Spotify wants sponsors to pay so that listeners will be interrupted by fewer ads. The streaming music service is pitching a new ad unit that would eliminate all the ads on an entire playlist if the user will watch one mobile video spot. With the vast majority of Spotify users opting for free service and 65-70% of revenue paid to rightsholders, the success of Spotify's efforts to lure advertisers is essential to the company's future.
Coca-Cola, Nike and McDonald's are among the brands testing Spotify's new video ads.
"We're giving brands the opportunity to give consumers uninterrupted sessions of Spotify," Spoify sales boss Jeff Levick told AdAge. "Ad monetization is incredibly important… From our side, we have rights holders and have to underwrite [the royalties paid to those rights holders] with advertising."
"Their challenge is to generate as much monetization from advertising as they can without creating a user experience people get annoyed by," eMarketer analyst Paul Verna told the advertising trade.