Spotify To Allow Promotional Artist Inputs In Personalized Recommendations
Spotify Technology SA (NYSE: SPOT) announced upgrades to its personalized recommendation feature on Monday. The company is testing a new recommendation service that will factor in artists' and labels' inputs.
The service is not a paid promotion and requires no upfront payment from artists or labels. It is still in the early stages of user testing.
What Happened: Spotify will initially test the feature on the Radio and Autoplay modes but could expand to other personalization areas over time, according to TechCrunch.
Music identified by artists and labels will be promoted to users via personalized recommendations. The feature will gauge user response to these recommendations and realign algorithm signals with user preferences.
A higher user acceptance will see an increased promotion of the track resulting in higher returns for the artist, whereas a negative user response will lead to a pullback.
Spotify says that rights holders, artists, and labels will receive a "promotional recording royalty rate." Spotify will soon begin a nationwide rollout of the new feature at the promotional rate.
Artists can generate higher returns as the music becomes more popular from the increased music streams through the recommendation feature.
Why Does It Matter: Charleton Lamb, Product Marketing Lead with Spotify, said that "If any kind of recommendation was causing a listener to respond negatively or show less interest in radio systems, then we would adjust how we're recommending."
Artists will also have the option to turn off the recommendation if it does not yield fruitful results.
Spotify has not disclosed the extent of the promotional royalty rate, but TechCrunch claims that Spotify stands to benefit when the music is recommended through the new feature.
Price Action: SPOT shares are trading higher by 1.08% to $233.99 in the pre-market session on the last check Tuesday.
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