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Spotify positions as radio add-on

News, 24 September 2015

LONDON: Spotify, the music streaming service, believes it can become an effective "add-on" to radio, increasing reach and bringing more money into the medium, according to one of its executives.

"What we're looking to do is to grow radio's overall share," David Cooper, director of sales at Spotify's UK operations, told Marketing Week.

He likened Spotify's approach to that of YouTube. "Rather than go in and try and take away money from the likes of Channel 4, they want to increase the overall share of money that's invested in the medium," he said. "That's really where we're coming from."

The latest Advertising Association/Warc Expenditure Report found radio adspend in the UK rose 8.2% to £122m in the first quarter, with growth of 4.3% to around £600m forecast for the year as a whole.

Cooper's remarks came on the back of a new study, carried out for Spotify by TNS and taking in more than 20,000 respondents in ten European countries.

This showed that, within the 15-34 age group, the service achieved an incremental reach of between 14% and 21% for various commercial radio stations.

And these extra listeners may be more receptive to brands, as another of the study's findings was that people are more likely to pay attention while listening on Spotify than they do to commercial radio.

"The brands that do well fully engage with our platform and go beyond straight advertising," explained Cooper, citing as an example Jack Daniels which "has done various events with us that were very well rounded".

"Brands that are our big audio spenders understand the power of going straight to people's earphones," he declared.

Music streaming is now a $1bn industry according to figures released this week by the Recording Industry Association of America. In the past year, revenue from paid subscriptions to services like Spotify grew 25% to $478m, while revenue from free services like Pandora grew 22% to $550m.

Download sales dipped 4% to $1.3bn while CD sales were down 17% to $748m, the Telegraph reported.

Data sourced from Marketing Week, Telegraph; additional content by Warc staff