Spotify Starts Trials Where Labels Can Pay for Songs to Be Featured On Popular Playlists
It was recently announced that Spotify is trying out a new system that allows labels to pay to have their songs included on user playlists. The songs would essentially be sponsored promotions for artists and would only appear on the free tier of the Swedish streaming service. The remaining 50 million users that have Spotify subscriptions will not be included or affected by the trial. Either way, it could prove to be a great investment opportunities for labels to get their artists seen and heard.
In contrast to other advertising banners the service utilizes when promoting new releases, the sponsored songs will not be so obvious. Potential listeners will instead be targeted based on their listening habits and the paid-for songs will be matched to them through interests. A plus for free Spotify users is that they can choose to opt out of the sponsored trial at any time through the app’s settings.
“We are testing new promotional tools that deliver the highest relevancy to our users,” Spotify shared in a statement via BBC News.
The trial is being utilized not just for ease for its users, but also because of the revenue woes that the service has. Despite the Swedish-based streaming service having more than 140 million active users, Spotify still runs at a loss. Incorporating other means of revenue through additional advertising strategies could prove to be a viable solution to the problem if the trial proves to be successful.
“This is not the silver bullet but instead part of what will be a multi-faceted answer to Spotify’s margin woes,” Mark Mulligan, managing director of Midia research said. “In a broader context, this may presage a wider strategy similar to that of Facebook’s, whereby it effectively starts charging artists and labels for access to fans.”
Additionally, Spotify is also thinking about taking the company public and putting it on the stock market.
We’ll see in the coming weeks if any of these answers prove to be the company’s means of turning over a profit in the long run.
Photo Credit: iSTOCK
