What Spotify’s Video Ads Mean For The Future Of Recorded Music

Spotify announced today that it would begin using video ads–in either 15 or 30-second increments. A 30-second video ad, for example, would net the listener 30 minutes of ad-free listening time.

At this point it seems that there are only two ways recorded music continues to survive. Either companies eventually subsidize it until all recorded music is free and paying for it isn’t an option, or streaming music services lower the price to the point of widespread mass adoption.

As Spotify further explores monetizing its 30 million free users–versus 10 million paying–with video ads, the subsidization option looks to be the most realistic. At a certain point artists trying to make a career in music likely won’t even accept direct payment from fans because few will be willing to pay what advertisers or corporate sponsors will pay.

Samsung spent nearly $14 billion on marketing in 2013, while the entire music recording industry made about $15 billion in the same year. Whether it’s through indirect ads or direct project sponsorships–e.g. Jay Z’s Magna Carta–it’s going to be hard for struggling bands to turn down money for licensing or other uses.

The other option, which seems simple enough, is to lower the cost of streaming music services. By lowering the monthly cost, services could drastically increase the amount of users paying into pool which gets distributed to artists.

Pretty much every service has standardized around $10/month which points to there being some reason why it doesn’t work to go lower. If that’s the case though, how does Netflix–a company paying $2 million per episode of The Blacklist in addition to all other content–support itself at $7.99/month?

If Spotify’s video ads prove even remotely successful, get ready for more free music, but also less ad-free music.

 
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