Spotify Is Sitting On an Advertising Gold Mine, Barclays Says


Spotify mental health
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Spotify mental health
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Photo Credit: Marc-Olivier Paquin

Consumers hate intrusive advertising — which is a major reason why they upgrade.  But according to one Wall Street analyst, Spotify’s advertising revenue could become a big growth area.

Social media sites like Facebook, Snapchat, and YouTube are great at stuffing ads in your face.  In fact, sometimes those advertisements are offensive and reprehensible.

But maybe annoying people is about to get a lot more lucrative.

According to analysts at Barclays, Spotify may be revamping its advertising strategy.  The focus on ads would allow the company’s value to surge by more than 20 percent.  “We believe Spotify is under-monetizing its ad business in order to improve the customer experience and gain market share,” Barclays shared, while pointing to a potentially major shift in strategy ahead.

“The revenue calculation of the music advertising business is nearly identical to online advertising names like Facebook and Google,” Barclays continued.

In Tuesday trading, Spotify’s shares grew gained 3 percent, landing just shy of $176.  But that’s just a taste: Barclays says Spotify is likely to break $200 and careen towards $210, thanks to high-powered advertising.

“Our optimism around SPOT stems from the company’s history of creating best-in-class products and user experience and innovating ahead of peers,” Barclays’ analysts continued.

The prediction sounds interesting enough, though somewhat curious.  For years, Spotify has been battling against labels to maintain its free tier, arguing that its ‘freemium funnel’ is working.  Maybe, though that ‘funnel’ has cost the company billions in losses, while Apple Music has amassed 45 million advertisers without an ad-supported tier.

Of course, there are plenty of other directions Spotify can steer to augment their revenues.  That includes areas like direct artist relationships, ticketing, and even hardware.  Just recently, a number of interesting job posts surfaced, including a listing for an Operations Manager in Hardware Product.

“You will define and manage distribution, supply, logistics, fulfillment and customer service for hardware products and work with partners to deliver the optimal Spotify experience to millions of users,” the req described.

Separately, Spotify is feeling increased pressure to restrict certain releases to premium-only subscribers.  Just recently, The Carters went premium-only on Spotify, and we’re anticipating plenty of other high-profile artists to follow suit.

Spotify’s current record sits at a warm $186 per share.



2 Responses

  1. will buckley

    just who is the greater fool. Time will tell.

    • Remi Swierczek

      Thank you!
      Theranos of music industry propelled by 150M ass kissed Spoofy lovers at the musicians and music industry expense.