Spotify has a new paid-for promotion tool. Is this good business or payola ickiness?

September 13, 2023 Alan Cross 0 Comments

It is illegal to pay a radio station to play your song without telling the audience you’re getting money for it. That’s called “payola.”

Meanwhile, it’s completely legal for a record label to pay a record store to set up a display promoting a certain artist. Remember all those posters and end cap displays? Paid for. That’s called “marketing and promotion.”

Then we have Spotify. It serves up songs like a radio station. It recommends songs via its algorithms just like a human DJ might. At the same time, though, Spotify will accept money to push your music just like a record store.

Spotify doesn’t make a lot of money from advertising. According to Music Business Worldwide, the platform brings in about US$5 million a day, far less than YouTube (US$84 million/day) and Meta (US$346 million/day). Spotify has never been cash positive, so it needs to find ways to bring in more ad dollars. How? By charging for marketing and promotion.

Back in 2019, the platform introduced Marquee. Labels can pay cash to directly advertise new releases to users. The latest initiative is called “Showcase.” For a price, artists and labels can highlight their material old and new on the Spotify mobile home page. Prices start at US$100.

Here’s how it works:

I find the idea of using Showcase to promote older music interesting. Let’s say, for example, a catalogue track akin to Kate Bush’s “Running Up That Hill” blows up as the result of placement in a TV show. Showcase will allow the rightsholders of that song to capitalize on that old song’s new buzz. More catalogue tracks are currently charting on Spotify than ever before, so this could accelerate that consumer listening behavior.