Spotify will experiment with allowing record labels to place songs on users’ playlists in exchange for payment, BBC reports. The #sponcon trial won’t affect subscription members, who pay to avoid advertising.
If the practice takes off, it could represent a boon to lesser-known artists with the label support and budget to purchase positions on popular playlists. It could also help to shift the relationship dynamic between Spotify and record labels. Spotify depends on access to labels’ content, and becoming their marketing partner could help it gain leverage and negotiate lower royalty rates.
The pay-to-play playlist trial is a reversal from 2015, when Spotify moved to ban users from accepting payment in exchange for placing songs on their playlists. Curators of popular third-party playlists were asking anywhere from $2,000 to $10,000 per song and the “playola” practice was an open secret, as Billboard reported at the time. “We are absolutely against any kind of ‘pay to playlist’, or sale of playlists,” Spotify said in a 2015 statement to the Financial Times. “It’s bad for artists and it’s bad for fans.”
Spotify reported a loss of $581 million on just over $3 billion in revenue in 2016. All three major record labels—Sony BMG, Universal, and Warner—are equity partners in the streaming service, which is now expected to delay its IPO until 2018.
