In short: Ads are one of Spotify’s revenue sources. More than 57% of users are free subscribers, which means Spotify needs to monetize such a large audience by serving ads.
If you are not a Spotify Premium subscriber, you are likely to receive ads in between songs and podcast episodes. Let’s talk about Spotify ads and why there are so many of them.
How often does Spotify play ads?
Spotify serves only two to three minutes of advertising per hour. These audio ads are between 15 to 30 seconds long and are played once every 2 to 3 songs normally.
Spotify never released information on how often it plays ads, but Charles Paquin was able to get the information from Spotify officials during a phone interview in late June 2019.
Based on my observation, however, I have noticed that Spotify actually serves a single 30-second ad every 15 minutes or so, which is closer to the 2-minute-per-hour mark.
Spotify will also serve you a video ad every once in a while, which will give you 30 minutes of ad-free music. These ads are random however and are mixed in with the other ad on Spotify.
Why does Spotify have so many ads?
Spotify makes money from two revenue sources: selling Premium subscriptions and selling ad placements. The latter is generated through advertisements across music and podcast content.
1. Monetize Spotify free subscribers
As of 2022, Spotify reportedly had 456 million monthly active users worldwide. About 195 million of those users are Premium subscribers, which means about 261 million are free users.
Since the majority of users (57%) are free subscribers, Spotify needs to find a way to monetize such a large audience. One effective way to do this is to place advertisements.
Many brands and companies choose to advertise on Spotify due to its reach. With more than 450 million worldwide users, advertisers can target audiences from different backgrounds.
In comparison, Apple Music has yet to reach the 100-million-subscriber mark, highlighting Spotify’s pole position among the world’s most popular music streaming services.
2. Ad placements are one of Spotify’s revenue sources
Spotify generated an estimated $1.5 billion USD in advertising revenue in 2021. Based on Statista’s calculations, this figure will reach $2.4 billion USD by 2026.
While the figure pales in comparison to Spotify’s Premium revenue (which accounts for 88% of total revenue) advertisements still bring in a decent amount of money for the company.
It’s true that advertisements only account for 12% of Spotify’s total revenue, but no business in their right mind would cut off a revenue source.
3. Convert free users into Premium subscribers
Spotify makes more money from its Premium subscribers than from ads. This is why you’ll often see Spotify advertising itself when you’re listening to a song or a podcast episode.
Furthermore, users are more likely to buy a Premium membership because ads are annoying. The only way to listen to music ad-free is by buying a Premium subscription.
It’s basically a sales funnel. Spotify wants to convert you to a Premium subscriber. By converting more free users into Premium subscribers, Spotify will be able to earn more revenue.
Why does Spotify advertise itself?
Spotify advertises itself for 2 reasons. Premium subscribers bring more revenue than ad placements (about 88% of revenue), and a piece of ad inventory wasn’t sold during that time.
1. Premium subscribers bring more revenue
The majority of Spotify’s revenues came from its Premium subscribers rather than ad placements. By advertising itself, Spotify brings more revenue. It’s as simple as that.
According to Statista’s revenue report published in March 2022, Spotify generated about 8.46 billion euros in Premium revenue and 1.2 billion in ad-supported revenue in 2021.
Both figures were the highest reported to date, with Premium revenue having grown by more than two billion euros since 2017. It is estimated to grow even more in the coming years.
If you do the math, Spotify’s Premium revenue accounts for 88% of its total revenue. This is why Spotify often advertises itself to free users since Premium brings a lion’s share of their revenue.
2. Advertisers are not willing to sell an ad to you
Spotify sells ad slots to many different companies and advertisers.
When Spotify runs an ad for themselves, it could be that they have a piece of ad inventory they weren’t able to sell. They need to serve you ads during each slot, after all.
Since Spotify ads are personalized, what you get depends on a number of factors, including your demographic information, internet history, and what you are listening to.
It could be the case that none of their current advertisers consider you a desirable audience, so they’re not willing to pay the price of sending an ad to you.
Instead of not showing you ads, Spotify runs an ad for themselves. If Spotify does not serve you any ads, you are more likely to keep using Spotify free and not upgrade to Premium.
Why do I get ads on Spotify Premium?
Spotify doesn’t serve ads that interrupt the music listening experience of Premium subscribers, but some podcasts may include advertising, host-read endorsements, or sponsorship messages.
Furthermore, what you see are probably not ads but “music announcements”. You can disable them in Edit/Spotify > Preferences > Music Announcements > Hide on Discover Page.
Spotify Premium users should not be getting any ads. If you are getting ads, try logging out and in, or perform a clean reinstallation of your app both on mobile and your desktop.