How Facebook and Spotify will change the music industry…

...but how music publishers are still vital! As Facebook and Spotify get even cosier, we discuss what this means to the music industry and make some predictions for 2012.

Facebook has further integrated with Spotify as part of it's mission to become an entertainment hub. Music being such a large part of entertainment for users, Facebook needed a way to integrate it's functionality into a music software that was scalable - with an evaluation of the capabilities of their now near-obsolete iLike app and Spotify's then plans to move into the US market - the choice was clear.

So how is this blossoming relationship going to affect the music industry and what implications does it have for music advertising?

Focus on Spotify Revenue for Artists
With Spotify operating on a much bigger scale than heard before, listens will go up and so will artists revenues. Spotify made a profit last year and is rapidly growing. It's launch in the US market will see users and listens grow further. Artists will eventually make more money from Spotify and record labels will begin to take the service more seriously as a revenue stream. The Beatles will be on Spotify by the end of 2012. There, I said it. Gulp.

Exclusive Spotify/Facebook Content
Sonic is predicting Spotify previews or Spotify-only releases as it has money to partner with Artists to have exclusive releases to promote it's service. With it's increasing profitability, Spotify is gaining more bargaining power with which it can afford to do more things like this.

Spotify functionality in Ad and Promotional Formats
As Facebook like and Twitter follow buttons are becoming increasingly prevalent in ad formats, we'll see Spotify getting involved too. Promotional Spotify widgets will start to appear in the same vein as SoundCloud and Mixcloud - where new album streams can be monetised. Three core call to actions will be to buy on iTunes, listen on Spotify and share on Facebook. The weighting of which by advertisers is yet to be determined.

Accounts linked with Pages
A heavier focus on artist partnerships will come from Spotify in the next few years. Ping did well to start artist's profiles but what it lacked was an already developed social network with which to integrate them with. Spotify & Facebook have this and we'll begin to see greater integration of Spotify accounts with official Facebook artist pages. Artists using Spotify functionality to promote new releases through tools like playlists, or simply giving an insight into their influences by posting their tracks, will be key moving forward. Publishers can also use these in the same way.

Spotify Data
Spotify on the whole will become more measurable by more people. Predicting a Facebook insights style analytics tool for Spotify related activity on Facebook which could eventually be built into the service itself. The ability to track a click on an ad to a listen on Spotify would be an excellent direct response metric that iTunes does not currently allow.

Implications for publishing and advertising
Campaigns will be split between promoting buying the record and listening to it on Spotify/sharing it on Facebook. Publishers will be just as important in having a platform upon which releases will be promoted, where album streams can be placed, where editorial features can go inside the music and where publications start the journey of new music into a web of recommendations and plays.

Sonic publishers like Rock Sound and This is Fake DIY will be pivotal in traffic driving to Facebook pages but also for promoting their favourite artists on Spotify - which could ultimately make or break a bands success given the size of certain publications.

It's not about the format of music anymore, it's about the situation in which we listen to it. With music soundtracking our social lives, there was only going to be one place for it.

Sonic has taken Facebook's announcements very seriously. Look out for further updates on how Sonic will be reacting to these changes and maintaining it's strength in music advertising.

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