Spotify has revealed plans to charge labels and artists for advertising services in a bid to raise revenue.
Despite reporting a total revenue of $7.44 billion in 2019, Bloomberg reports that the streaming service will now be offering more advertising at a higher price. They already use one service, titled Marquee, which allows artists and labels to send notifications to fans when new music is released, for fees of upwards of $5000.
Despite the total revenue, and Spotify's main business streaming generating $6.1 billion alone in sales last year, the company still continues to lose money because of the revenue going back to the music industry in the form of royalties.
In the report, Bloomberg shared a statement from Mike Mulligan, an industry analyst at Midia Research, who said: “They need to diversify their revenue streams, they need to work out ways to drive higher operating margins.” Although Spotify has more than 270 million total users, its advertising falls behind other platforms, with the company generating $678 million in advertising revenue in 2019 — less than what Twitter takes each quarter.
Spotify has been undergoing major changes over the last 12 months. In February, the service announced beta of a new Songwriter Pages concept that lists songwriting credits, and lets listeners find more music by the same songwriters. The new clickable Songwriter Pages are available on iOS, Android and Desktop apps by clicking on Song Credits and scrolling to the Written By section.
At the start of the year, the streaming giant shared that they do not have the ability to "validate and review" political advertising, and suspended the ads across the service's 141 million free users who currently hear advertising.
Read the full report from Bloomberg here.
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