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Teamable, the Tinder for hiring, raises $5M and acquires Simppler
Teamable, a provider of hiring software that leverages employees’ social networks, has brought in $5 million from new investor Foundation Capital and existing backers True Ventures and SaaStr Fund.
The startup also announced its acquisition of Simppler‘s referral recommendation engine and matchmaking recruiting software. Teamable’s co-founder and chief executive officer Laura Bilazarian declined to disclose the terms of the deal but said none of the $5 million investment was used to finance the transaction.
According to Crunchbase, Simppler had raised $3.2 million in equity funding from Foundation Capital, Greylock, Vertex Ventures and others. The company, which is akin to Teamable, creates a referral platform using existing employee networks; it was founded by Vipul Sharma in 2013. Sharma previously ran machine learning at Eventbrite and, according to his LinkedIn profile, he’s been an engineering director at Indeed for the past year.
Sharma and the Simppler team will not be joining Teamable .
Using Gmail, Facebook, GitHub and other social media platforms, Teamable aggregates its employees’ contacts to connect recruiters with a more focused set of potential candidates. Companies using Teamable, including Spotify and Lyft, then facilitate a warm introduction between a candidate and the employee in their network. The startup says its social recruiting algorithms lead to more efficient and diverse hiring practices.
“I don’t think candidates love the way recruiting is done,” Bilazarian told TechCrunch. “They are throwing applications over a wall and not hearing back. And I don’t think companies love the way recruiting is done because people are just making guesses based off a job description and they aren’t getting the right applicants.”
“Instead of few people at a company spamming the entire world, you have people who really understand the company reaching out to you,” she added. “Teamable is very precise. It’s reach out to five people to get a hire versus reach out to 200 just to get one response.”
The Foundation-led investment brings Teamable’s total equity funding to date to $10 million, including last year’s $5 million Series A. Bilazarian says the 50-person company is cash flow positive with 200 customers. With offices in San Francisco and Yerevan, Armenia, Teamable will use the capital to expand its team and recruiting platform.
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Spotify’s Premium app gets a big makeover
Spotify has given its app a big makeover, with a focus on making the experience better for its paying subscribers. The company has simplified the app’s navigation by reducing the numbers of buttons and has revamped its Search page, which now incorporates elements previously found in “Browse,” like favorite genres or music to match a mood. And it’s given its Radio service a redesign as well, with the addition of new and easy-to-use Artist Radio Playlists.
The most immediately noticeable change is the app’s navigation.
Spotify has always felt a bit cluttered, with its five navigation buttons – Home, Browse, Search, Radio and My Library. The new app has chopped this down to just three buttons – Home, Search, and My Library.
Recommendations will appear on the Home page, following the update, while discovery is powered by Search.
The Search page lets you seek out artists, albums and podcasts by typing in queries, as before. But the page is also now personalized, showing your own “Top Genres” beneath the search bar – like R&B, Rock, Hip-Hop, Kids & Family – or whatever else you listen to. This is helpful because users’ tastes can change over time, or they may share their individual Spotify account with others (instead of opting for a Family plan), which can garble their recommendations.
The “Browse” section has moved to this Search page in the redesign, and points to things like top charts, Spotify’s programmed playlists, your own personalized playlists, plus music by mood, genre, activity and more.
The Radio section got an overhaul, too.
With the update, you can search for a favorite artist or song, then immediately start listing to one of the brand-new Artist Radio playlists. These are personalized, endless streams based on your own tastes – and they’re updated regularly to stay fresh, Spotify notes.
This latter feature appears to address a recent challenge from Pandora, which tapped into its Music Genome to create dozens of personalized playlists for its users. Spotify, effectively, is turning its radio stations into personalized playlists now, too. Instead of asking users to thumbs up/down its selections, it will just create stations it knows you’ll like, based on the data it already has. These radio playlists also work offline, the company says.
The updated app for Premium users follows a redesign of the app for its free customers, announced back in April. That redesign made it easier for free users to access over a dozen playlists with songs on demand, which also included the option to skip tracks. It also reduced the number of tabs in the bottom navigation.
This week, the company also rolled out a new Android Wear application. Plus, the third-party manufacturer Mighty launched a new version of its Spotify player, which is basically an iPod Shuffle-like device that works with Spotify instead of Apple Music or iTunes.
The changes to the Spotify app comes at a time when the company is losing ground in North America to Apple. Pandora was just snatched up by Sirius XM for $3.5 billion, which could make for increased competition in the U.S., as well.
Spotify’s Premium Subscribers grew to 83 million in Q2 2018, and it has 180 million monthly actives, including free customers, which still puts it ahead of the competition, in terms of user base size.
Spotify says the redesign for Spotify Premium is rolling out to all Premium subscribers on iOS and Android globally starting today.
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SoundCloud finally lets more musicians monetize four years later
SoundCloud moves painfully slow for a tech company, and no one feels that pain more than musicians who are popular on the site but don’t get paid. 10 years since SoundCloud first launched, and four years since it opened an invite-only program allowing just the very biggest artists to earn a cut of the ad and premium subscription revenue generated by their listeners, SoundCloud is rolling out monetization.
Now, musicians 18 and up who pay SoundCloud $8 to $16 per month for hosting, get over 5000 streams per month, and only publish original music with no copyright strikes against them can join the SoundCloud Premier program. They’ll get paid a revenue share directly each month that SoundCloud claims “meets or beats any other streaming service”. However, the company failed to respond to TechCrunch’s inquiries about how much artists would earn per 1000 ad-supported or premium subscription listener streams, or how many streams would earn them a dollar.
Beyond payouts, Premier members can post new tracks instantly without having to wait to be discoverable or monetizable, they’ll get real-time feedback from fans, and extra discovery opportunities from SoundCloud. The company hopes monetization will lure more creators to join the 20 million on the platform, get them to promote their presence to drive listens, and imbue the site with exclusive artist-uploaded content that attracts listeners.
It’s been a year since SoundCloud raised an $170 million emergency funding round to save itself from going under after it was forced to lay off 40 percent of its staff. That deal arranged by Kerry Trainor saw him become CEO and the previous co-founder and CEO Alex Ljung step aside. With underground rap that had percolated on SoundCloud for years suddenly reaching the mainstream, the startup seemed to have momentum.
The problem is the slow speed of progress at SoundCloud has allowed competitors with monetization baked in to catch up to its formerly unique offering. YouTube Music’s launch in June 2018 combined premium major label catalogues with user uploaded tracks in a cohesive streaming service. And last month, Spotify began allowing indie artists to upload their music directly to the platform. Meanwhile, licensing distribution services like Dubset are making it legal for big streaming apps to host remixes and DJ sets. Together, these make more of the rarities, live versions, and hour-long club gigs that used to only be on SoundCloud available elsewhere.
The delays seem in part related to the fact that SoundCloud wants to be Spotify as well as SoundCloud. It’s refused to back down from its late entry into the premium streaming market with its $9.99 per month SoundCloud Go+ subscription. As I previously recommended, “to fix SoundCloud, it must become the anti-Spotify” by ruthlessly focusing on its differentiated offering in artist-uploaded music. Instead, another year has passed with only a light revamping of SoundCloud’s homescreen and some more personalized playlists to show for it.
SoundCloud proudly announced it had reached $100 million in revenue in 2017, and exceeded its financial and user growth targets. But filings reveal it lost over $90 million in 2016 and it was previously projected to not become profitable until 2020. That begs the question of whether SoundCloud will have to raise again, or might once again open itself to acquisitions. With Apple, Google, Amazon, and Spotify all in fierce competition for the future of streaming, any of them might be willing to pay up for music that fans can’t easily find elsewhere.
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Ne-Yo wants to make Silicon Valley more diverse, one investment at a time
Dressed in a Naruto t-shirt and a hat emblazoned with the phrase “lone wolf,” Ne-Yo slouches over in a chair inside a Holberton School classroom. The Grammy-winning recording artist is struggling to remember the name of “that actor,” the one who’s had a successful career in both the entertainment industry and tech investing.
“I learned about all the things he was doing and I thought it was great for him,” Ne-Yo told TechCrunch. “But I didn’t really know what my place in tech would be.”
It turns out “that actor” is Ashton Kutcher, widely known in Hollywood and beyond for his role in several blockbusters and the TV sitcom That ’70s Show, and respected in Silicon Valley for his investments via Sound Ventures and A-Grade in Uber, Airbnb, Spotify, Bird and several others.
Ne-Yo, for his part, is known for a string of R&B hits including So Sick, One in a Million and Because of You. His latest album, Good Man, came out in June.
Ne-Yo, like Kutcher, is interested in pursuing a side gig in investing but he doesn’t want to waste time chasing down the next big thing. His goal, he explained, is to use his wealth to encourage people like him to view software engineering and other technical careers as viable options.
“Little black kids growing up don’t say things like ‘I want to be a coder when I grow up,’ because it’s not real to them, they don’t see people that look like me doing it,” Ne-Yo said. “But tech is changing the world, like literally by the day, by the second, so I feel like it just makes the most sense to have it accessible to everyone.”
Last year, Ne-Yo finally made the leap into venture capital investing: his first deal, an investment in Holberton School, a two-year coding academy founded by Julien Barbier and Sylvain Kalache that trains full-stack engineers. The singer returned to San Francisco earlier this month for the grand opening of Holberton’s remodeled headquarters on Mission Street in the city’s SoMa neighborhood.
Holberton, a proposed alternative to a computer science degree, is free to students until they graduate and land a job, at which point they are asked to pay 17 percent of their salaries during their first three years in the workforce.
It has a different teaching philosophy than your average coding academy or four-year university. It relies on project-based and peer learning, i.e. students helping and teaching each other; there are no formal teachers or lecturers. The concept appears to be working. Holberton says their former students are now employed at Apple, NASA, LinkedIn, Facebook, Dropbox and Tesla.
Ne-Yo participated in Holberton’s $2.3 million round in February 2017 alongside Reach Capital and Insight Venture Partners, as well as Trinity Ventures, the VC firm that introduced Ne-Yo to the edtech startup. Holberton has since raised an additional $8 million from existing and new investors like daphni, Omidyar Network, Yahoo! co-founder Jerry Yang and Slideshare co-founder Jonathan Boutelle.
Holberton has used that capital to expand beyond the Bay Area. A school in New Haven, Conn., where the company hopes to reach students who can’t afford to live in tech’s hubs, is in development.
The startup’s emphasis on diversity is what attracted Ne-Yo to the project and why he signed on as a member of the board of trustees. More than half of Holberton’s students are people of color and 35 percent are women. Since Ne-Yo got involved, the number of African American applicants has doubled from roughly 5 percent to 11.5 percent.
“I didn’t really know what my place in tech would be.”
Before Ne-Yo’s preliminary meetings with Holberton’s founders, he says he wasn’t aware of the racial and gender diversity problem in tech.
“When it was brought to my attention, I was like ‘ok, this is definitely a problem that needs to be addressed,’” he said. “It makes no sense that this thing that affects us all isn’t available to us all. If you don’t have the money or you don’t have the schooling, it’s not available to you, however, it’s affecting their lives the same way it’s affecting the rich guys’ lives.”
Holberton’s founders joked with TechCrunch that Ne-Yo has actually been more supportive and helpful in the last year than many of the venture capitalists who back Holberton. He’s very “hands-on,” they said. Despite the fact that he’s balancing a successful music career and doesn’t exactly have a lot of free time, he’s made sure to attend events at Holberton, like the recent grand opening, and will Skype with students occasionally.
“I wanted it to be grassroots and authentic.”
Ne-Yo was very careful to explain that he didn’t put money in Holberton for the good optics.
“This isn’t something I just wanted to put my name on,” he said. “I wanted to make sure [the founders] knew this was something I was going to be serious about and not just do the celebrity thing. I wanted it to be grassroots and authentic so we dropped whatever we were doing and came down, met these guys, hung out with the students and hung out at the school to see what it’s really about.”
What’s next for Ne-Yo? A career in venture capital, perhaps? He’s definitely interested and will be making more investments soon, but a full pivot into VC is unlikely.
At the end of the day, Silicon Valley doesn’t need more people with fat wallets and a hankering for the billionaire lifestyle. What it needs are people who have the money and resources necessary to bolster the right businesses and who care enough to prioritize diversity and inclusivity over yet another payday.
“Not to toot the horn or brag, but I’m not missing any meals,” Ne-Yo said. “So, if I’m going to do it, let it mean something.”
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Spotify ends test that required family plan subscribers to share their GPS location
Spotify has ended a test that required its family plan subscribers to verify their location, or risk losing accessing to its music streaming service. According to recent reports, the company sent out emails to its “Premium for Family” customers that asked them to confirm their locations using GPS. The idea here is that some customers may have been sharing Family Plans, even though they’re not related, as a means of paying less for Spotify by splitting the plan’s support for multiple users. And Spotify wanted to bust them.
Spiegel Online and Quartz first reported this news on Thursday.
Of course, as these reports pointed out, asking users to confirm a GPS location is a poor means of verification. Families often have members who live or work outside the home — they may live abroad, have divorced or separated parents, have kids in college, travel for work or any other number of reasons.
But technically, these sorts of situations are prohibited by Spotify’s family plan terms — the rules require all members to share a physical address. That rule hadn’t really been as strictly enforced before, so many didn’t realize they had broken it when they added members who don’t live at home.
Customers were also uncomfortable with how Spotify wanted to verify their location — instead of entering a mailing address for the main account, for instance, they were asked for their exact (GPS) location.
The emails also threatened that failure to verify the account this way could cause them to lose access to the service.
Family plans are often abused by those who use them as a loophole for paying full price. For example, a few years ago, Amazon decided to cut down on Prime members sharing their benefits, because they found these were being broadly shared outside immediate families. In its case, it limited sharing to two adults who could both authorize and use the payment cards on file, and allowed them to create other, more limited profiles for the kids.
Spotify could have done something similar. It could have asked Family Plan adult subscribers to re-enter their payment card information to confirm their account, or it could have designated select slots for child members with a different set of privileges to make sharing less appealing.
Maybe it will now reconsider how verification works, given the customer backlash.
We understand the verification emails were only a small-scale test of a new system, not something Spotify is rolling out to all users. The emails were sent out in only four of Spotify’s markets, including the U.S.
And the test only ran for a short time before Spotify shut it down.
Reached for comment, a Spotify spokesperson confirmed this, saying:
“Spotify is currently testing improvements to the user experience of Premium for Family with small user groups in select markets. We are always testing new products and experiences at Spotify, but have no further news to share regarding this particular feature test at this time.”
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PagerDuty raises $90M to wake up more engineers in the middle of the night
PagerDuty, the popular service that helps businesses monitor their tech stacks, manage incidents and alert engineers when things go sideways, today announced that it has raised a $90 million Series D round at a valuation of $1.3 billion. With this, PagerDuty, which was founded in 2009, has now raised well over $170 million.
The round was led by T. Rowe Price Associates and Wellington Management . Accel, Andreessen Horowitz and Bessemer Venture Partners participated. Given the leads in this round, chances are that PagerDuty is gearing up for an IPO.
“This capital infusion allows us to continue our investments in innovation that leverages artificial intelligence and machine learning, enabling us to help our customers transform their companies and delight their customers,” said Jennifer Tejada, CEO at PagerDuty in today’s announcement. “From a business standpoint, we can strengthen our investment in and development of our people, our most valuable asset, as we scale our operations globally. We’re well positioned to make the lives of digital workers better by elevating work to the outcomes that matter.”
Currently PagerDuty users include the likes of GE, Capital One, IBM, Spotify and virtually every other software company you’ve ever heard of. In total, more than 10,500 enterprises now use the service. While it’s best known for its alerting capabilities, PagerDuty has expanded well beyond that over the years, though it’s still a core part of its service. Earlier this year, for example, the company announced its new AIOps services that aim to help businesses reduce the amount of noisy and unnecessary alerts. I’m sure there’s a lot of engineers who are quite happy about that (and now sleep better).
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7 takeaways from Samsung Unpacked 2018
Samsung introduced a wide range of gadgets and upgrades today at its Unpacked event in Brooklyn. The overarching theme of the event centered on increased productivity throughout its connected ecosystem with performance improvements across the board.
Here are seven takeaways from Samsung Unpacked:
1. Note 9 rumors are confirmed
Samsung’s latest phablet was introduced this afternoon without much surprise after weeks of leaks, speculation and even a photo of CEO DJ Koh using the phone in public made their rounds online. Little has changed aesthetically on this year’s Note, aside from a few new colors, a shifted fingerprint scanner and a screen that’s a fraction of an inch larger than its predecessor. The one improvement that does stand out, however, is found in the Note’s battery, which now measures 4,000mAh hours — that’s a 700mAh jump over the Note 8. Samsung is on the offensive this time around and made sure to highlight its eight-point safety check the company instituted after the firestorm of Note 7 batteries exploding.
2. Increased functionality on the S-Pen
Samsung’s stylus got its own reboot today with a focus on performance. The company has equipped the S-Pen with Bluetooth low energy, allowing users to untether themselves from the phone and use the stylus as a remote to take pictures, advance slideshows or play music. Samsung also said developers will be able to incorporate BLE into their apps later this year.
3. The new Galaxy Watch seeks mainstream adoption
While Note 9 rumors were swirling leading up to today’s event, Samsung did a better job at keeping its new Galaxy Watch under wraps. The company’s latest smartwatch will come in two sizes, an improvement from previous Samsung watches that were too large for many wrists. Samsung beat Apple to the draw by introducing LTE functionality on the Galaxy Watch and it’s sticking with Tizen as an OS, rather than switching to Android Wear.
4. Bixby gets more conversational
Samsung demoed an updated version of Bixby, the company’s voice assistant that saw much backlash when it was released last year, due to its lackluster performance. Luckily, that’s changed, and at today’s event Samsung showed how Bixby will carry on conversations and answer follow-up questions. The upgrade also features a range of app integrations with Yelp, Uber, Ticketmaster and more, allowing users to make reservations, hail rides and buy tickets even if they don’t have the app installed on their phone. Samsung also noted that Bixby will learn from your past decisions to better serve requests in the future. For example, if you’ve asked for French restaurants in the past, Bixby will generate other French restaurants in future requests related to food.
5. Samsung is (finally) getting into the smart speaker game
Improvements to Bixby were made even more apparent when Samsung unveiled its own smart speaker at today’s event. The Galaxy Home features a cloth covering and a tripod stand with a built-in subwoofer and eight microphones designed for far-field communication that’s seen on other smart speakers. Much like the initial announcement of the HomePod, there wasn’t much information on a release date or price. For now, the product is only listed as “coming soon.”
6. Spotify integration allows for seamless cross-listening experience
To go along with its new smart speaker, Samsung announced a partnership with Spotify, cementing the Swedish streaming service as the preferred music supplier on Samsung devices. Spotify will now be part of the set-up process for Samsung devices, and the integration allows for a seamless cross-devices listening experience within the Samsung ecosystem. The partnership also pins Samsung directly up against Apple and the HomePod’s exclusive integration with Apple Music.
7. Fortnite for Android launches as a Samsung exclusive
At long last, Fortnite is coming to Android this summer. The insanely popular survival game will be available for Galaxy users with an S7 or higher, and the 6.4-inch display on the Note 9 makes for a mobile gaming powerhouse. Starting today, the title will appear on Galaxy devices’ game launcher and will remain a Samsung exclusive until the 12th — at which point it will most likely be available to all Android users.
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Samsung announces Spotify as its go-to music partner
Samsung didn’t just unveil new devices like the Galaxy Home, the Galaxy Watch and of course the new Galaxy Note 9 at its Unpacked event this morning — it also announced a partnership with Spotify.
The goal is to create a seamless cross-device listening experience on Samsung devices, including the ones announced today. As demonstrated onstage, you should be able to start playing a song on your phone, then switch over to your TV, then over to your Galaxy Home.
This integration that will allow you to play Spotify on your Samsung Smart TV through the SmartThings app deepens the integration between Spotify and Samsung’s voice assistant Bixby, making Spotify the default choice whenever you ask Bixby to look for music.
In addition, Spotify will become part of the set-up experience on Samsung devices.
For Spotify, this partnership should mean more visibility, making it the preferred music experience on Samsung devices. And for Samsung, it highlights one of its differences compared to Apple, which has been focusing on Apple Music as it rolls out new devices like the HomePod.
Spotify CEO Daniel Ek took the stage at Unpacked to talk about the partnership, which he also discussed in the official Spotify announcement.
“We believe that this significant long-term partnership will provide Samsung users across millions of devices with the best possible music streaming experience, and make discovering new music easier than ever – with even more opportunities to come,” Ek said.
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Spotify misses on revenue in first earnings report with 170M users
In Spotify’s first ever earnings report, the streaming music came up a little short, pulling in $1.36 billion revenue in Q1 2018. That’s compared to Wall Street’s estimates of $1.4 billion in revenue and an adjusted EPS loss of $0.34. Spotify hit 170 million monthly active users, up 6.9 percent from 159 million in Q4 2017 and 99 million ad-supported users. It also hit 75 million Premium Subscribers, up 30 percent year-over-year, and 75 million paid subscribers, up 5.6 percent from 71 million in Q4 and up 45 percent YoY.
Interestingly, the MAU count indicates that 4 million of Spotify’s 75 million subscribers pay but don’t listen. Spotify confirmed as much. For reference, Apple Music has roughly 40 million subscribers.
Spotify’s results were in line with the guidance it gave yet Wall Street was still disappointed. Spotify shares promptly fell over 8 percent in after-hours trading to around $156, beneath its IPO pop a month ago but still above its $149 day one closing price and $132 IPO pricing.
Spotify’s Gross Margin was 24.9 percent in Q1, over the top of its guidance range of 23-24 percent. Its operating loss was $48.9 million, which improved significantly, and come in under the $59 million to $95 million operating loss Spotify warned of. The music company now has $1.91 billion in cash and cash equivalents at the end of Q1.
As for Q2 guidance, Spotify expects 175 to 180 million MAU, 79 to 83 million paid subscribers, and $1.3 to $1.55 billion in revenue, excluding the impoact of foreign exchange rates. It’s planning an operating loss of $71 million to $167 million, in part due to a $35 million to $42 million expense related to its direct listing debut on the public markets.
During the earnings call, CEO Daniel Ek said he hasn’t seen any significant impact from increased promotion by its competitor Apple Music. In fact, churn hit an all-time low of 4.7 percent, and lifetime value to customer acquisition cost ratio is holding firm at 2.7:1. But overall, “We don’t see this as a winner takes all market” Ek says.
As for voice-activated smart speakers, Ek said “We view it longterm as an opportunity not a threat” since Spotify is available on Google Home and Amazon Alexa devices.
Spotify is hoping to boost paid subscriber numbers by first luring more users to its free ad-supported service. Last month it unveiled a revamped free tier that lets users listen to songs on-demand on particular Spotify-controlled playlists instead of only being able to play in shuffle mode. The idea is that once users get a taste of on-demand listening, they’ll pay to upgrade so they can listen to whatever they want across the whole catalog.
That strategy could not only boost subscriber numbers, but also give Spotify more leverage over the record labels. More than 30 percent of all Spotify listening now happens on its owned playlists. That gives it the power to choose what will become a hit, and in turn means record labels need to play nice. This could help Spotify secure more exclusive content and a better bargaining position in royalty negotiations.
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Spotify’s missing money-maker is artist-to-fan messaging
Streaming royalties are too expensive for Spotify to thrive as a public company just playing us songs. Spotify’s shares closed down 10 percent today during its NYSE trading debut. Luckily it controls much of the relationship between musicians and their fans on its app, poising it to build a powerful revenue and artist loyalty generator by connecting the two through native advertising and messaging that doesn’t stop the music.
Spotify already has a wide range of ad experiences built for traditional brands, from audio ads to display units to sponsored sessions where users get ad-free playback in exchange for watching a commercial. But none of these ad units are designed to help musicians grow their audience within Spotify, even if they can be bent to that purpose.
Spotify could win big by following Facebook’s roadmap.
Back in 2007, Facebook already had ads that led offsite. Think of these as Spotify’s existing audio and display ads. But when Facebook built Pages that let businesses reach you through the News Feed, it also launched ads that let them promote and grow their Pages within Facebook. Unlike the stock banner ads you see all over the web, these ads were native to Facebook, targeted with its profile data, and that used social referrals about Pages your friends interacted with to rope you in. They gave entities within Facebook a paid way to grow their popularity inside the platform.
This is Spotify’s opportunity.
Spotify’s existing ad units are designed for brands, not musicians
A few years ago, Spotify’s user base was too small for artists to focus on spending money there to get popular. But Spotify has grown to the size where it’s replacing top 40 radio, and over 30 percent of listening now comes from its recommendations and algorithmic playlists like Discover Weekly. The record labels now need Spotify to have a hit. Between that influence and it’s stature as the biggest on-demand music streaming service, Spotify has the leverage to offer artists the best tool to boost their fan base.
Spotify has already built the groundwork for this with the launch of its Spotify For Artists analytics dashboard app last year that shows a musician’s top songs, and the demographics of their fans including their location, gender, age, and what else they listen to. Spotify’s proven the power of this data with its Fans First email campaigns that let artists reach their most frequent listeners with access to concert ticket pre-sales and exclusive merchandise. It claims the emails see a 40 percent open rate, and 17 percent click-through rate — way higher than the industry standard.
But if Spotify built new surfaces for artists to reach out directly to fans within its apps, it could become the destination for record label marketing money. Since these artist ads and messages would all drive users deeper into the app rather than away from it like brand, Spotify could charge less than traditional ads and make them affordable to labels on a budget or musicians paying out-of-pocket.
Here are some ways Spotify could create native artist-to-fan marketing channels:
Sponsored songs on its algorithmic playlists could expose fans to artists in the most natural way possible. Wherever there’s recommendations, there’s room for paid discovery. Listeners could easily skip the track or switch to a different playlist, but might end up falling in love with the band, and diving into their catalogue. It’s the equivalent of Facebook’s in-News Feed native ads, but with a musician promoted instead of a business’ Page. Spotify was actually spotted testing what was effectively a sponsored song in mid-2017 above the start of some playlists. There was an opt-out option within the app’s Settings, though that’s since disappeared, so Spotify has at least considered this idea.
Spotify was spotted testing what was effectively a Sponsored Song back in mid-2017
Promoted Artists could use a similar model to Google’s AdWords sponsored search results. When users search for an artist, they could be shown similar artists who’ve paid to be promoted in the search typeahead or results page. Spotify could also insert a box within the profile of another artist you’re browsing below their top tracks. Spotify already lists a slew of related artists in text, but could highlight one that pays, perhaps showing one of their songs that could be instantly played.
Featured Artists could give artists that pay a special slot on Spotify’s browse page. With so many recommendations here, it’d be easy to slot in a sponsored section without feeling interruptive.
Sponsored Visualizations could make better use of your screen while you listen. Rather than just staring at the album art and playback controls, Spotify could let artists pitch fans their other music, tickets, gear, or social media channels. Spotify could also fill this space with entertaining silent video clips, photo slideshows, and biographical info as I suggested as a differentiator in 2016, and similar to how lyrics site Genius started doing with its Stories this week. Given users are currently listening to the artist, they might be primed for these experiences. Spotify has already tested letting artists show GIFs during playback, and has partnered with Genius to show Behind The Music factoids, but this is real estate that could help artists earn more money as well as entertain fans.
Direct Messaging
The most ambitious and audacious way to let artists reach fans would be a special artist-to-fan messaging channel. Spotify got rid of its in-app inbox and messaging feature a few years ago, instead pushing users to share music via their chat app of choice. But similar to the Fans First email campaigns, Spotify could create a special artist-to-fan messaging section in its app that could alert users to new releases and playlists as brand advertising, or even push tours and merchandise as more direct performance advertising.
Spotify could give all artists a certain volume of messages they could send for free or let them reach out just to the top 1% of fans a certain number of times per month or year. Then artists could pay to send more messages beyond the limits. Alternative, it could just charge for any use of messaging.
Done wrong, any of the above options could feel like Spotify gauging artists to reach their own fans. But done right, users might actually enjoy it while. They wouldn’t be too far off from following an artist on other social media, but where people are already listening. Finding out about one of your favorite band’s new albums, tours, or t-shirts might feel less like an ad and more like an inside tip from the fan club.
Spotify might be able to get away with showing some of these different experiences to users who’ve subscribed if they don’t get in the way of music listening. Swinging to the other end of the opportunity spectrum, the company could just give away all these experiences to artists, boosting their loyalty to Spotify and getting them to promote their presence there instead of on competing streaming services like Apple Music.
If Spotify doesn’t figure out a way to improve its margins with additional revenue drivers, it may have a tough time surviving as a public company. If it becomes too profitable from just music streaming, the labels can always try to increase their royalty rates. Spotify might hope that more artists work with it directly, cutting out the middlemen, but the record labels still provide some important marketing, radio promotion, and distribution services that artists need. Meanwhile, startups including United Masters (which raised a $70 million Series A from Google parent Alphabet and Andreessen Horowitz) want to usurp the record labels and become the way artists earn more before Spotify can.
This New York Times’ chart shows why musicians feel screwed, even though it’s labels keeping their money not Spotify
These features also offer Spotify a way to combat the enduring narrative that it’s screwing over musicians. If Spotify can prove these artist-to-fan messaging options earn them more than they cost, it could be seen as the streaming service that’s actually trying to help musicians make a living.
Recorded music has always been a promotional tool for all of a musician’s other revenue streams. Streaming’s on-demand structure and no-extra-cost-per-play nature turns the curious listener who’s only heard of an artist or just likes one single into a diehard fan who shells out the big bucks every time they’re favorite act is in town.
As we shift to an experiential culture where our possessions are digitized and its our interests that define us, people want to connect to the creators they love. Artist-to-fan messaging could bring the whole life-cycle from discovery to affinity to real monetization beyond the music all within one green and black app.
For more on Spotify going public, read our feature stories:
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