In order to compete against the multitude of different music streaming services out there (and there are a lot of them these days including Pandora, Songza, Beats, Rdio, Rhapsody and services from Microsoft, Apple, Nokia, and Google) Spotify has recently started tapping into a new vertical: merchandise.
It started with its deal with Topspin earlier this year. Now Spotify has entered into a brand new partnership with BandPage, a website that acts as a platform for musicians, it was announced on Wednesday. The new deal will allow artists to sell their merchandise directly on Spotify.
Here is how it works: all the artist has to do is create a BandPage profile, and create some offers for sale in their BandPage Store. As long as that artist has music that is currently available to be streamed on Spotify, their offers will be automatically matched to their Spotify profile.
Artists can have up to three synced offers on Spotify at one time, and two offers have to be approved, which will take place within three days.
In addition to selling merchandise, like t-shirts and koozies, artists can also sell "experiences," which can include private online concerts, real-world meet-and-greets, the chance to collaborate on a song, or guitar lessons.
The deal between the two companies is mutually beneficial. For the artist, it gives them access to over 40 million potential customers to buy their merchandise. BandPage also has partnerships with companies like Rhapsody, Vevo and Soundcloud, but adding Spotify is a major deal for the company.
"At BandPage, our mission is to help you, the musician, increase revenue and grow your fan base by helping you reach hundreds of millions of fans across major music platforms. As new music services have exploded on the scene, millions of fans are spending more and more of their time there," BandPage wrote in the announcement of the new partnership.
"These new platforms have rapidly become the most significant and important places to engage and sell to your fans."
For Spotify, this partnership is not about making money. As BandPage says on its FAQ section, all sale proceeds go into the artist's PayPal account and "Spotify does not take any commissions or fees on sales either."
So what is this really about then? Much like Spotify's similar deal with Topspin earlier this year, it seems to be more about developing relationships with artists and their representatives, giving them an added incentive to have a relationship with the company.
On top of that, it also gives more artists an incentive to add their music to the site, which will equal more money for Spotify in the long run.
Despite taking in $578 million in revenue during 2012, an increase of 128% from the year before, the company also lost $78 million, up from $60 million the year before. There are no figures for 2013 out yet, but Spotify can't be happy if the trend continues in that direction.
Founded in 2006, the Swedish music-stream company has raised a total of $538 million. It most recently raised $250 million in a round led by Technology Crossover Ventures.
BandPage, which was founded in 2009, acts almost like a social network for musicians. Artists upload a profile with their bio, pictures, videos, tracks and tour dates. BandPage then updates that information across the web, onto sites like Facebook, Twitter, SoundCloud, VEVO, Xbox Music, WordPress and the artists' website. By using BandPage, artists are able to grow their fanbase and increase their revenue.
It has raised over $27 million from investors that include Mohr Davidow Ventures, Walden Venture Capital, Robert Kavner, GGV Capital and Northgate Capital,
(Image source: bandpage.com)