Spotify has been prioritizing its data play in an effort to help
advertisers market to people based on what they're doing while
listening to particular genres or playlists. Mr. Benedik said each
playlist offers its own set of consumers. Some are more often
listened to on mobile, such as workout and dance-oriented lists,
while others are more popular on desktop while people are at
Spotify plays ads to consumers who use its service for free.
Premium subscribers, who pay $9.99 per month, are not served ads
and will not see sponsors on Spotify playlists.
Ads will be served in sponsored playlists as normal, although
the first ad break will go to the sponsor, which will also recieve
category exclusivity. Sponsorships will be sold for a week at a
Spotify tested out the new product with Kia, which sponsored New
Music Friday. Kia attached its logo near the top of the playlist.
"We wanted to provide our Sportage customers with a unique
experience and believed 'New Music Friday' was a natural fit for
their interests," said David Schoonover, senior manager-head of
digital, CRM and dot-com, Kia Motors America, in a
statement. "This new platform is an engaging and interactive
experience that allowed us to further target consumers that align
with the Kia brand and, in particular, with the all-new Sportage
Last May, Spotify began offering marketers the ability to target
ads to the then-roughly 45 million people who use Spotify's free
service based on the playlists they stream. Advertisers could
target playlists in 15 categories of moods and activities like
workout, commute, happy or chill.
It uses its first-party data and also harnesses analytics from
The Echo Nest, a music-intelligence firm it acquired in 2014. In
2013, it acquired Tunigo, which Mr. Benedik said was among the best
of the music discovery and curation platforms. It also said it
recently began partnering with Krux, a data management platform, to target
Spotify has a number of ad formats, including an audio ad suite
that serves roughly two minutes of ads per hour, versus the eight
to 15 minutes of ads per hour on terrestrial radio, said Mr.
Benedik. Others include a video ad suite that includes sponsored
sessions on mobile, which is when a person using the free service
will watch a 15-second video from a brand in exchange for 30
minutes of ad-free listening. The mobile service also offers an
overlay ad unit, while desktop offers homepage takeovers and video
takeovers in between songs.
Spotify has been battling increased competition from newer
streaming music services. Last June, the company said it had 20
million subscribers and 75 million active users, but in March, its
founder-CEO Daniel Ek said in a tweet that it had
reached 30 million subscribers.
That suggested that the arrival of Apple Music last June hasn't
had much of an effect on Spotify, at least in terms of paying
subscribers. Executives for Apple Music said in February on John
Gruber's podcast "The Talk Show" that its subscriber base had
reached 11 million users since it arrived at the end of June 2015.
Tidal, which Jay-Z bought and reintroduced in March 2015, said in
March 2016 that it had reached 3 million global subscribers. Tidal
is a subscription-only, ad-free service, though the subscriptions
are tiered by level of music quality.
Pandora, long the biggest service in the category, saw its user
count peak in 2014 with 81.4 million in 2014 and ended 2015 with
81.1 million. At the end of the first quarter of 2016, the company
said it had 79.4 million users.