How The Soup is Made
Advertisers pay websites and platforms like Spotify a set amount per thousand times their ad appears. The price could be $10 or more per thousand ad appearances. Every time a web page loads, an ad appears. It doesn’t matter if the visitor reads an article, streams a song, or watches a video. If the page shows an ad, the advertiser pays because their product or service received brand awareness.
What happens when you send fans to these platforms is they’re often greeted with ads. Send someone to YouTube and it’s the first thing they see, as they’re forced to watch an ad before being allowed to view your content. On Spotify, as a non-user, they’ll get an ad to join Spotify. As a Free user, they’ll see banner ads.
Exploitation Without Compensation
When I go to Olivia Rodrigo’s Smart Link and click to visit Spotify, I’m shown an ad. It doesn’t matter if I stream any of her songs, how long I spend listening, whether I save, follow, etc. my visit has already been monetized. Now, for Olivia Rodrigo to get her share of this revenue, I have to stream one of her songs for at least 30 seconds. Adding to it, Spotify’s new threshold will require each track an artist releases to generate at least 1,000 streams every 12 months. This will allow the platform to exploit the catalogs of millions of artists without compensation.
Unlike YouTube, Spotify requires an account to stream music on their platform. As a visitor without an account, when I click to stream I’m confronted by an ad that directs me to sign up and join the platform.
This is called Customer Acquisition and as a platform, it costs Spotify lots of money to acquire new customers. As a visitor without an account, Olivia Rodrigo would be aiding in Spotify acquiring me as a customer. After signing up, creating an account, and going through all the steps in that process I may never return to her page to stream her music. Spotify, however, will monetize my visits with third-party ads and first-party ads to upsell me on becoming a Premium subscriber. Olivia Rodrigo gets nothing because I didn’t stream any of her music for at least 30 seconds.
In the case of YouTube, they reserve the right to advertise on your videos no matter if you’re in the Partner Program or not. Additionally, even without third-party ads, they advertise the content of other creators on your videos to drive views and ad revenue.
Using the image above as an example, all of YouTube’s Recommended videos are effectively ads. None of the videos they’re Recommending belong to Femi Onas so they’re driving traffic away from him and his music. Not only is he being restricted from earning from the visit he may have spent money to drive, but he’s also being limited when it comes to acquiring those visitors by having them pushed to other creators.
Money on The Table
With an advertiser paying $10 per thousand times an ad appears – called a CPM – 3,000 Page views would drive $30. It would take you 10,000 streams to earn as much. With Spotify’s barriers to access, only 16% of your audience on Facebook may have a Spotify account ( 500 Million Spotify users out of 5 Billion Facebook users ). 39% of Spotify users have a Premium account granting them the ability to stream your music on-demand. Even if 80% of those Premium users streamed your song 3 times each it would drive just 447 streams earning you a single dollar per 3,000 visits and not $30.
The better way would be to send your fans to either a Smart link or Web page monetized with ads and direct your traffic there. Showcase your track, plus provide more content to drive meaningful engagement while, optionally, continuing to link to third-party platforms. With a layout that features a sidebar, you can feature the release with an option to buy and promote your other releases. Every new track page that’s visited as fans explore your catalog would drive more revenue. Every return visit would drive more revenue. Fans could listen, engage, and even buy without being required to in order for you to monetize. That’s what we built with our Payusnomind Music Monetized Smart Links.
It’s time for artists to wake up and understand how the game is being played. With subscriptions, the revenue of a subscriber is capped so greater consumption degrades value. The more music a Spotify subscriber consumes, the lower the value of their $10 subscription fee. This is why Spotify has found ways to advertise to subscribers by using Marquee, Discovery Mode, and Showcase. Advertising revenue increases with consumption. Spotify isn’t alone in this, we’ve also seen Netflix and Amazon Prime introduce ads. As an artist, you shouldn’t be reliant on selling access to music that’s freely accessible elsewhere or resorting to charity. Your ability to bring people to the party is why you’re recruited by these platforms. They understand your value, even if you don’t.