Thanks for your comment. Explaining comparably small differences in pricing between two similar countries is indeed difficult. We conjecture that such differences are due to a combination of factors linked either to costs or to demand. On the cost side, VAT is higher in Belgium than in Germany (see here). What Spotify has to… Read more
Thanks for your comment. Explaining comparably small differences in pricing between two similar countries is indeed difficult. We conjecture that such differences are due to a combination of factors linked either to costs or to demand. On the cost side, VAT is higher in Belgium than in Germany (see here). What Spotify has to pay to right-holders may also differ across countries (although we did not find any information in this regard). On the demand side, we can think of several reasons for which the willingness to pay for Spotify may be higher in Belgium than in Germany. First, demographics could play a role. For example, the average number of persons per household is higher in Belgium than in Germany (see europa.eu: Average number of persons per household by country, in 2010 and in 2019.png – Statistics Explained). It could then be that a family account is, on average, shared by more people in Belgium than in Germany. (Note that this may also impact Spotify’s costs, as a larger bill would have to be paid to right-holders). Additionally, there may be cultural differences (even between neighbouring countries such as Belgium and Germany) that affect how much people are willing to pay for music. In a nutshell, what it costs to serve users and what users are willing to pay may well differ across seemingly similar countries. As a result, and given that arbitrage across countries seems hardly feasible, Spotify may find it profitable to practice geographical price discrimination.
Why travel so far ? A spotify abo in Germany costs less than in Belgium.
Compare https://www.spotify.com/de/premium/ and https://www.spotify.com/be-fr/premium/.
That cannot be explained. The content and the service is exatly the same.
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Thanks for your comment. Explaining comparably small differences in pricing between two similar countries is indeed difficult. We conjecture that such differences are due to a combination of factors linked either to costs or to demand. On the cost side, VAT is higher in Belgium than in Germany (see here). What Spotify has to pay to right-holders may also differ across countries (although we did not find any information in this regard). On the demand side, we can think of several reasons for which the willingness to pay for Spotify may be higher in Belgium than in Germany. First, demographics could play a role. For example, the average number of persons per household is higher in Belgium than in Germany (see europa.eu: Average number of persons per household by country, in 2010 and in 2019.png – Statistics Explained). It could then be that a family account is, on average, shared by more people in Belgium than in Germany. (Note that this may also impact Spotify’s costs, as a larger bill would have to be paid to right-holders). Additionally, there may be cultural differences (even between neighbouring countries such as Belgium and Germany) that affect how much people are willing to pay for music. In a nutshell, what it costs to serve users and what users are willing to pay may well differ across seemingly similar countries. As a result, and given that arbitrage across countries seems hardly feasible, Spotify may find it profitable to practice geographical price discrimination.
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