In a bid to raise more revenue, Spotify has shared its plans to charge labels and artists for advertising services.
Even though they reported a total revenue of $7.44 billion in 2019, Bloomberg says that the streaming service will now be offering more advertising with a higher price tag!
Spotify To Charge Labels and Artists
Marquee, a service already in use, which allows artists and labels to send notifications to fans when new music is released, will in future have fees in excess of $5000.
Spotify’s main business of streaming generated $6.1 billion alone in sales last year. However, the company still continues to lose money due to the revenue going back to the music industry in the form of royalties.
In a report, Bloomberg shared a statement from Mike Mulligan, an industry analyst at Midia Research, that said: “They need to diversify their revenue streams, they need to work out ways to drive higher operating margins.”
Spotify Making Changes
Even though Spotify has over 270 million total users, its advertising falls behind other platforms, with the company making $678 million in advertising revenue in 2019. To put it in context, that is less than what Twitter takes each quarter!
Spotify has been making major changes over the last year or so and all for good reason.
Just last month, Spotify announced a beta of a new Songwriter Pages concept that lists songwriting credits. It also allows listeners to find more music by the same songwriters.
At the beginning of 2020, the streaming company said that they do not have the ability to “validate and review” political advertising. They went ahead and suspended the ads across the 141 million free users who currently hear advertising.