Spotify Would Like to Pluck Local Advertising from Radio Stations

Question: If streaming is hurting music sales, can it also eat into the listenership of radio stations?

Answer: It depends.

According to a story in today’s Globe and Mail, Spotify is testing Canada–one of the company’s fastest-growing markets–to see if running local ads for their free tier can work. Would, say, a local restaurant, auto dealership or retail outlet be prepared to spend to run commercials on Spotify? This, of course, would be an attack on the advertising base of local music radio stations.

Spotify certainly thinks this can work. They surveyed about a thousand Internet users aged 15-65 from the Toronto area, finding that Spotify had a greater reach than almost all of the city’s major terrestrial radio stations. ALMOST all of them.

Stations that played the hits–CHUM-FM and Virgin Radio–were more susceptible to being hurt by Spotify. Listeners to rock (Q107 and 94.9 The Rock/Oshawa were mentioned) and classical stations (specifically Classical 96.3) were more likely to stick with their station of choice. My guess that this is the result of demographic factors. Streaming tends to skew younger and towards people who are more tech-savvy.

RAIN had this graphic.

Another finding: While radio is still king in the car, daytime listening (at work, mostly) might be siphoned away towards streaming services like Spotify. The same applies to evening listening to about 10pm.

Finally, there’s this: Spotify is the most popular of the streaming music services in Toronto, with almost 17% of the people in the survey using the free tier at least once per week. Apple Music was second with 10.5%. They also have separate numbers for Google Play Music and Songza, but since Songza disappeared (it was formally and completely swallowed by Google at the end of January), so the full range of streaming behaviour isn’t really complete.