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Instead of buying exclusives, Spotify lures artists with promises of bigger audiences

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2016 Children's Hospital Los Angeles 'Once Upon a Time' Gala Photo by Rich Polk/Getty Images for Children's Hospital Los Angeles

Spotify has started to lean on its biggest strength to appeal to big-name artists: its listeners. According to a report from Bloomberg, the company is running a “months long promotional campaign” leading up to the release of Katy Perry’s new album — and they’re doing it for free. The idea is that by putting its many resources into promoting a single album, Spotify can prove its influence in the industry if the album does well.

As Bloomberg points out, Spotify’s recently launched creator services division is behind the Katy Perry campaign. The promotional push includes ads on Spotify’s interface, emails to subscribers, links to concert tickets within Spotify, and billboards in Los Angeles and London. “We didn’t ask for a billboard,” Martin Kirkup, a partner at the marketing firm that represents Perry told Bloomberg. “[Spotify] offered it.”

The campaign is one of several Spotify has recently launched (Shawn Mendes and The Weeknd also reportedly received some promo help) to show how the company can capitalize on its huge userbase in a way that’s appealing to artists. Spotify has far more users than any other streaming service. Last June, the company announced it had over 100 million subscribers and around 40 million of those are paid subscribers. In September, Apple Music had around 17 million subscribers, while Tidal was still hovering around 3 million.

But despite its massive size, Spotify doesn’t have something both Tidal and Apple Music do: exclusives. Chance the Rapper’s Coloring Book was initially an Apple Music exclusive, and it became the first streaming-only album to make it onto the Billboard 200 charts. And Drake, whose track “One Dance” has been the most-streamed song on Spotify for months, notably released that song’s full album as an Apple Music exclusive.

Aside from exclusives, Spotify has also been sidelined by major artists like Beyoncé and Taylor Swift (Beyoncé released her album Lemonade as a Tidal exclusive, while Swift removed all of her albums from Spotify in 2014 over the royalties Spotify gives rights holders).

Spotify has gradually begun to respond to these threats to its model. Last August, Troy Carter, Spotify’s global head of creator services, said that exclusives were "bad for artists, bad for consumers, and bad for the whole industry." As for the issue of royalties, Carter told Bloomberg he doesn’t really think that matters anymore. “The argument over ad-supported vs. premium, and whether Spotify pays or not, I think it’s gone,” he said.

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If Spotify doesn't want to fight for exclusives or offer the best royalties, then raw data may be its best bet. Spotify's reach is impressive. It's millions of users don't just listen to the service, but see the ads and promotional playlists scattered across it. If you use Spotify today, almost all of the ads you’ll see will be for Katy Perry’s new single, “Chained to the Rhythm” — even if you’ve never listened to a Katy Perry song in your life.

Spotify’s plan seems to be working. This was recently demonstrated by Ed Sheeran’s release of two new singles simultaneously last month. Both “Shape of You” and “Castle on the Hill” broke Spotify’s previous record for streams within a 24-hour period with more than 6 million streams each. (The previous record-holder was One Direction’s “Drag Me Down,” with around 4.7 million streams). “Shape” also broke Spotify’s record for first-week plays. Both those songs debuted in the Top 10 of Billboard’s Hot 100 — with “Shape” becoming Sheeran’s first-ever No. 1 debut, and “Castle” in the No. 6 slot. This wasn’t all Spotify’s doing (Apple Music doesn’t make its streaming numbers public), but Sheeran’s mutually beneficial relationship with Spotify certainly helped.

As Musically points out, when Sheeran announced his new singles on Twitter, he linked to a widget that listed both tracks on Spotify before Apple Music and iTunes. Acknowledging that the lineup in this widget is probably not a coincidence, it seems like Sheeran and his label wanted to push listeners toward Spotify.

So Sheeran pushes listeners to Spotify, and Spotify pushes listeners to Ed Sheeran. “Shape of You” is currently sitting atop Spotify’s Global Top 50 playlist and its United States Top 50 playlist. Right now, on Spotify’s Today’s Top Hits playlist, “Shape of You” is in the No. 2 position. In the No. 1 slot? Katy Perry’s newest single.