Spotify testing ‘sponsored songs,’ would allow labels to pay for plays
Ever trying to stay ahead of the curve in music streaming technology, Spotify has been testing a sponsored song ad unit. According to a spokesperson for the company, the sponsored songs option is “a product test for labels to promote singles on the free tier.”
Labels will be able to pay to have their songs appear in playlists users follow, as opposed to clearly distinguishable ad banners. This will enable the labels to tailor their promoted music to the listener’s taste and and surreptitiously fit the sponsored music into playlists the user currently follows. The labels hope that being able to slip music into playlists the user already likes will open their ears to new music and encourage them to share the sponsored content with friends, etc.
Spotify told TechCrunch that if the test is successful, the sponsored songs ads will appear on the free tier of Spotify. There’s an opt-out option, but it’s not clear if it will be provided to those who listen for free. Right now, it’s not clear whether Spotify is charging labels per impression, action, listen, or other method.
The company’s numbers for 2016 leaked at the end of May, showing annual operating losses at around $332 million with yearly revenues at $3.2 billion for last year. If Spotify’s new sponsored songs option goes into effect, it could help the company redeem some of the losses from its free listeners who don’t pay to use the platform.