Last week was a big one for digital music. Facebook, at its f8 conference, launched a new platform with options for partnering with music streaming services. In advance of the news, long-time subscriber-based services raced to unveil new, free, Facebook-friendly products. The problem with free? Money's still gotta come from somewhere. Which may explain Spotify's recent hiring of a chief advertising officer in the form of former AOL exec Jeff Levick.
Adweek: Is there something in Facebook's new music functionality beyond allowing Spotify to automatically send updates to Facebook? I can already do that manually.
Jeff Levick: It’s more than that; it’s basically opening up Spotify to the world. Any Facebook user, globally, who wants to listen to music is able to click through and sign up to be a part of the Spotify service. It’s a great opportunity to grow our user base, increase engagement of our users, and from an advertiser point of view, it’s a significant new opportunity for reach globally.
Because the potential new users that click through will see ads?
Because they’re signing up as Spotify users, so over time, however they choose to use it, they are spending more time on our platform.
Will deeper integration basically mean users spam their news feeds with Spotify updates?
I’d say that’s a Facebook question. They’ve done a lot of changes with the feed and with new ways to deliver updates and with different types of information presented in different places in the fed or other places. The new functionality, as it relates to music, is the ability to share playlists and listen with your friends at the same time. It’s about the sharing of music and the engagement of music socially.
What will happen to users when their free six-month trials run out?
Spotify will always remain free. After six months, there might be levels of how much free music you can listen to in terms of hours. We haven’t made a decision on what that will look like. Free has to remain free, and that’s where the advertising also lives.
You guys have a bit of a dominant position out of the free streaming services, being one of the first to market here and having scale in Europe already. Does this Facebook platform level the playing field? It seems like your competitors with free services can do the same kind of “deep integration” you have.
We believe we have a superior product, and we welcome the competition because it highlights what you can do more of with Spotify. We have the largest library of music available in the cloud with 15 million tracks, and it continues to grow. Pandora has something like 800,000 tracks in the cloud. We have scale, speed, and functionality. There’s also a portability attached to it.
Just curious, how many of those 15 million songs are karaoke songs?
Well, I’ve only been on the job for around seven days so I’d have to get back to you on that, but hey, if you use Spotify, you don’t have to buy an expensive karaoke machine!
What is your goal for revenue mix between ads versus subscriptions?
We don’t break that out, but our free product is very important to us. It's ad-supported and it’s a huge part of the company strategy. The two major parts are audio and display. What you can expect to see is innovation in both of those products. Expect to see integration in all this media coming out of Spotify with ways for brands to be able to connect with people who love music and the social elements of all of this. We allow music to be shared, and we’ll allow advertisers to participate in those conversations.
Can you elaborate on any of those ways brands will be able to connect?
We’re working with our team and with advertisers to develop them.
Some executives in digital audio have complained about the overabundance of inventory and lack of ad dollars in the space (namely, Pandora CEO Joe Kennedy, in relation specifically to mobile). How do you plan to address that disconnect?
Our No. 1 focus is having an amazing product for consumers. Spotify is new to the U.S. and has a small team already speaking with agencies and clients, and I don’t think we’re seeing concerns with the radio industry or the display industry. If other companies are complaining, we’re doing a lot of listening, and we’re excited about working with the U.S. advertising community.
Are you trying to convert terrestrial ad dollars to digital, or pulling from existing digital budgets, or trying to gin up new money?
We’re doing all three. We’re working with folks from traditional digital and traditional audio, and we’re also working with the future, defining what the new product will look like and working with our partners deciding where the budgets might be coming from.