All You Can Eat Tunes, With a Side of Advertising

By BKV in Media Strategy on August 24th, 2010

With music being a constant and major pulse in our lives, we have all become susceptible to the unending barrage of new artists, new songs, and the hype that comes with the hottest new single on the market. Because people love music so much, advertisers have followed suit by positioning their brands and services next to what catches people's ears for many years now. From the early branding sing along slogans to the latest YouTube music video/meme sensation, advertising has been "flipped-turned upside down" (shout out to my Fresh Prince) in order to keep itself in front of the average consumer. While the entertainment landscape is vast and highly debated, I am only going to focus on one aspect of the musical world and one company that, in fact, has been talked about way too much online. Yes, I am feeding the fire, but I have also come to realize how important this is to future generations and the evolution of the music community as we see it. This company is called Spotify, and it fits into the same genre as the other Gorillaz (Can't help myself) in the Spotify Logo room - Apple iTunes, Rhapsody, Amazon, Microsoft Zune, MOG, and newly released Rdio. Each of these companies provides the average user a massive Jukebox of songs to feast off of as long as they are paying customers. The one thing that separates Spotify from all of these, you ask? Advertising. So, why haven't you heard of it? It's only launched in the UK, and the US mass media hasn't gotten a hold of it yet. Surprisingly, this is the only current ad-supported service of its kind with any sort of mass appeal. Pandora has been doing it for a while, but it acts more like a radio station than a music service, where YOU chose the songs to play. With the other services I listed above, they offer either a pay-per-song model or a monthly subscription. I have used Spotify briefly, and the ad model is really not bad at all. Hearing one or two ads during a 12 song playlist doesn't put a damper on the service. If this increases substantially, they might have a problem on their hands - especially here in the US where it seems we all love to complain. Either way, one can easily see that we are currently in a huge transition period, while companies are trying to figure out what the consumer likes best. So will the ad-supported model work? I am excited to see if it will. So far, Spotify has claimed that it is working in the UK, but we are unsure if that is because Spotify Interfaceof ads or the ad-free premium accounts that people actually pay for. During a recent interview at SXSW, the founders briefly discussed some of the targeting and learnings they are developing around ads and what people are listening to. In the near future, they will be able to target ads based on the genre and general feel of the songs. They are also seeing very high click through rates (3% -5%) as compared to traditional metrics. Who knows, services like these might become the next or ValueClick of the digital audio world. Until that happens, I am going to stick to what's working in the US so far. Just to show you how impressive this change is, I have been typing this post and streaming music over my 3G cell phone through MOG's online subscription base of over 7 million songs. Currently playing: Delorean - "Stay Close." You have to admit, it's pretty amazing how quickly things are changing these days and how many of the treasures in life are now at the mercy of your fingertips. More excitingly, smaller bands and musicians can even get some love without having huge record deals or mass radio play. I wonder if it will ever happen for this guy - Neon Tuxedo.