Spotify’s New Advertising Model: Finally More Money or Risk to Artist Royalties?
Performing in the Advertising Machine
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Spotify's New Advertising Model: Finally More Money or Risk to Artist Royalties? · Source: Spotify
Spotify’s advertising model is about to undergo significant changes that could definitely affect the way artists are compensated. Whether this will be positive or negative is the ultimate question. And of course this is of interest to us musicians and music producers, as our music is certainly being offered through Spotify.
All About Spotify’s New Advertising Model
Spotify’s New Advertising Model: New Sources of Income or a Pay Trap for Musicians?
As part of the changes to Spotify’s advertising model, the platform has introduced the Spotify Ad Exchange (SAX). This allows advertisers to reach and view engaged and logged in Spotify users in real-time through an auction process. This enhancement provides advertisers with comprehensive addressability and measurability. At the same time, the Spotify Ads Manager has been revamped to offer improved targeting and measurement capabilities. The launch of the new “Spotify Generative AI Ads” tool, which can automatically create scripts and voice-overs, demonstrates Spotify’s increasing reliance on AI-based technologies to make ad content more efficient.
These announcements come on the heels of Spotify’s “Loud & Clear” report, which highlights the music industry’s growing distribution. Between 2014 and 2024, annual distributions will increase from $1 billion to more than $10 billion. Last year, Spotify ended its fourth quarter with a profit for the first time in a full fiscal year. The question remains, however, as to how much of an impact the new advertising measures will have on artist compensation. While Spotify claims that advertising revenue has more than doubled since 2020, it is unclear whether this will translate into higher distributions to musicians.
Innovative or Unfair? The impact on musicians
The report highlights that Spotify distributes around two-thirds of its revenue from premium subscriptions and advertising to rights holders. However, the free nature of the service remains controversial, as artists are paid significantly less per stream than for paid subscriptions.
Critics complain that the distribution system is being diluted by the increasing proportion of free users, and that artists are often earning less despite the overall increase in revenue. However, Spotify’s response to this criticism remains unequivocal: the company emphasizes that streaming enables more artists than ever before to generate revenue at all stages of their careers. The growing diversity of music and the ability to be heard around the world is creating a new dynamic, but one that also intensifies competition among artists.
More Money for Spotify – is There Enough for Artists?
The introduction of new advertising models could therefore lead to greater monetization of the platform in the long term. Whether that means a fair share for artists remains to be seen. The fact is that Spotify is addressing the paradox of the modern music market: while more and more artists are gaining access to a global audience, the competition for users’ attention is also increasing.
The idea that more artists than ever before are generating revenue may be true from Spotify’s perspective, but the question remains whether individual artists are actually benefiting. It remains to be seen how this development will affect actual payments to musicians.
More Information About Spotify’s New Advertising Model
- Spotify Newsroom Blog
- More about Spotify
- More news about Spotify
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One response to “Spotify’s New Advertising Model: Finally More Money or Risk to Artist Royalties?”
TL;DR: “we make tons of money… but we have no idea what’s going on after we pay royalties… it’s not our fault if you don’t get paid”
What a load of corporate cow manure.
Spotify could choose give less money to the top 1% so medium artists (100k-1m streams) could earn a decent living
Spotify could decide to push smaller artists in their playlists
Spotify could decide to reduce the amount of money given to lazy grift like ambient playlists
Spotify could decide to detect and not pay AI scams uploaded on their websites (allegedly, they could decide to not create some themselves)
But they don’t.