Xbox Music’s Ad-Based Revenue Model Takes Shape: Triton (Pandora’s Partner) Appointed For Audio Ads And Analytics

Xbox Music, Microsoft’s streaming music competitor to Spotify and iTunes that began to roll out to Xbox and Windows-powered devices in October, today filled in one part of the picture for how it will make revenues from the free portion of the service. Triton Digital has been appointed to provide audio advertising for it. Triton will also provide audience analytics so that Microsoft can make better sense of what platforms consumers are using and what music they’re consuming.

Triton says that the deal is exclusive to it for the time being and will include access not just to measurement services but to Triton’s ad sales network — it also works with Pandora, Slacker, Clear Channel and CBS among other media streaming companies — and ad insertion technologies. The commercials will come in the form of audio ads that will run in the free streaming service (which sits alongside a paid download service) that will run on Windows 8 and Windows RT devices. Triton says that they will be “highly contextual and appropriate ads to their audience.”

“Digital audio is bursting at the seams and some very big names are joining the competition,” said Mike Agovino, COO at Triton Digital in a statement. Indeed, to help differentiate Xbox Music from all the other companies offering streaming services today — and to ensure that its Windows devices have just as many music options for consumers as the iPhone and Android do — Microsoft is putting a big bet on personalization, with the streams targeted by demographic, geography and past listening history.

Triton will come into play here with data that it will pick up through the service.

Although Microsoft Advertising has made a big push into multimedia and social ads — one look at the new concepts being implemented in Skype gives you a glimpse of what it hopes to do there — its deal with Triton points to one area where Microsoft apparently hasn’t developed capabilities and so has had to look elsewhere to provide them. It’s also a sign, I think, of how Microsoft perhaps is waiting and seeing just how Xbox Music will develop before it invests money into developing those kinds of capabilities in-house for itself.