Spotify and record labels have a long-standing and arguably beneficial relationship. With the streaming giant‘s latest pitch, the future of the relationship may become complicated.
In 2019, Spotify launched Marquee, a playlist submission tool that “drives incremental streams” for artists through pop-up ads. However, at first, the company touted that the ads were separate from their popular editorial playlists.
According to Bloomberg, the Stockholm-based music mammoth is now pitching a second monetization effort that pushes the label to pay them for promotion and streaming data of their music habits. Under this new program, Spotify will insert sponsored songs into playlists to better connect artists to their listenership.
Since the billion-dollar business shovels the majority of its revenue back into labels due to royalties, Spotify is seeking to diversify its streams of ad revenue. For an entity that singlehandedly revived the music business, it sounds fair. Problem is, their newest idea is scarily similar to payola, which would reward label signees with hefty financial backing with numerous placements while indie musicians fight to have their music heard.
In the past, several Spotify executives have boasted that artists do not pay-for-play, but it looks like the tides of the streaming industry are changing. So what does this mean for the future of music consumption? The promotion game will become an arms race according to industry consultant, Vickie Nauman.
“If labels are putting out a new release, they are going to get behind that with playlist placement, with billboards, general advertising, marketing everywhere,” Nauman said.
Given the legal troubles new and established artists continue to face, looks like this will be another part of the business to keep an eye on.