Spotify have been testing a new feature for free streamers in Australia that allows users to skip ads if they want to – but how does that work for advertisers and streaming revenue?
Spotify have, with the help of other digital music services, re-invented the way we consume music making nearly every song in the world available in one place. Spotify revolutionised music by making it free, but the musicians still made money through advertising between songs. But Spotify are testing a feature that would let listeners skip ads.
How will this work for paying musicians? It seems like Spotify don’t want users to be able to skip through every ad, they just want them to be able to skip ads that are pointless to them. By allowing users to skip ads that they aren’t interested in and instead listen to adverts that apply to them or for things they might buy then advertisers, Spotify and the listener all win. Advertisers can target more relateable audiences which in turn means the audiences can relate, whilst Spotify gain happy customers and partners.
Spotify’s global head of partner solutions, Daniel Lee says: “Our hypothesis is if we can use this to fuel our streaming intelligence, and deliver a more personalised experience and a more engaging audience to our advertisers, it will improve the outcomes that we can deliver for brands. Just as we create these personalised experiences like Discover Weekly, and the magic that brings to our consumers, we want to inject that concept into the advertising experience.”
Spotify say that they will refund advertisers for any ads that get skipped. Ad-free listening isn’t the priority for Spotify, the tier acting as a stepping stone to move onto their Premium paid streaming tier which equals better royalties for artists and labels. Optimising advertisements might make it more valuable to advertisers which could in turn lead to more investment, however making their free tier more appealing for listeners could be dangerous in terms of conversion.
This is only in testing currently in Australia and won’t necessarily be launched as a wider feature. They have been testing there for the past month now.