Spotify's latest revenue generation scheme involves music labels paying to get their songs into playlists.
(CCM) — Spotify has started to inject sponsored tracks near the top of its playlists as part of a trial that gives music labels the opportunity to pay to promote particular songs. Spotify says that it is testing sponsored songs in its free service, but some paying Spotify subscribers have reported discovering sponsored tracks in their playlists, according to a Digital Trends report.
Sponsored songs are not flagged in Spotify playlists, but a verbal announcement is made before the track is played, the report says. Users appear to be able to opt out of receiving sponsored songs by toggling a "sponsored song" button in the desktop and mobile Spotify apps' settings, but it is not clear yet if users of Spotify's free service will be able to do this once the trial is complete.
The company has over 50 million paying subscribers, and Spotify has long attempted to monetize its free service subscriber base by displaying banner ads in the Spotify application. Last year, it also offered brands the opportunity to sponsor popular playlists with the inclusion of their logo and videos.
The reason that Spotify is trialling sponsored songs as a source of revenue generation is likely to be connected to the fact that it has yet to make a profit. In 2015, the company had $205 million loss, and leaked figures suggest that the company suffered a loss of over $440 million in 2016.
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