Spotify may have found a new revenue stream. The music streaming platform has begun testing a sponsored song ad unit that would enable labels to reach those who have subscribed to their free tier of service.
Label owners and other content creators would pay for their singles to be included in playlists users follow where previously advertisers could only promote via banners. Listeners would be able to opt out of hearing sponsored music, although at present it’s not clear whether or not Spotify users at the free level would be afforded the courtesy.
The proliferation of music streaming services in the mobile era has spelled trouble for the recording industry, which already suffered a decline following the advent of music downloads. Streaming apps themselves haven’t had an easy time operating sustainably, but Spotify had better luck than most. Since its 2008 launch, the company’s “freemium” model drew a wide user base to the service while simultaneously incentivizing paid subscription.
Recently, however, Spotify’s profitability has become uncertain. The company’s acquisition of SoundCloud fell through after months of deliberation, and between 2014 and 2016 its net losses increased from $207 million to $340 million – a 64% margin.
Spotify has not revealed when it will roll out the sponsored song ad unit or disclosed pricing details at this time.
Source: Dancing Astronaut
