Spotify Free is the new radio. Now what?
Spotify is facing relentless pressure to shut down its free access tier, based on industry concerns over low royalty payments. But Spotify is now distributing data showing that its free tier actually rivals the reach of most traditional radio stations. In major markets like New York, Los Angeles, and Chicago, Spotify Free is a top five station in terms of overall listeners and reach.
The US-based study, conducted by research firm TNS and commissioned by Spotify, was shared with DMN today but conducted in late December. It involved 1,943 respondents ages 15-64 years. The 18-49 demographic was a particular focus, with 1,217 participants involved.
All of the participants were given questions about their listening habits, particularly as they related to Spotify Free.
Shocking results? Well, the biggest finding was that Spotify now commands very impressive brand recognition, and that is translating into heavy listenership. That group of listeners, in turn, displays far better listening habits when it comes to how long they listen, when they listen, and how engaged they remain.
The first major difference, according to the Spotify report, is that Spotify Free listeners are far more engaged than traditional radio listeners. They aren’t just flicking on a station during their morning commute or blasting the radio for a quick shower or dishwashing session. Instead, across several major cities, engagement rivaled some of the largest stations (see below). In some cases, Spotify Free attracts the greatest levels of engagement across all traditional stations in a geographical area.
There’s also a big age differential. In particular, Spotify Free is grabbing far more younger listeners, with Boomers and older generations more wedded to traditional radio. That’s hugely important to advertisers, who are not only trying to sell to Millennials, they are attempting to establish longer-term relationship with them. That’s a trump card Spotify will continue to use, especially when courting mega-advertisers that aren’t reaching everyone on traditional radio anymore.
There’s also a huge difference in the time people listen. Traditional radio gets its heaviest listening during the morning commute, a period dominated by talk shows and news. There’s also another bump during evening drive time, but once the car is parked, so is the radio.
Spotify has very little of that, and its listening levels are far more balanced throughout the day. That includes nighttime, as shown by these breakdowns.
The next questions get really, really interesting. After all, if Spotify Free is basically a giant radio station, how does that change the way that labels, artists, and advertisers view this platform? The answer is complicated: for starters, Spotify Free is widely viewed as a drag on Spotify Premium, and Spotify has faced serious pressure to shut it down. That’s started to bleed into public comments by executives like Sony Entertainment head Michael Lynton, who most recently projected that the industry would completely shut down free access after a satisfactory number of paying subscribers is reached.
Others feel that free access is unfair to platforms that are trying to get music fans to pay. Just recently, Apple Music executive Trent Reznor blasted YouTube for exploiting artists while boosting its monstrous audience, though free-access platforms like Spotify and SoundCloud were also part of the complaint. To its credit, Apple Music walks the walk, with a paid-only platform that now has 15 million takers.
This study is BS. They claim to be 5th in Chicago behind the #4 station, WLUP. But Arbitron/Nielsen places WLUP at #18 which would make Spotify at most #19. Some stations are also not ranked, including local NPR stations which would almost certainly outranked WLUP and Spotify.
Spotify is just cherrypicking metrics to vastly over inflate their worth. Similar to what Pandora did when they started making claims about how they rank against terrestrial radio.
Found the terrestrial radio employee in the room…
Adapt or die!
Adapt to what? (Google enforcement of GRAND THEFT of MUSIC)
The musicians are suppliers of the goods that make current music NERD LAND a reality. They should call the shots how machine is organized and when and where it spits the cash!
SCREW THE CONSUMER OR MUSIC FAN. Let them enjoy what they get on owners terms! It’s free so shot up and do not complain.
The situation resembles bunch of virtual thugs wondering around and plundering my fat bank account and pushing me to FOOD STAMPS.
“After all, if Spotify Free is basically a giant radio station, how does that change the way that labels, artists, and advertisers view this platform?”
Except it isn’t, is it? Spotify is a jukebox. Rather than being a promotional medium for music it is overwhelmingly a substitute for better-paying recorded music options – that much is now beyond doubt.
Pandora, XM & YouTube would be also in top 10 sources in all markets.
CONVERT both RADIO & STREAMING to primitive, sub free and if you want ad free (!), DISCOVERY BASED MUSIC STORE.
Just that change of business model would give us $100B music business by 2020!
As a reminder, there is over 100,000 Radio stations on Earth.
Seems to me that Spotify is approaching an interesting fork in the road. Given the mounting demand from the music industry for more revenues from streaming, they need to get more ad $$ from Spotify Free or be forced by the industry to shut it down. One way to do that is try to get ad $$ from budgets reserved for radio — hence the “radio” focus of these reports. The fundamental reality though, from the research I’ve done, is that Spotify, free or otherwise, is NOT radio but another way of listening to music, displacing listening to owned music much more than radio. Quite apart from what they would like advertisers to believe, Spotify would love to have the music industry see Spotify Free in the sheep’s clothing of “radio” rather than being a predator on music revenues.
As a longtime broadcaster, online content creator, and someone with extensive experience with research, I have to question the integrity of this study. The first graphic that shows the awesome power of Spotify is based only on 18-49 year olds and across the four markets surveyed only includes 324 ONLINE participants, theoretically just over 80 per market. The margin of error and bias with a sample like that is off the charts. If I took data like that to a client, I’d get fired on the spot.
Spotify commissioned the study to show how strong they are, and I have no doubt that they do carry some weight in all those markets. However, looking at actual independent research, like the metrics published every month by Triton, it’s certainly possible to conclude that the data in this study may have some intentional omissions and manipulation of the results. In other words, take what you see with a huge grain of salt.
Streaming is big and getting bigger every month. Right now, Pandora and Spotify are the dominant players in free streaming. Broadcasters will tell you that those services are tiny blips on the radar as they are now fighting the streamers for advertising money. Look at objective third-party research from companies like Edison and Jacobs Media and you’ll see that the truth lies somewhere in the middle.
This is quite possibly the most inaccurate… translated: “Dumbest” piece of propaganda “news” I’ve read all day. And since when does Dallas have 97.1 The Eagle and 102.1 The Eagle? I have a bag of something brown i’d like to sell you. It starts with S and doesn’t rhyme with Spotify.