Spotify Adds Hundreds of Employees to Grow Their Advertising Business

JAKARTA - Spotify plans to hire hundreds of staff to increase its ad sales in Europe and elsewhere, as the music streaming service continues to seek to increase revenue from subscribers who don't pay a monthly fee but make up the bulk of its user base.

"We increased the marketing force of our ad business by more than 70% in Europe, Australia, and Canada ... and that's from a sizeable base," Lee Brown, head of Spotify's advertising business, said in an interview cited by Reuters.

"We are investing in our advertising business. As far as a long-term strategy, I think are past the days of advertising that is less than 10% of our overall revenue," he added.

"We've also hired an ad industry executive with 25 years of international experience to lead international sales," Brown said, though he didn't give his name.

The company, which derives revenue from paid subscriptions and by distributing ads to non-paying users, has seen its advertising business grow again this year after being hit by the pandemic.

Of its 365 million monthly active users, 210 million are ad-supported, generating about 12% of its total revenue.

"Advertising not only creates revenue for the company, but also lowers costs, as it causes fewer songs to be played and, in turn, lowers royalties a bit," said Morningstar analysts.

The surge in podcast content – Spotify brought in 2.9 million podcasts in the second quarter, up nearly 12% from the previous three months – has helped increase ad revenue, as podcasts attract more users and, being longer, allow more time for advertising.

The company wants to add more tools for advertisers and will make the advertising and podcast publishing platform Megaphone available in Germany, France, Spain, and Italy.

Megaphone, bought by Spotify last year, offers tools for podcasters to create ads for their own programs, for which they receive revenue, and to measure their reach. It currently hosts about a third of the top 200 shows on Spotify and Apple.

Spotify has spent hundreds of millions to improve its podcast business. Its rivalry with Apple intensified after the two launched a paid subscription platform for podcasters earlier this year.

The Swedish company is expected to overtake Apple in podcast listenership for the first time this year, according to research firm eMarketer.