In An Attempt To Generate More Revenue, Spotify Is Now Demanding Artist And Labels Pay For Advertising. How Will Smaller Artist & Labels Compete?

Money, Money, Money! The goal of every business is to generate revenue. Spotify, is one of the most popular music streaming platforms on the planet. You can literally find almost any artist from any genre on the platform, yet they still want more revenue.

Spotify generated 6.1B$ in revenue last year due to it’s 120 million paid users, however the company didn’t retain all of this money as it goes back into the industry in the form of “royalties”.

In an effort to compete with it’s competitors ad sales, Spotify is proposing a new method to generate revenue: paid promotion and getting labels to pay to promote their artists.

In October of 2019, Spotify launched a new initiative called “Marquee” allowing an artist to pay an amount resulting in an increase of listeners over a seven-day period.

Senior Product Marketing Manager Charleton Lamb stated “You’re not paying for streams. Every listener has the choice to either engage or not,”. Even though this is true with artist as big as Lil Wayne & Justin Bieber using there service to alert fans of new releases it makes you wonder about the artist with little to no budget.

Indie labels and indie artist will suffer the most. Spotify became so popular because it provided the resources for musicians and independent record companies help release their music without the help of major labels.

With Spotify preparing to shift to a “Paid Promotion” strategy, major labels will benefit the most.  They have the funding to pay the money to make sure their artist are constantly pushed to the top of playlist or top of Spotify’s homepage.

It is also a win win for major labels because with the way things are currently constructed, the labels will recoup the money spent to promote artist anyway.

Small indie labels will suffer the most because they will not have the funds to go to a bidding war with a Sony or Epic (among others).

This is just another hurdle in the way of independent artist who are looking to eliminate the major label and put things into their own hands.

Any time money can be used to influence popularity, instead of just allowing the the quality of the music to speak for itself, the art form suffers in the long run.