By Derek Kartalian
This past week, Spotify announced the introduction of a new tool for artists to promote their music. This new feature utilizes the very system that has made Spotify the premier music streaming service: its proprietary recommendation algorithm. Spotify claims that its algorithm— that suggests new music selections based on the user’s listening patterns—creates 16 billion new artist discoveries each month. A staggering amount of music is discovered and listened to as a result of Spotify’s complex algorithm that accounts for thousands of factors when picking music for you. This new unnamed feature works by giving artists the option to boost their song’s priority in the recommendation algorithm with the intention of reaching a larger audience. However, since the Spotify algorithm is quite adaptable, Spotify claims that it will only continue to recommend the song to people if they think people would actually like to listen - it will not be forced upon anyone like when Apple forcefully downloaded the new U2 album in everyone’s Apple Music library in 2014.
While this tool seems like a great way for artists to promote and potentially gain momentum on a track they are excited to debut, the use of the feature comes with a cost. The report from Spotify mentions that there is no upfront cost to boost your song in the algorithm; rather, the streams that result from the recommendation system will be monetized with a lower royalty payout. This tradeoff presents an interesting opportunity for artists to try to gain traction while taking a decreased payout.
In the music industry, artists generally do not make much of their income from streaming, typically making most of their income from live performances and deals with venues and merchandise companies. Royalties for streaming are already extremely low (~ $0.004 per stream, or $4 per 1000 streams), so the use of this feature will likely not be super impactful on the earnings for many established artists; however, more up and coming musicians who rely solely on the internet to carry them may find themselves faced with a tough decision. Although the revenue from the streams generated by this feature may be decreased, a jump in popularity may propel a new artist forward in their career.
This new feature is fascinating as Spotify became a market leader in music streaming due to the quality of its recommendation system, and they are leveraging their technological differentiation in a way that is beneficial to both themselves and artists. In the era of rapid music streaming and discovery through the internet, this new tool presents an exciting way for artists to attempt to go viral and make a name for themselves.