In Spotify Refresh, a New Canvas for Advertisers

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Spotify CEO Daniel Ek didn't utter the word "advertising" once at his company's New York media event on Thursday, which saw Metallica's Lars Ulrich hug it out on stage with Napster co-founder and former Metallica archenemy Sean Parker. Mr. Ek was there to announce that Metallica's music was now on Spotify and to introduce a new set of features to the music-streaming service to help listeners discover new music by following the tastes of big-time music artists and other music aficionados.

Spotify player
Spotify player

But in an interview after the event, Spotify Chief Advertising Officer Jeff Levick talked about the potential that one of the new features holds for marketers. The new section, which Spotify is labeling "Discover," surfaces content such as songs, playlists, and live-performance videos that Spotify users haven't discovered yet but which they may like based on their past listening habits. The section is laid out in a visual-driven experience incorporating images and videos in a big-tile grid that has some traces of Pinterest.

"It's another new canvas for us to look at the right way for brands to participate in the music experience," Mr. Levick said in the interview.

Jeff Levick
Jeff Levick

Mr. Levick was low on details, but said Spotify will start experimenting with incorporating marketers into the Discover section in the new year. He also believes the timing of the Spotify refresh -- specifically the introduction of the "Discover" section -- fits in nicely with the move in the digital-media industry to create new types of ad formats that rise above the banner ad.

"Ads can be and should be about content and we plan to use this content-rich experience to let brands test out new things," he said, successfully avoiding saying the already cliched term "native advertising."

Up to now, Spotify has made money from marketers in two ways: through audio and display ads on the free version of the service. (Spotify also offers two paid tiers which are ad-free.) It also helps brands like McDonald's and Reebok build their own Spotify apps, which they often promote through ads on the service.

Mr. Ek announced at the event that Spotify now has 5 million paying subscribers globally -- paying either $4.99 or $9.99 a month -- and 1 million who pay in the U.S. Another 15 million or so use the service, but don't pay for access, meaning they are being hit with advertising.

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