The latest round of criticism for Spotify’s business practices is focusing on its marquee pop-up ads, and specifically the self-service ‘campaign’ tool that labels and artist teams can use to book them, which began beta testing in March.
Label Fourth Strike Records recently got access to the tool, and published a forthright series of tweets about what it sees as a program where “artists will be required to pay to show their *own followers* that they’ve released new music”.
The label also criticised the financial model of the ads, which are shown to fans who have followed ‘or shown interest’ in an artist’s music. “To make our money back per-tap, we’d have to get 125 streams – and that’s not accounting for transaction fees, distribution fees, etc. each person who tapped this screen would have to listen to the album front-to-back 12 times.”
One label complaining? The more-than 1,330 quote-retweets make it clear that the unrest is more widespread. For its part, Spotify has already published various case studies of artists and their teams using marquee ads successfully, and we strongly suspect a new batch will be coming along soon in response to the latest criticism.
Interestingly, Spotify has been keen to pitch a number of its ‘two-sided marketplace’ tools – see also: Discovery Mode – as ways for independent artists to punch above their promotional weight on its service. Fourth Strike Records clearly sees it differently.
It’s a reminder of the sensitivities as Spotify turns on more paid features in this marketplace of artists and fans that it has created. To some extent, it is reaping the consequences of the strategies of bigger tech platforms before it. Think of Facebook, for example, and the cautionary tales about organic reach spiking, then being throttled sharply when an option to pay for that reach is introduced.
The equivalent on Spotify would be, say, artists’ organic reach on the ‘Release Radar’ playlist being dialled down to push them towards paying for marquee ads. There’s no evidence of this happening at scale, but it’s what Spotify’s sharper critics will be watching closely for, and shouting loudly about (including to regulators) if they spot it.
In its defence, Spotify will point to features like its ‘What’s New’ feed, which is currently rolling out as a way for people to see a list of new releases from artists (and podcasts) that they follow on the service. As far as we can tell, this is a feature focused on organic, unpaid-for reach.
The final word on marquee, and on-DSP paid promotions more generally, will come down to the economics. The ‘money back per-tap’ aspect of Fourth Strike Records’ criticism. If Spotify ads couldn’t pay for themselves, nobody would pay for them, regardless of the ‘should you pay to reach your own fans?’ debate. And yet people – labels and artist teams – ARE paying for them.
Understanding how these models work, and not just from the case studies selected by Spotify but from a range of feedback from campaigns that have worked, flopped or scraped their budget back, is an important challenge for the music industry to crack on with. And all the while keeping a beady eye on organic reach through Spotify’s organic playlists and features, with the hope that it will find a more creator-friendly model than Big Tech’s boost-then-throttle template.