When you know every stream on Spotify can earn you money, why wouldn't you spend some money on guaranteed streams? Here are a three good reasons.
Streams don't automatically mean fans.
Streams are important, afterall if nobody listens to you music you don't stand a chance, but it's what happens after the stream that is actually more important. .
Success on Spotify occurs when you trigger a network effect. IE one stream, becomes multiple streams, a save, a playlist add, a playlist share, a friend recommendation. At this point a listener becomes a fan, and this could result in a lifetime of value for the artist.
When you have a fanbase, they look forward to hearing your next track. As the word suggests, you have a 'base' of guaranteed listeners. If that base grows with every release the promotion costs tumbles, it's always cheaper to get an existing customer to buy again that to recruit a new listener from cold. But if you are attracting one time listeners you will be stuck in a cycle where you always need to pay to recruit new listeners. That's not efficient and you are fooling yourself if you think you are furthering your career, these are nothing but vanity streams.
There is another way. Major Labl create thumb stopping, social media ad campaigns to promote music. The ads they create sit on social media and drive people to a landing page, then on to Spotify. This crucial middle step removes the fake 'bot click' traffic and allows you to collect data which can be used to retarget engagers (which brings the cost down even further). The net effect is the people who like the ad, and choose to go to Spotify to listen are already warm prospects, this is a conscious choice. Unsurprisingly this approach delivers a save rate between 20-50%.
When people listen to tracks buried on a playlist, their attention is far lower, they literally pass-through your track on route to the next one. Unsurprisingly research from Major Labl shows the save rate for playlist promoted tracks to be just 7%!
Paid playlists screw up your audience targeting.
When you pay to add your music to a playlist, it often ends up on a playlist alongside a random assortment of music, some good, some terrible. The featured music is likely to be from a wide variety of genres. This isn't a playlist that has been editorially curated, it's a random collection of songs bought together by payment not love.
These playlists can really mess up your audience targeting. You might be a folk singer with an audience that typically consists of 25-55yrs olds but the moment you pay to be on a playlist that is largely filled with R&B and Trap your audience starts to screw to 16-18 years old girls. On one hand you might think this is good, isn't your music reaching new audiences? Well yes, but only if they actually listen, and as we discussed above there is little guarantee. In reality they are just passing through. Now it's anyone's guess who your actual fans are? That makes future ad targeting nothing short of guess work.