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Amazon and Google Are Making Music Free

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Spotify’s free tier is one of the modern music industry’s most controversial talking points — and one of the Swedish company’s strongest competitive advantages.

Spotify has regularly proffered the following justification for its “freemium” model: In a world where YouTube and piracy sites allow any of us to access most of the world’s recorded music without paying a bean, Spotify needs to be able to offer the same level of cost-free convenience to thrive. This is good news for artists and the industry, says Spotify, because “free” users will not only drive revenue by listening to advertising, they’ll also be in a position to be up-sold into Spotify’s $9.99-per-month Premium tier.

Alphabet/Google turned over $32.6 billion from advertising last year. Amazon, whose ad platform remains a minority strand of its business, turned over around $10 billion from advertising and related services. Both of these figures dwarf Spotify’s advertising revenues in the same 12 months, which weighed in at €542 million ($640 million) – around 16 times smaller than Amazon’s equivalent figure, and 50 times smaller than Google’s.

Amazon and Google are now weaving free music further into their aspirations to accelerate these multi-billion dollar advertising businesses, branching out more meaningfully into audio advertising. This spells difficult news for Spotify, and its ambitions to convince advertisers that it — rather than its colossal tech competitors — offers the most powerful music-related destination with which to spend your marketing money.

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