The U.K. branch of Spotify believes that the company’s ad-revenue prospects are bright, due largely to macro-economic conditions. That is the hard-won upshot of slogging through a study just released by the music service.
The report is called Advertising: First to Suffer, First to Recover? — though the title is never mentioned in the study’s press release. It is a treatise authored by Spotify’s Director of Economics, but fine print distances Spotify from endorsing it. It is a dense read, requiring an appetite for economic theory, cyclical analysis, historical reviews, and an infestation of links to academic journals and banking forecasts. Bristling charts bring GDP into clashing juxtaposition with consumption and investment. Undaunted readers are challenged with MBA-level brain teasers: “The next question to ask is which of the three bars best correlates with the red advertising spend line?”
It takes 14 pages, but eventually a point is quietly made: Spotify advertising revenue is forecast to rise five percent in 2014. At least, it is in the U.K., home base for the calculations and suppositions of the study.
The plain-English premise is this: Spotify has managed to sell advertising in a down economy, so imagine the good times as things recover. That seems sensible, although perhaps only an unsteady theory would require so much fortification.
Anyway, if you’d like to take a swing at it, here is the PDF.