify’s.

Won’t Spotify’s new music streaming competitor, Google Play Access, force an end to this price discrimination?

Let’s hope so. The launch price for Google’s new music streaming service is £7.99 a month. It doesn’t support Apple’s iOS and I have no idea if it offers a similar range of content to customers or a more generous commission to artistes. Even so, it might force Spotify to match it before too many of their premium service users jump ship.

Economists may explain that businesses maximise profits by raising prices to the point that any further rise would reduce overall revenues due to lower sales volumes. It is conceivable that Spotify have analysed consumer price sensitivity around the world, leading to higher prices where compliant and law-abiding consumers are less likely to seek alternatives. On the other hand, it could just be that they don’t care enough about their customers in the UK.

So what can we do about it?

Firstly, we should refuse to pay £9.99 a month for streaming music from Spotify. The less scrupulous among us might revert to illegal music downloads, or find a way to register as American users via a proxy server, neither of which I advocate. Some may switch to Google but I won’t be joining them while Google maintain their arrogant attitude towards corporation tax and corporate responsibility.

My own problem will soon be resolved by new developments. Spotify recently launched a browser-based Web Player and the new Google Chromecast dongle, which is expected in the UK in time for Christmas, will let me stream content from my PC’s browser to my TV set for a one-off payment of around £30. It is pleasing to see the two companies together conspiring to solve my problem for me.

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