Published
Wed, Mar 4, 2020, 18:55
- The new services are meant to allow Spotify to keep some of the money it pays back to labels in the wake of slow revenue growth.
Spotify is now asking labels and artists to purchase ad space and services for more visibility on its platform.
A Bloomberg report today outlined how Spotify is now trying to earn revenue through two new services for content creators already using its platform.
One service, Marquee, is already in use and allows for artists to send notifications to followers when new music is released. (The rates start at $5000.) Bloomberg reports another service is in the works that will allow creators to pay for more visibility on the service in order to potentially reach new listeners and grow their audience.
Spotify is under pressure from shareholders to increase revenue and make profit, and while the platform rakes in billions of dollars each year, it makes a loss once payments go out to music rights holders. Sluggish ad revenue growth is another factor.
The new scheme is a way for Spotify to grow its advertising revenue as well as keep some of the money that would otherwise go to labels and artists, which some have criticized as an indirect cut to royalty rates.
Richard James Burgess of the American Association Of Independent Music says, "People aren't very happy about it. Some labels feel like they'd promote music to people they will reach anyways, and it just reduces the royalty you make."
The new advertising scheme, which is known as the two-sided market place, is one of Spotify's two biggest priorities for earning new revenue, alongside its recent investment into making original podcasts.
Listen back to Angus Finlayson's recent two-part report for RA Exchange's The Hour on the changing economics of electronic music, which covers the impact of streaming, and specifically Spotify, in depth. (Read a written version of the first part here.)
Resident Advisor recently announced a ticketing partnership with Spotify.
This post has been updated.