Music | March 3, 2020 12:25 pm

Spotify Wants Artists and Labels to Pay to Promote Their Music

The move comes as the company looks to grow its ad revenue

iPhone smartphone with headphones playing Spotify
Spotify and other streaming services are participating in "Blackout Tuesday" today.
Mahmut Serdar Alakus via Getty

Since it launched in 2008, artists and labels have scrambled to figure out how best to maximize revenue from Spotify, and now, as a new Bloomberg piece points out, the streaming service is looking to maximize their own profits by asking them to pay to promote their music on the platform.

The Stockholm-based company has already rolled out a new feature called Spotify Marquee, which allows artists and labels to pay to have notifications sent to users when they release new songs or albums, and as Bloomberg notes, musicians like Justin Bieber and Lil Wayne have already signed up for the service.

The move comes as Spotify attempts to boost its ad revenue. The company generated more than $6 billion in revenue in 2019, but most of that came from subscriptions, and much of that money goes directly to labels and rightsholders as royalties. Of the $6 billion last year, only $678 million — or roughly 10 percent — came from ads, and as the publication notes, that’s less ad money than Twitter rakes in in a single quarter.

“They need to diversify their revenue streams, they need to work out ways to drive higher operating margins,” Mark Mulligan, an industry analyst at Midia Research, told Bloomberg. “They’ve been apologizing for the underperformance of ads.”

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