Spotify has changed their free music streaming service in an attempt to make Spotify ads more effective. Starting in May, Spotify users can only listen to 10 hours of free music a month, with a limit of five plays for each song.
“There’s an issue of ever having enough ads if users listen all day. The inventory will now be more manageable and we’ll have a better idea of what will be available each quarter,” he said. “For brands it’ll be more valuable to reach a lot of people with one ad than serving one person the same ad over and over again,” said Jonathan Forster, Spotify general manager for Europe and VP of ad sales when speaking to Advertising Age.
“There will be fewer ads but there’ll be less usage, so we don’t think we’ll have issues delivering campaigns,” he went on to say.
The target here is better advertising, as they would be able to sell better ads for the Spotify free service. Some Spotify users were such heavy users that they generated too many advertising impressions, causing the value of each ad to go down. The solution? Less ad impressions, and the value of each Spotify ad goes up.
They also hope that this will drive more users to the Spotify premium service, giving them access to full album previews before the album's release date. Spotify premium can also be used on an iPhone or Android device.
A Spotify US launch is still in the works, but is facing challenges in negotiations with record labels, as they don't like the ad-supported music model as much as their European counterparts. Spotify did, however, just land a $100 million investment round. The move to a new advertising model could be an appeasement to the US record labels, as a way to beef up their paid service in a way that could pay the licensing fees.
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