Why spotify is only 40 per cent effective for advertisers | radioinfo

Why spotify is only 40 per cent effective for advertisers

Monday 25 May, 2020
Spotify CEO Daniel Ek

Comment from Peter Saxon.

Spotify's uber-ambitous CEO, Daniel Ek has broadcast radio firmly in his sights. 

“Both short and long term, we are always thinking about Spotify’s role within the larger ecosystem,” said Ek in a recent interview with Music Ally“While most [external] focus is on competition between streaming services, we continue to be focused on the billions of users who are listening to linear radio.” 

Hate to rain on Mr Ek’s parade but the latest Infinite Dial findings presented last Wednesday by Edison Research president Larry Rosin, for CRA and Triton, shows that Radio remains not only Alive and kicking goals, but if Audio was an Olympic sport it would win gold for Australia.

Among a treasure trove of valuable insights was this graphic that seems to confirm radioinfo’s long held belief, that online music streaming organisations such as Spotify are not so much replacing radio listening as they are owned music as is demonstrated by the chart below. Over the past four years, online music listening has increased at a rate that pretty much corresponds to the rate of decrease in listening to owned music, CD’s in particular.

To be honest, linear radio hasn't been totally immune to the streaming services but the damage has been minimal and its got every chance of coming back when the new streaming toy loses its shine.

While all that may be old news for radioinfo readers, there’s something even more interesting to come out of the Infinite Dial findings.

Although we we’ve been largely unimpressed by claims that streaming services would eat radio's lunch, we were somewhat concerned that they would, nonetheless, compete for radio advertising dollars which is something that could not previously be achieved with owned music.

But as the chart below shows, 60 percent of Spotify users prefer to pay for the service, without ads, rather than listen to ads so as to get it for free.

Not only that, the trend towards paid subscriptions has grown year on year for the past four years. 

In effect, in terms of bang for your buck, when you advertise on radio your potential audience is all radio listeners (10+ Mon - Sun). In other words you get 100 percent of radio’s listeners but only 40 per cent of Spotify listeners. 

Peter Saxon



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Anthony The Koala
25 May 2020 - 11:50am
A few months ago on this site, there was a report about Spotify wanting to produce "radio-like" streaming services for the car combining a mix of music and locally-sourced news breaks. Such as service may well pose a threat to music stations.

According to the 2nd last horizontal bar chart, in 2017, 75% of listening in cars was terrestrial (AM/FM/DAB) with 1% listening to internet (IP) audio streams. In 2020, the percentage of listeners to terrestrial radio is 66% with a a corresponding increase of 19% listening to IP streams. The big threat of IP streaming is to music-oriented terrestrial shows.

On podcasts, one would presume that they are spoken word programs. There is no information about the percentage share of audio books. Whether it an audio book or podcast it may well pose a threat to spoken word terrestrial (AM/FM/DAB) broadcasting.

While podcasts may be daily up-to-date such as Ross Greenwood's "Money Minutes" or Brooke Corte's "Money News" or Sean Aylmer's "Fear and Greed" or Dr Norman Swan's "Coronacast" , generally podcasts don't have the immediacy of the 'breaking story' or the reaction from listeners via talkback or other talent.

In sum, terrestrial music programs may well be threatened by Spotify but not for terrestrial talk programs.

Thank you,
Anthony of analytical Belfield
Anthony The Koala
27 May 2020 - 12:35pm
I may add that Spotify is incorporating spoken word podcasts as part of its service. It has recently signed a broadcaster for $100m plus, https://www.theguardian.com/media/2020/may/24/spotify-podcast-deal-the-joe-rogan-experience .

Perhaps spoken word terrestrial broadcasting may be under threat from spoken word podcasts. Then again, podcasts do not have the immediacy of live radio and do not allow for immediate two-way communication between the broadcaster and the listener and/or guest.

Nevertheless, podcasts are the beginning. What is to stop Spotify having customised streams of podcasts interspersed with news on-the-hour from local sources?

Thank you,
Anthony of applications-oriented Belfield
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