This was not commercial suicide because of the nature of "screenless marketing", she explained.

"Spotify is primarily an audio experience and that is accompanying you through your day, whether you're getting ready to leave the house, commuting, at work or working out," she said.

"People on this journey with us are less likely to pause to skip an ad, and when they do, we learn from that and serve them an ad next time that they are more likely to want to engage with."

Audio advertising had hitherto been dominated by the "one-to-many" communication of commercial radio, however Spotify was a "one-to-one" communication that lent itself to a more intimate experience, Ms Ingham said.

Andrea Ingham, head of sales at Spotify Australia/New Zealand Patrick Stevenson

For instance Spotify integrated with a smartphone's pedometer to know when a user was working out, so an ad might talk about that, or perhaps mention the music a user had recently streamed.

"Radio remains an important medium but the ads there need to scream a bit to stand out. We can use our first party data to help advertisers create something in context that is way more likely to resonate and prompt an action," Ms Ingham said.

Video ads were far more likely to be skipped under the new arrangement, Ms Ingham admitted. However Spotify has created a way around that in so-called 'sponsored sessions', in which free-tier users agree to watch a 15-second video ad in return for 30 minutes of ad-free listening.


The ad-skipping function adds to several recent improvements to Spotify's free tier. For instance users can now build an on-demand listening library of up to 750 songs, which remains curated by Spotify but adapts to listener preferences.

Spotify accepted that paid subcribers to its 'any song, any time' premium tier would probably always be in the minority, Ms Ingham said. As at March 31, 2018, there were 75 million subscribers globally and 100 million ad-supported users.

"But the 'freemium' model works for us because the world is increasingly in love with on-demand platforms, but we're one of the few that advertisers can engage with," said Ms Ingham, pointing out services like Netflix and rival Apple Music did not have free ad-supported tiers.



