Spotify Teams With Coke, Launches Branded Apps
Spotify announced a broad new partnership Wednesday with Coca-Cola and launched a series of branded apps from the beverage giant and others as the music streaming service seeks to ramp up advertising revenue.
The deal: Spotify will power technology behind Coca-Cola Music, a global initiative launched last year to support music programs in the years between Olympics and World Cup sponsorships. Coke will integrate Spotify into its Facebook presence and Timeline, where it boasts more than 40 million fans.
As part of the agreement, Coke will also leverage the Spotify API and platform to develop various music-related applications. The initial Coke app for Spotify, created last weekend during a two-day “hacker day” by the companies, is expected to debut in the coming weeks in relation to Coke’s summer Olympics marketing efforts.
Mark Ronson's "Move To The Beat" will be the official anthem of Coke's 2012 Olympics campaign. Spotify and Coke plan to launch a joint ad campaign to be unveiled later this year.
Spotify, which launched in the U.S. last year, could get a further boost from on-pack promotions through My Coke Rewards, Coke’s customer loyalty marketing program. Under the partnership, specially marked packages of Coke products could offer free trial codes for Spotify to help expand its user base, per a Billboard report.
The music service says it has more than 10 million users worldwide, including 3 million paid members. Unlike Web music rival Pandora, which gets most of its revenue from advertising, Spotify generates most of its sales from subscriptions. It offers a $10 per month unlimited subscription in the U.S.
Prior to announcing the Coke deal, the company said it had signed advertising deals with companies including AT&T, McDonald’s, Intel and Reebok to create branded apps that will populate Spotify’s desktop app. Spotify first rolled out a set of apps late last year from partners including Rolling Stone, Pitchfork and Billboard to help users navigate its library of 15 million songs, providing recommendations, song lyrics and other services.
The new crop of branded apps are intended to be thematically consistent with the brands they represent. AT&T’s offering would allow users to see maps and locations where popular songs were recorded, while the Reebok app will make playlists for workouts.
Spotify founder Daniel Ek told Reuters last week the company will take in revenue close to $900 million this year, but ruled out the possibility of filing for an IPO to capitalize on investor hunger for hot Internet startups. Pandora raised $235 million in an IPO last year. Spotify’s growth, however, has also brought it into conflict with labels and artists who have complained about the company not paying sufficient royalties.