8Tracks Adds Audio Ads, Raises $1.2 Million

8Tracks is a quiet but powerful player in the music streaming business. It’s one of the most popular online streaming destinations, ranking as the 5th most popular online music service among 19-24 year-olds.  It ranks 8th overall, with 8 million active monthly visitors. It’s an impressive standing in an arena dominated by wealthy players like Spotify and Pandora. Unlike Spotify or Pandora, however, 8tracks builds its model around user-generated playlists. In addition to genres, users search for music based on their current mood – happy, mellow, in-love, turnt, etc. It’s also received just $1.5 million in funding since launching in 2008, in comparison to Spotify, which has received $538 million in backing so far.

8tracks CEO David Porter told RAIN News that they’re opening up audio ads because music listeners are increasingly turning to mobile streaming. After closing a second round of funding this summer, bumping up total funding to 2.9 million, 8Tracks may be ready to reveal itself as a heavyweight competitor. Porter told RAIN News that 8Track is “going to start slowly…We’re interested in formats that would be great for our young audience. At the same time, we remain mindful that buyers are used to standard formats – 15-second and 30-seconds spots.” The company hopes to remain profitable through a balance of ad-support and ad-free subscriptions. Porter notes that it’s a big change for the company that “Historically we have been a consumer-facing business, and advertising has been second fiddle.” 8Tracks’ other ventures into advertising include “native ad products, which are about a brand being affiliated with a playlist, or curating it,” and video pre-roll ads, launched just last month.

Though the CEO says they’ll listen closely for user reactions: “we have to follow the listening experience….We’re willing to experiment to see which formats are going to strike the right balance, generating enough revenue, but also not going to push people away. You have to walk that fine line.” The chosen partner for audio advertisements is AudioHQ, who says 8Tracks is “trying to find a middle ground between direct audio ad sales with the highest payouts and programmatic marketing which automates inventory and pushes pricing lower. As Porter points out, 8Tracks has a lot to learn about audio ad formatting, while also building a sales team. So far the streaming service has maintained an ideal combo of a dedicated audience and steady financial growth.  Considering 8Tracks’ untested history with audio ads, it’s partnership with AudioHQ seems like a good fit.