The Power of Spotify Premium for Emerging Artists
By: Joseph Zapinski
Spotify has created an incredible business model by making their free version absolutely intolerable. With the free version, a user gets access to more or less all of the same music as a premium user, but with 100x the hassle of listening to whatever you want, whenever you want it. There are blaring, annoying audio ads every few songs and if you're on mobile, you aren't allowed to click specific songs, leaving you to pick an artist/album/playlist and hit shuffle, praying you land on the song you wanted. Not to mention you only have so many skips before you have to listen to even more ads. All that said, I think the fact that they do this is actually a great thing for artists because it forces listeners to give money to the streaming service that is ultimately the one paying out the artist.
Before streaming, you had to buy your music in a physical form, there was no way around this and it meant that there was a very streamlined way for artists of any size to make money. However, now with the ability to listen to whatever music you want on your phone, essentially for free, how do artists make up that gap in sales? The easy answer is ads, but when you look at the data, it seems as though the real answer is buying Premium, and artists whether they are established with a large following or are just up and coming, need to be aware of this data to better put their music out into the world.
Ads drive revenue for streaming services and to get rid of them, you have to find a way to fill that gap in revenue. This gap is where premium comes into play and I believe Spotify does a better job than any other music streamer in making their premium version accessible, easy to use, and great for emerging artists. Because Spotify has done this, 89.9% of their revenue in 2015 came solely from people subscribing to Premium. Obviously emerging artists are not going to be making money from people choosing to deal with ads all the time because Spotify's ad revenue made up only 10.1% of their revenue.
https://qz.com/690521/spotify-makes-90-of-its-money-from-30-of-its-users/
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