Spotify has confirmed it is testing a new ad type that lets record labels promote new singles.

After confirming a year of major financial losses, Spotify has been seeking new ways to make money. Some users have seen Spotify’s new idea in action.

Non premium users may have noticed a new ad unit which is called ‘Sponsored Songs’. It allows record labels to promote singles on playlists – for a price. A Spotify official has confirmed that they are testing this new feature.

TechCrunch has reported that the sponsored songs will be placed into users playlists based on their musical preferences.  The Sponsored Songs will appear above a playlist and will be instantly playable.

At the moment we are not sure how much Spotify will be charging the labels to advertise using this feature or whether it will be based on listens, impressions, actions, etc. If the testing is a success the feature will get a roll out but it will only be on the non premium service.

Some users may find this feature annoying but it isn’t surprising. Spotify needs to increase revenue after apparently losing $601 million even though the user count of the service reached 140 million.