In February 2021, Spotify announced its high-quality audio offering, called HiFi, and released a promotional video featuring Billie Eilish and her brother/producer Finneas touting the benefits of listening to recordings in their natural state rather than compressed files that became standard in the digital age. “Streaming War Goes Hi-Fi”, Advertising sign was announced a few months later.
But it was a false start. Spotify HiFi did not materialize and the company officially announced its delay in January 2022. There were rumors of HiFi in June 2023, but the rumors were not at all. Instead, Spotify moved to create an all-in-one audio platform, building its podcast business and launching an audiobook offering.
Now, HiFi seems to be back on track. This month, it was announced that Spotify will finally release a high-definition audio layer later this year. Still called HiFi, Spotify will offer the tier for an extra $5 per month for individual plans ($16.99 compared to $11.99, which is an expected $1 increase from the current $10.99), according to Bloomberg report. The HiFi family tier is listed at $19.99, $3 more than the current $16.99.
Waiting three years may have some advantages. First, there is a large addressable market that wants high quality audio. A 2023 MusicWatch survey found that 85 million Americans ages 13 and older agreed that getting the highest quality sound is important and that they would be willing to pay more to get it, according to MusicWatch's Russ Krupnick. That's a big increase from 2020, when a previous MusicWatch survey found that 69.2 million people aged 13 to 65 were open to paying more for studio-quality sound. Most of this change represents a greater interest in high-quality audio, as population growth has been “only about 1% per year,” Crupnick says.
“Once people realize the sound quality is available and listen to it, it's hard to go back,” says Qobuz CEO Dan Macta. “The challenge is just getting people to actually listen to it.”
There are two types of premium audio streaming: 16-bit, known as “lossless” or “CD quality,” and 24-bit, commonly referred to as “high resolution.” Both Apple Music and Amazon Music Unlimited offer CD quality and higher definition levels up to 24-bit/192kHz. Qobuz streams 24-bit audio up to 192kHz. Spotify streams up to 256 kbps for subscribers — well below CD quality of 1,411 kbps — and 128 kbps for ad-supported users.
High-definition early entrants like Qobuz, Tidal, Amazon Music Unlimited and Apple Music have done much of the dirty work of educating consumers about sound quality. Amazon Music, which debuted in high-definition audio in 2019, has seen strong demand and engagement, Amazon Music vp Steve Boom he said Advertising sign in 2021. Apple Music launched lossless audio and spatial audio in June 2021. More than 90% of Apple Music listeners have engaged with Spatial Audio, the company said in January, adding that music playbacks that are available in the format have more than tripled in the past two years.
The streaming market has matured over the past three years. Spotify currently has 59 million more subscribers than it did at the end of 2021, giving it a larger base from which to sell premium audio. Consumers have also been excited about the idea of paying more for a music subscription. Spotify's first large-scale price increase in July 2023 was followed by an additional increase in May in the United Kingdom and Australia, and the United States will follow later this year — all without significant subscriber churn, company executives said.
However, Spotify will have to convince its subscribers that high-quality audio is worth it. Amazon Music Unlimited originally charged a premium for high-definition audio, but later made it a standard feature for its lower-end, standard subscription plan. Similarly, Apple Music offers lossless and spatial audio at no additional cost. To counter its competitors' pricing strategies, Spotify could make HiFi a bundle of premium features. In 2022, Spotify reportedly surveyed consumers about their willingness to pay for a premium tier that offers high-definition audio, additional playlist and library features, ad-limited Spotify playlists, and other extras.
But Spotify HiFi could also encourage its competitors to follow suit by raising prices further. Mackta says Qobuz plans to raise prices at some point in the future. In fact, Qobuz dropped prices in 2019 — a standard plan is currently $12.99 per month — in response to larger services like Apple Music and Amazon Music making high-definition audio a standard feature. “In general,” he says, “music is very cheap.”
