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Spotify experimenting with ad-skipping
By Chris Cooke | Published on Tuesday 14 August 2018
Spotify is testing a new feature that will allow freemium users to skip ads YouTube style. Called ‘active media’, the new functionality is being quietly tested in Australia.
The pitch to advertisers, who you might think would rather Spotify users did listen to their ads, is that based on each person’s skipping the streaming platform will be able to better profile the listener’s interests and then better target advertising. Or “deliver a more personalised ad experience”, according to the streaming service’s official pitch.
Spotify calls the new feature an “evolution” of its advertising model. It’s not clear whether there are currently active plans to further roll it out beyond Australia, or whether that is still dependent on feedback from users and advertisers alike
In many ways Spotify’s free level has mainly been a loss-leading upsell platform for the market-leading streaming firm to date, via which it can promote premium subscriptions. However, when the company listed on the New York Stock Exchange earlier this year, it insisted that it saw the free service and the ads it sells around it as a decent second revenue stream long-term.
Advertisers won’t be billed for skipped ads, so offering that option could negatively impact on ad income over all, unless Spotify can persuade listeners to enjoy their “personalised ad experiences” more often, and then sell more ads or charge a higher rate as a result.
With the music industry’s deals with companies like Spotify ultimately revenue share arrangements, the music community has an interest in the company boosting ad income, and equally in it not screwing up ad sales up by getting too skip happy. Though the minimum guarantees also included in many of those licensing deals, which are more important on the ad-funded side, might shield the music companies from too much ad-skip-induced pain.
