Big Data Killed the Radio Advertiser: How Spotify Turns Listens into Lines of Code

Music is an invaluable aspect of culture, and never more than in the digital age. We can thank Spotify for the proliferation of affordable and (arguably) ethical digital consumption. Established in 2006 by two Swedish ad-tech millionaires, Spotify has effectively created a market of listeners willing to pay — directly or indirectly — for access to music. However, while we may listen because of Spotify’s extensive catalogue and spot-on recommendations, it seems the company’s real value lies in its almost invisible interweaving of advertising, technology, music and finance (dubbed ‘the Spotify Effect’), and all the data it collects in the process. Spotify claims to know a lot about its listeners. Recently, Spotify released a millennial audience profile, filled with insights into consumption behaviour, and how brands can best connect with this lucrative, elusive audience. And they seem to know us pretty well!

Spotify says millennials are impassioned, eclectic and voracious listeners, with the vast majority claiming music defines us. And they should know – we make up 62% of their users. Spotify has provided the information required for brands to tailor creative messages to millennial listeners across various ‘streaming moments’ — utilising our ‘stream every moment’ mindset – thereby increasing ad recall, brand awareness and consideration. Spotify generates this allegedly invaluable data with the help of computer-generated playlists. A nifty line of code breaks down songs into contexts — from working to chilling to partying — and moods — anything between ‘Have a Great Day!’ to ‘Life Sucks.’ In doing so, Spotify converts music into data, and that data into audience insights.

While I applaud their valiant effort, classifying a song through such a utilitarian lens ignores 99% of what goes into writing a song, and strips it of context and meaning. This approach tries to calculate the incalculable: treating something with inherent emotional and cultural value as a disposable commodity. Even Apple CEO Tim Cook agrees that the datafication of music risks draining it of its humanity. Nonetheless, Spotify swears there’s method to the madness, boasting several success stories. Wild Turkey, for instance, saw a 367% increase in awareness and a 41% lift in consideration targeting ‘partying’ millennial men (classic).

This resource comes at an interesting time for Spotify Australia with the introduction of Ad Studio: its self-serve audio ad platform, which makes it easier and cheaper for brands to create and rollout effective targeted campaigns. But it also comes as Active Media – a fancy name for Spotify ad skipping – launches down under. Such a colossal contradiction begs the question: why make it easier than ever to create effectively tailored targeted ads, then give listeners the ability to ignore them?

Something doesn’t really add up. One explanation for this overhaul could be Spotify’s vested interest in building their premium audience. Spotify conveniently exploits its ad server to promote the paid service – as a side note, I decided to suspend my premium account while writing this piece, and (no joke) the only ads I’ve received have been for Spotify Premium. But this seems to be working: premium subscriptions made up 90% of total revenue in 2017, and the number of premium subscribers is now 83 million, representing 40% year-after-year growth. Since the free service has never been profitable, this motive has some logic. But if this is the plan, then why reduce the incentive for making the switch?

Perhaps Spotify’s goal is to reinforce its image as a high value, innovative and profitable company. After all, this has been its motive since market entry. Its strategic position as a cool, Nordic tech startup — despite better resembling a media company or financial broker — has allowed for higher valuation, greater investment interest and even the exploitation of regulatory loopholes to secure more funding during the recession. Spotify further maintains an image of profitability, increasing its ad revenue by multiplying supply chain vendors, sharing your data with an overwhelming number of companies while you stream. Given its struggle with profitability since becoming a publicly listed company earlier this year, Spotify is likely doing all it can to appear valuable, even if that means selling out its users to invent a revenue stream.

Companies involved in the ad supply-chain over a 60-minute Spotify session

Ultimately, it seems Spotify has shown its true colours, not as an innovative tech firm, but a 21st century media titan, currently stuck between the rock of dominating the market and the hard place of making a dollar. While music consumption has always been dominated by powers outside the industry itself, its increased entanglement with technology and capitalism threatens to weaken cultural force, and strengthen connections to “disturbing aspects of modernity such as forced obsolescence and waste.” This millennial study reminds us how much Spotify knows about us, and how much it values that knowledge. But in doing so, Spotify has revealed how little it values the music, and the artists.

And now…

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