Spotify offers users two ways of listening to music: either via a free tier in which users have no control over music playback and have to listen to ads, or a paid tier in which for a monthly subscription fee, they can listen to whatever they want, save songs for offline listening, and more.
Like we said, ads are part of the free tier which is also how Spotify makes its money, and now in a report from TechCrunch, it looks like the company has found yet another way to monetize the free tier and it is through sponsored playlists. This was discovered in the settings menu in the form of “Sponsored Content” in which users could opt out of. However the company has since confirmed to TechCrunch that this is something that they are testing, and it is basically where labels can pay money to insert new songs or songs they want to promote into playlists on the free tier.
This means that these songs are more targeted compared to current methods of advertising which includes banner ads. For example if you enjoyed listening to rock, then any new upcoming rock singles that labels want to promote could be inserted into your rock playlists, which should in theory be more effective than trying to market a rock song to people who might prefer another genre.
Spotify has told TechCrunch that if this test is successful, it would be rolled out on a more official basis and would only appear to users on the free tier. It’s not a bad idea and for those who are on the lookout for new music, this could be a great way for them to discover what’s new, allow labels to promote, and allow Spotify to monetize the free tier without hindering the user experience, but what do you guys think?