Spotify Remains Number 1 Music Streamer

Spotify is expanding into Connected TV by bringing video ads to the Spotify app on the Roku platform.

The Spotify app has been available on Roku devices for more than a decade and Spotify's ‘Video Takeover’ ads, which already reaches 551 million people streaming music across mobile, 平板电脑, and desktop devices, will soon include CTVs, beginning with the Roku platform.

“In terms of a consumption method using a TV to listen to music is still relatively small [the primary device is the mobile phone] but there is definitely a good audience 那 Spotify can reach,——克雷格·阿默, Global Strategic Insight Director at Kantar, tells 流媒体.

Kantar research finds 那 16% of people streaming film and TV in the US are using a Roku stick – 那’s huge number of users. And only third of Roku users are using Spotify- meaning the music streamer have a potentially massive group to tap into.

“We’ve seen free trials are a popular driver for people to try services for the first time so this could unlock a new audience for Spotify,阿默说。.

艾莉森·莱文, VP, ad revenue and marke停 solutions at Roku, said in a statement, “Roku and Spotify are uniquely positioned to make the largest screen in the home work harder for brands.”

Of Spotify’s 551 million monthly users, 220 million are subscribers 但是,尽管 属停 $12.4 billion revenue in 2022, a 21% increase year-on-year, it posted a $248 million loss. 该服务有 never published a net profit.

“Platforms like Netflix and Disney+ tell us 那 那 people on ad tiers 属te more revenue per user than those on those on ad-free tiers阿默说. “Obviously with Spotify the ad tier is free to use but it did introduce a first modest price increase (up a dollar to $10.99 for those with an individual plan in the US) for those 那 are paying and this has not affected the overall number of subscribers so 那 should yield higher revenue.”

Video ads will begin alpha tes停 this month, with additional markets following. In the future, more video ad products, such as video podcast ads, will be added. Podcast ad spending has increased at an annual rate of 19 percent in the U.S. (or six percentage points faster than other digital ad spending growth rates)—and an astonishing 60 percent in Europe.

The deal with Roku is the inaugural step in launching a Spotify CTV Partner Network. 广告时代 expect CTV ad spending to grow 21% this year to $25 billion in the US and $40.90 billion by 2027, making it one of the fastest-growing ad sectors. Spotify and Roku will share responsibility for selling inventory, but did not disclose how revenues would be shared.

Spotify’s head of advertising business development, Emma Vaughn, 《百家乐app下载》, “CTV is essentially the highest growth category for where advertisers are spending and where the eyeballs are.”

Partnering with CTV providers lets Spotify tap into growing spending, but it also factors into Spotify’s plan to create an advertising stack 那 lets advertisers target users using Spotify on various platforms.

“The dream is ubiquity,” 她补充说. “We’re going to bring the Spotify experience with all of these new consumer and advertising products to every point of consumption.”

Spotify reported a $41m hit on podcasts in the second quarter and has made heavy cutbacks in the division, laying off hundreds of staff members, after spending $1bn (£830m) on the format for creators including Meghan Markle, Barack Obama and Joe Rogan.

Today it has pivoted to concentrate on audiobooks, making 150000 titles available as part of the subs package to members in Australia and the UK.

直到现在, users have been able to purchase individual titles, with Spotify direc停 downloads through its own website due to an ongoing row with 苹果 over fees on in-app purchases.

The update means paying subscribers will be entitled to 15 hours free each month, equivalent to roughly two audiobooks of average length.

“Expanding further into audiobooks means Spotify is having to navigate different content types and make sure people can still discover new music,阿米尔说。. “We think 那 user satisfaction with Spotify dipped 18 months ago but over the last 6 months is has been improving ways to serve up music recommendations and discovery.”

Indeed, in its recent 点播音乐 report Kantar found 那 Spotify remains the largest music streaming service by a significant margin, facing down threats from Amazon, 苹果, 和YouTube.

It attributes its success in part to strong word-of-mouth marke停 “driven by exceptionally high satisfaction levels among current paid subscribers,阿默说。. “值得注意的是, Spotify's recent innovation focuses on enhancing music discovery, rather than prioritising podcasts and audiobooks as it had in recent years.”

“Some of the most important features 那 people want in a music service involve being able to create playlists and get decent music suggestions based on their music habits. Spotify have always led the pack when it comes to those features. Their satisfaction rate among users is always higher than for competitors.”

That’s been assisted by its use of AI to build and increase engagement. 这包括 AI DJ feature, launched in North America earlier this year and now rolled out to 50 global markets.

The AI DJ uses OpenAI’s Generative AI and an AI-属ted voice built using 2022 acquisition Sonantic to curate a personalised selection of music combined with spoken commentary to emulate the feeling of a live radio station complete with running commentary.

According to reports Spotify now appears to be developing AI-powered playlists. References discovered in the app's code indicate the company may be developing 属tive AI playlists users could create using prompts.

Key demos for music streaming

In the UK specifically Kantar found 那 TikTok rates highly (26%) among Gen Z for discovering new artists. In terms of overall listening habits Gen Z are more likely to be using music services 属lly and to pay for the experience.

“This group are the most engaged with music and the ones most willing to pay. That means they naturally skew to Spotify. Older age groups are likely to be using more free tiers and more likely to have a wider range of services. Amazon features more heavily among over 55s, 例如, and 苹果 Music peaks in the 35—54 age group, those with more disposable income.”

Unlike the more saturated video market, the whole music streaming industry has considerable room for growth. “当 33% of households 那 subscribe to a VoD service, such as Netflix or Disney+, still do not stream music digitally, 那 代表s a massive opportunity for music services to expand阿默说. ““Realising this untapped potential is critical to drive both incremental growth for music services and the expansion of the entire digital music industry. Platforms need to make their offer more appealing to older age groups which is where most of 那 headroom is.”

That’s just looking at ‘western’ markets like Australia, the US and Europe. Spotify will also have its eye on expansion into markets in LatAM and Asia.