Spotify aims to turn brands into 'tastemakers'
Spotify is looking to make brands as influential as the artists and tastemakers that have been key to its recent strategy of shifting to become a music discovery service by introducing new ad formats and other areas to house brands on the platform.
Speaking to Marketing Week, Spotify’s global ad product strategy director Gary Liu said throughout the rest of 2013 and 2014 the music service is looking to build the profile of brands on the platform as it looks to encourage its users to listen to more music, growing its advertising revenues and the likelihood they will upgrade to its paid-for service.
Spotify has been exploring new ad products, more integrated apps and even brand profile pages that users could follow, although Liu would not confirm which of those would be most likely to launch and when.
Liu said: “There’s lot of different ways brands can make an impactful presence on Spotify. Users are looking to Spotify for people to tell them what great music to do to and brands have proven that they can help with that. It could even be as basic as just media [through to helping brands to become tastemakers] at scale, that’s an objective.”
One such ad product likely to launch soon is the opportunity to place multi-screen campaigns on Spotify.
Liu said: “The US is currently the only market with a free Spotify offering on mobile. We are committed to changing that as a company and hopefully we’ll have some exciting news about that soon.”
Since Spotify launched in 2008, it has been met with a wave of competitors, from start-ups through to major players like Google and Apple launching their own streaming services.
Liu said Spotify still believes “piracy” is its main competitor, a stance he said it is likely to communicate about “more and more” through studies and other marketing communications as it continues to grow in size and influence in major markets such as the US.
In Sweden, for example, Liu said the music industry is growing again on revenue directly from music consumption. This can be attributed to the growing number music streaming users in the region, he added.
Despite its efforts to combat piracy, Spotify has come under criticism from artists, who claim the model does not help new musicians get paid fairly - including a very public Twitter display by Radiohead singer Thom Yorke on the matter recently.
Liu said: “We have heard these kind of criticisms throughout our entire existence and I don’t feel we have to proactively respond to the Thom Yorkes. This business has been incredibly profitable for the entire industry. Seventy per cent of all our revenue goes back to the labels.
“That was $500m back to the industry last year and 2013 is already on track to give back another $500m. We can always do more education and we’ve spent a significant time doing that with rightsholders, many of which understand why we are doing what we are doing.
“We are on the same side of them. Our success is on the same side as their success.”