How Spotify’s Thriving Recommendation System is Becoming A New Advertising Platform
A Brief Introduction To Spotify
For those who don’t know, Spotify is a Swedish music streaming service, launched in 2008, with roughly a hundred million paid subscribers and another hundred million freemium service users which is an ad supported model. Subscribers drive the 90% of the company’s revenue.
Their business model is primarily to make connection between a beloved product and the consumer.
What is Discover Weekly and The Secret Behind Its Algorithm?
Spotify employs music experts to create thousands of curated playlists. With the increasing demand for more personalized playlists, Spotify launched Discover Weekly in 2015, a computer-generated playlist, updated on Mondays, that provides users custom-made music recommendations for two hours. And it seems like people love their Discover Weekly.
Matt Ogle, the guy at Spotify in charge of Discover Weekly told Tech Insider “We’re trying to find the missing tracks.” But how are they collecting their data? The team behind the platform use collaborative filtering, ML(Machine Learning), DSP(Digital Signal Processing) and NLP(Natural Language Processing) approaches — they scrape web for artist information, scan each note in every song on Spotify for acoustic signals, and model users’ taste through a cluster analysis.
Collaborative filtering is the backbone of Discover Weekly, generated by a factor analysis of user based playlists matched to each user’s current listening behavior. It follows consumption patterns associated with users’ preferences. How does collaborative filtering work? First, the algorithm goes through all the playlists on Spotify that include songs and artists the user like. Then, it identifies the songs on those playlists. At the end, it filters the songs that the user hasn’t heard on Spotify.
User taste data is collected from consumer behaviors like their individual taste in music and choice of genre. You can find which songs and artists you listened most here.
Natural Language Processing, or NLP, is an AI algorithm that is focused on enabling machines to understand and process human languages. It gets its data from scanning tracks’ metadata, and scanning through blogs, news, social media for keywords -cultural vectors- associated with songs and artists. Each vector is assigned to a score as reflector of its importance.
Digital Signal Processing machines use convolutional neural networks for audio processing which helps determine audio patterns. This recommendation system is beneficial for less famous artists.
Machine Learning algorithms bring all the recommendation systems together to create the best personalized playlist for the user.
You can help Discover Weekly algorithm to curate better playlists for you by following very simple steps:
- Click ‘heart’ icon for the songs you like.
- Follow the artists you like.
- Create your own playlists with your favorite songs.
- If you are listening music that doesn’t reflect your taste, use Private Mode.
How Does Sponsored Discover Weekly Work?
Spotify is beta testing a new ad format for Discover Weekly as the company is offering brands to sponsor weekly playlists as opposed to just running ads. While Spotify runs ads during the playlists, the sponsor brands will have an opportunity to customize the ad experience for the entire individualized playlists and engage with particularly active users.
Sponsor companies will have a platform for advertising in-playlist and local ads similar to sponsored playlists. Spotify has over 200 million active users including a hundred million paid subscribers. According to data, Discover Weekly listeners stream music on Spotify more than double the amount of users who don’t listen Discover Weekly.
While Discover Weekly sponsorship doesn’t affect premium users, freemium users get audio and video advertisements between songs in Discover Weekly in addition to existing ads.
Microsoft will launch AI powered campaign “Empowering Us All” as the first brand to sponsor. Ad breaks will discuss the impact of AI on education, healthcare, and philanthropy. Microsoft’s general manager of global media Erin Bevington said in a statement.
“At Microsoft we are focused on empowering every individual and organization to do more.Our work in AI is a central part of that mission to unlock human ingenuity. Our partnership with a technology innovator like Spotify offered a way for us to effectively share that message within a personalized entertainment experience powered by AI.”
For a company that provides majority of its revenue from paid subscribers, sponsored Discover Weekly will increase the average revenue per user that has been steadily falling with low-cost students and family plans. The new ad platform will also force freemium users to subscribe for quality streaming without ads.
Brand sponsorships for Discover Weekly is still in beta testing and Spotify hasn’t announced a certain launch date yet.