Audio and video advertisements have always been the key revenue-driving factor for most music streaming services. However, Spotify Technology (SPOT) is currently experimenting with a system where all users – both free and paid members – will be able to skip advertisements while using the platform.
The testing of the new feature, called Active Media, is taking place in Australia, given the low risk of lost revenue in the region. The new system lets the users of its ad-supported service skip as many ads as they want. As per the current system, users are forced to painfully wait until the advertisement is over to switch to the next song.
Spotify claims that the advertisers will also benefit from this new feature, as they need to pay only for the viewed ads.
The company is also giving users the liberty to spend longer time watching ads that they like. The company believes the experiment will enable it to learn more about users’ preferences. If the testing yields the desired results, Spotify will expand it to other markets.
The Luxembourg City-headquartered company has been offering music services through its premium and ad-supported memberships. The premium provides free music services with unlimited online and offline streaming access, while the ad-supported one offers limited on-demand online access only.
At the end of the second quarter, Spotify’s monthly active users grew 30% year-over-year to 180 million. The growth in Latin America and Rest of World outpaced that in more established markets during this period. Premium subscribers contributed nearly 90% of the revenue and the premium subscription base jumped 40% to 83 million for the second quarter, helped by the unlimited family plan.
The company expects total premium subscribers to increase 36-43% for the third quarter and 30-37% for the fourth quarter.
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