By Lindsey Wheeler / Staff Writer –
Over the past five years, the music industry has seen the rise and fall of a handful of digital streaming services. Not all streaming services are created equal, but when it comes to functionality, library size, and membership, two services lead the pack– Pandora and Spotify.
Founded in 2000, Pandora, also known as the “Music Genome Project”, provides unlimited radio web streaming via the Internet and forty hours of mobile streaming for free listeners. Users can select favorite songs and artists, from which Pandora curates personalized playlists from its 900,000-song library.
Spotify is a global service that allows users to stream music from its 20 million song library. Users can listen to curated radio playlists and follow their friends’ playlists as well.
The two services share some obvious similarities — first, both Pandora and Spotify boast some of the largest listener bases of all streaming services. Pandora noted 65 million users and Spotify hit 24 million active users in 2013. In both cases, the services operate under a “freemium” business model and the majority of users listen via the free version, interspersing audio advertisements in between songs.
Despite similar business models and streaming offerings, however, when it comes to effective content marketing, Spotify reigns supreme. Spotify leverages the free version’s advertisements to engage users in a new way. It’s old news that banner ads are ineffective. In much the same way that online shoppers, readers, and blog-disciples ignore banner ads almost entirely, music listeners have begun to tune out repetitive ads after hours of listening. While Spotify does feature some auditory ads, similar to Pandora, the service has set itself apart by promoting the sponsored playlists of advertisers.
For example, Spotify frequently features the personal playlists or new albums of artists that they promote on the platform. Users are given the option to click on an ad and access the playlist for personal listening. Users who are interested in a given artist may engage with the ad, access the playlist, and discover new music.
When advertising Budweiser’s Made in America music festival in Philadelphia, Spotify not only promoted the festival but also featured a curated playlist including artists who would be performing there. By enabling users to click on the ad and access the actual musical content of the festival, Spotify boosted the likelihood of its users buying tickets for the festival.
Meanwhile, Pandora interrupts music streaming periodically as well. Unlike Spotify ads that prompt user engagement, however, Pandora ads for The American Red Cross or the Windows 8 Phone by HTC, for example, simply talk at listeners. Rather than encouraging spending additional time with the content, the Pandora ads even include a timer that counts down the seconds until the ad ends and the music returns.
Despite the fact that Spotify is working with a smaller listener base than Pandora, Spotify is much more innovative and engaging with its content. By weaving curated playlists into its advertisements, Spotify increases the odds of user engagement significantly. As music streaming becomes increasingly widespread in the coming year, driving advertising revenues will become more important to maintaining freemium-streaming models. The effective use of content will remain at the heart of this challenge. So far, Spotify is winning the content smackdown.
This article was written by Lyndsey from NewsCred Blog and was legally licensed through the NewsCred publisher network.