Could analysing Spotify data assist in gauging the impact of interest rate rises on the economy?
The Bank of England's chief economist has suggested that analysing Spotify data can assist in gauging the impact of interest rate rises on the economy. The BBC first reported that in a speech about the new possibilities of data analytics, Andy Haldane suggested that ‘Spotify data had been used to gain an insight into people’s mood’.
“Spotify has been used, in tandem with semantic search techniques applied to the words of songs, to provide an indicator of people’s sentiment," he said.
Spotify data can provide an insight into consumer confidence and mood
During the speech, Haldane argued that it has become increasingly difficult to measure the mood of consumers through traditional methods and therefore it was important to look at new possibilities in big data. Citing a study by Claremont University, he claimed that analysing popular music against the sentiment of markets, ”does at least as well in tracking consumer spending as the Michigan survey of consumer confidence”.
The cited study, ‘The Rhythm of the Markets’, analysed emotions including joy, anger, sadness and anticipation within the language of songs in the Billboard Top 100 in the US. The popularity of these tracks was correlated with the rise and fall of the Nasdaq, the Dow Jones and the S&P 500.
The study's authors argued that the methods means they "are able to create trading strategies with our music sentiment indices that outperform traditional buy-and-hold strategies in terms of reward and risk".
Instrumental’s A&R music scouting platform is currently tracking over 180,000 artists and 830,000 tracks on Spotify. The platform also makes use of Spotify’s track characteristics, to allow users to filter and scout for artists based on the mood of tracks.
Claiming that the analysis of people's on-demand music choices could be a useful metric and offer a "window on their soul", Haldane also reported on the use of gaming environments to analyse purchasing and marketing behaviour.