Megabrands will soon be able to recommend your next Spotify playlist.
The music-streaming service will add apps from the likes of AT&T, McDonald's, Intel and Reebok over the coming months in its latest effort to curate its immense library of music and make the platform more attractive to advertisers that can help offset massive licensing costs.
Spotify, which launched in Europe four years ago and in the U.S. last summer, said it has amassed 10 million active free listeners who also hear ads, and 3 million users paying a monthly fee for unlimited ad-free tunes. That fee is $9.99 a month in the U.S.
Spotify introduced apps late last year with music publishers such as Rolling Stone, Pitchfork and Billboard so that third parties could create playlists from the service's 16 million songs. The brand apps, which will first be available in the U.S., operate the same way. Spotify CEO Daniel Ek will introduce them at Ad Age 's Digital Conference in New York next week.
The first brand apps will include AT&T's "Surround Sounds," which plots songs to the locations where they were written, recorded, played or performed, allowing users to find music by searching maps. Reebok's app creates workout playlists, and Intel's "Sifter" recommends songs, bands and artists based on what users' Facebook friends are listening to.
Enticing brands and their ad budgets is crucial for Spotify, which can't expect paying listeners to cover the licensing fees for every song it streams. So far it has paid $300 million to record labels for streaming songs, according to Chief Marketing Solutions Officer Jeff Levick.
While Spotify doesn't charge anyone, brand or not, to build apps on top of its service, brand apps could attract more ad money to the platform. Consider the Facebook effect: While it's free for brands to build pages and apps on the social network, they often spend money advertising on Facebook to get people to visit or "like" them.
"Brands will build these apps, and they'll spend their marketing dollars to promote them on and off Spotify," said Mr. Levick, who joined the company from AOL, where he was president-global advertising. Spotify already sells display and audio ads.
Advertising, of course, is not the the company's only revenue stream, considering its 3 million paid subscribers. Spotify raised a reported $100 million in venture funding last summer and is trying to raise another round at a $3.5 billion valuation, according to Business Insider.
Because Spotify is relatively new to the U.S., the brand apps (and brands' efforts to promote them) might also help get the service in front of mass, less tech-obsessed audiences. Intel plans to promote its app with ads on both Spotify and other digital channels, said David Veneski, Intel's U.S. media director. It will be available late this month and eventually on Intel's Facebook page.