Summary
- Spotify is focusing on maximizing ad revenue and engaging users with new AI tools for advertisers.
- Spotify’s new AI tool generates ad scripts and voiceovers for segments between songs, in the US and Canada.
- Users’ general frustration with ads and lack of promised lossless streaming could potentially drive users away from Spotify.
Spotify has been a two-tier music streaming app for years, offering most of its core features for free so long as you put up with advertisements. Premium subscribers get an ad-free experience with other conveniences like custom playback sequences, unlimited repeats, and more. While we wait for a new tier for lossless quality streaming, Spotify is equipping its advertisers with an AI tool in a bid to keep its ad revenue climbing.
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Presently, subscriptions contribute more to Spotify’s earnings than the advertisers, but a recent New York Times report states the business is intent on maximizing the potential of the latter. On Wednesday, Spotify shared elaborate plans to help advertisers with new initiatives, like making ad purchases easier. This seems to be motivated by the distinction that Spotify commands more user involvement and attention than, say, YouTube where Reels and video podcasting has been performing well.
The key new addition, though, will be a new AI tool for brands in the US and Canada that automatically generates scripts and voiceovers for ad segments injected between songs on the app. The company’s co-president and chief business officer Alex Nordstrom told the New York Times this push for advertising makes sense because an engaged audience will likely engage more with ads on the platform as well.
Spotify reckons its engagement is strong because users are arguably more involved in joining shared listening sessions with friends or catching up on a long podcast or audiobook spanning several hours. This involvement beats typical entertainment from Reels and Shorts, which Nordstrom says will soon “self-swipe” as well, further reducing user interaction with the app.
AI-powered ads and other issues might also drive users away
Compounding problems
However, typically we have seen users grow increasingly frustrated as ads on any platform swell. On the video streaming side, we’ve seen the likes of YouTube crack down on account sharing and other tricks to get cheap Premium subscriptions as it pushed for more invasive ad strategies. I worry the same could happen on Spotify if it continues going down this road.
Moreover, frustration among users has been on the rise since we have waited for a lossless-quality streaming service for more than a couple of years now, only to be teased on with leaks. Spotify also has other problems to tackle, such as pornographic adverts and podcasts or shows with sexual content that flout the platform’s terms, but still go unchecked. With AI to speed up the process for ad creation, evidently minimal filtering in place, and little hope for users to hang on to, Spotify’s appeal may dull soon.