One of the things that’s most valuable to artists, management and labels is the demographic information of exactly who is listening. In these days of targeted advertising, the more we know about an audience the better we can serve them. While artists really need this info, the fact of the matter is that advertisers might need it even more, since they’re making the decision to spend real money on a platform. That’s why the latest deal between Spotify and Nielsen Research is so important, at least to advertisers initially but ultimately for artists too.
More than half of Spotify’s daily users (over 100 million) are on its free tier, which isn’t totally free in that it contains ads, which ultimately pay for it. The problem is that there wasn’t enough data being generated for advertisers to make intelligent decisions (and spend more money as a result), so the deal with Nielsen to provide some advanced metrics could be a big deal for both the platform and the rest of the music industry as well.
Spotify will soon incorporate the Nielsen Digital Brand Effect platform to measure brand-related metrics in real time in the US, Germany, Canada, Mexico, UK, Spain, France, Netherlands, Japan, and Australia. The platform monitors the effectiveness of ad campaigns according to awareness, perception, frequency of ad exposure and purchase intent across audio, video, and display formats.
Data is generated by comparing a group of survey respondents who were exposed to an ad to a non-exposed but otherwise identical control group of respondents. These groups are called the “Control” and the “Exposed” groups.
Basically what this means is that if brands spend more money on better targeted and effective advertising, then Spotify will make more money, and it will have to pay more money back to the record labels and ultimately to its artists. It looks like this could be a win for everyone.