For some time now, Spotify has been showing its mobile listeners full-screen recommendations of new albums from the artists that they like – ‘Brand new music for you!’ pop-ups with a ‘Go to Album’ button to tap.
Thus far, this has been a purely-editorial feature – known as ‘marquee’ to industry partners – but today Spotify is launching a test in the US to “let artist teams pay to sponsor these recommendations” – for Spotify’s free listeners and paying subscribers alike.
It’s the latest move in Spotify’s much-talked-about ‘two-sided marketplace’ strategy, although the streaming service is clearly aware that there will be sensitivities around the change.
For one, its blog post today stresses to listeners that “these recommendations will continue to be powered by your music taste, so you will only hear from artists that you frequently listen to or follow”. It seems Spotify has learned its lesson from its controversial Drake takeover in July 2018, when his new album was heavily promoted on the service, even to non-fans.
Another sensitivity is showing a sponsored ad unit to listeners who pay for a Spotify subscription that explicitly promises “no ad interruptions” as one of its benefits. That’s why the blog post today stresses that “we hope you enjoy these recommendations — but if you’re not into them, Premium subscribers can turn them off”.
However, Spotify is also hoping that subscribers will choose to leave the feature running. The pitch: “You’ll now hear from a wider range of artists, which means you’re less likely to miss out on new releases from your favourites”.
Sensibly, Spotify will also be limiting the number of these pop-ups that individual listeners see in a given period, so they don’t feel spammed. It’s also an albums-only feature. And, with an eye on advertising regulations, the pop-up includes a ‘Sponsored recommendation’ disclosure, with a link for people to tap on to get more information.
We’ll see how Spotify’s listeners respond: running this as a test in a single country means Spotify will be able to adapt to feedback if necessary before deciding when/if and how to roll this change out globally.
What about labels and artists though? Spotify is running the test with a “select” group of artists on major and independent labels. The sponsorship will use a cost-per-click model: teams will set a maximum spend, with the ads running until the budget is used up. Specifics on what those costs will be are not yet public.
Today’s news comes as Spotify continues to negotiate its next set of licensing deals with major labels. The company has said that these kinds of marketing tools will play a key role in those talks. “The primary focus for this round of negotiation has really been about enabling the marketplace strategy,” CEO Daniel Ek told analysts in July.
During that earnings call, Ek and CFO Barry McCarthy also fielded a question about whether new marketing tools for labels and artists might alienate Spotify’s listeners, if they felt they were being advertised to more, rather than getting purely-editorial / personalised recommendations.
“Everybody wants to know if you’re gonna promote content that Paul [Vogel, Spotify’s investor-relations exec who was sat alongside him during the call] doesn’t care about in order to drive revenue. The answer to that is no,” said McCarthy. That’s borne out by today’s news: the sponsored album pop-ups will only be shown to people who follow and/or regularly listen to that artist.
Walking that tightrope between making more money from artist marketing while keeping listeners happy is one of Spotify’s key challenges going in to 2020, when it expects to launch more tools for labels and artist teams to use.
“Part of our marketplace mission is to create tools that bring artists and fans closer together. With our unique understanding of listener preferences and ability to deliver personalised recommendations, we can help artists reach the fans that care most about their music, driving value for both artists and fans,” is how Spotify’s VP, Creator, Beck Kloss put it in a statement today. “We view this as the next iteration of the popular recommendation and discovery features listeners already love on Spotify.”
Another important question about today’s news and the marketplace strategy in general is the extent to which it’ll work for independent labels and artists, with smaller marketing budgets, as well as the bigger labels. It’s perhaps telling that Spotify has provided journalists covering today’s story with an endorsement, not from a major, but from independent digital distributor OneRPM.
“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,” said Jordyn Reese, its product manager for US Latin & Urban. “This will absolutely be one of the top tools in our growth arsenal.”