Spotify is testing a new ad platform that allows artist teams to promote music directly to fans without turning to third-party applications.
Spotify users are already familiar with ‘Music For You’ notifications. These alerts appear on screen to inform fans and followers of an artist when their favorite musicians have a new release. It is a helpful tool that encourages fans to support the music they love in a crowded marketplace where nobody can remember every release date. And now, for the first time, those notifications are for sale.
This week, Spotify began testing a new tool in the United States the allows record labels and artists to purchase ‘Music For You’ notifications for their latest releases. The pop-ups will land within both free and premium accounts using the same algorithm already in place for organic (free) notifications to alert an artist’s most dedicated followers.
Spotify Founder and CEO Daniel Ek hinted at the ads during the company’s Q2 earnings call earlier this year. Speaking to investors, Ek said, “We believe we can find a way to charge record companies to pay to promote their artists directly to their fans on our platform without p**sing off our users too much. If we succeed, labels might then switch some of their digital ad spend away from Google, Facebook, and Instagram, and over to us.”
In simpler terms, Spotify knows labels and musicians pay social media platforms to run ads that inevitably link to an artist’s Spotify page. The streaming giant hopes the opportunity to push engagement through its platform instead of third-part apps will lead the industry to invest more money into Spotify (in hopes of earning more through the platform).
Music Business Worldwide reports that Premium Spotify users will be able to turn off sponsored ‘Music For You’ alerts, but free users will be stuck with them.
Spotify’s introduction of ‘Music For You’ alerts could not have been smoother. Users are already familiar with the notification system, and many rely on the service to help them remember when musicians release new material. Though the company has not shared any data with the public, one can assume the company knows the conversion rates for these messages and is factoring them into the pricing for paid promotion. It’s already a proven marketing tool despite no one paying for access before this moment.
The situation also brings to mind the metaphor of a snake eating its tail. Music professionals often complain about the low royalty rates Spotify pays out, and now many will give Spotify money out of their pockets in hopes of getting additional revenue. It’s a vicious cycle that opens up a world of ‘pay to play’ possibilities that could hinder independent artists from gaining traction for their music.
Jordyn Reese, Product Manager, US Latin & Urban, ONErpm, said: “As an independent distributor, it’s essential for us to spend our marketing budgets wisely and find creative strategies to develop our artists’ audiences. It’s really exciting to see Spotify is creating tools that are designed from the ground up with music marketing in mind and giving indies more power to reach their fans with new music. This will absolutely be one of the top tools in our growth arsenal.”
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