In 2015, it was on-trend for music streaming services to announce plans to move into video. Early in the year, premium streaming music service Spotify announced it would focus on video. It was followed by recently-launched competitor Tidal, and, not long after, rumors surfaced that Pandora would join them. YouTube also announced that it would release a music and entertainment hybrid subscription service, YouTube Red, which debuted in the Fall of 2015.
Want to know more about the trend? READ: “On Trend: Music Streaming Services Tackle Video — Here’s Why.”
Since the Summer of 2015, Spotify has been testing video content in a beta phase, available to only iOS users, while it adjusts as needed for a bigger push in video to take shape by May 2016, when the company is said to be rolling out video to a wider audience.
But what exactly does a shift from music streaming to video look like for the mega-music-streaming service?
Video Is Important, But Audio Is Still the Core… For Now
For Spotify, the shift to video isn’t a deviation from their core business — audio. As Spotify has looked towards adding a slate of content, audio has served as a central peg for the video–related projects the streaming platform has been quietly testing in beta over the last few months.
“What we have learned about our users is that they want to be informed, they want to be enlightened, they want to be entertained, in whatever format suits their context,” said Shiva Rajaraman, Spotify’s product lead.
So, to kick off its video offering, Spotify first took aim at curating content that can be consumed in audio-only format or accompanied by video. Spotify started to work with the usual suspects in the video space — Fullscreen, Maker Studios, Collab, Tastemade, Vice, among others — calling for content that could fit with the more popular curated “Mood” playlists like Urban, Coffeehouse or Pop, but looked more like video podcasts than episodic web series, all housed under a “Spotify Shows” section.
Since testing the video product, Spotify has learned that their original assumption that video is a natural fit on the platform is proving to be true.
“In our case, when we start thinking about entertainment, pictures can be fun, they can even be more engaging,” Rajaraman said. “So we have been testing video largely because we think that it is an underlying consumer need. And the easier it is to deliver video, especially with increased bandwidth, and increased access we have to the internet, the more we have to play on different formats.”
Intuitively, it might seem that Spotify would benefit by first moving into the music video business, perhaps acquiring a company like Vevo (should it ever be able to separate from its YouTube ball and chain), which has a wealth of licensed music video IP from major artists such as Beyonce, Miley Cyrus and Lady Gaga. And, in fact, the company has dabbled with rolling out music videos to accompany music (see left). While Spotify is covering all bases, music videos are not as central to Spotify’s video strategy as it might need to be to start converting audio-first behavior to more audio-visual.
A Slight Hurdle — Changing User Behavior and Fitting Original Video Into Product
According to sources close to the situation, Spotify hit the pause button at the end of 2015. With big dollars being thrown at content licensing and original projects by major players such as Verizon’s Go90, Samsung’s now-defunct Milk Video, Vessel and YouTube Red, among others, Spotify can’t just financially tiptoe into the video space. We have yet to see if Spotify is prepared to spend the $1 billion in content acquisition and marketing like recent entrant to the video space, Go90.
Secondly, those who are part of the beta claim that Spotify users haven’t been as receptive to video consumption as Spotify initially intended. However, despite these concerns, the company will press forward with video, targeting May 2016 for its wider roll-out.
“Original programming is a logical area for new entrants in the streaming space to invest in to try and differentiate from their competitors and augment their offerings,” according to Jonathan Carson, the former Chief Revenue Officer at Vevo. “The reality though is that original programming is a long-term play that needs sustained investment and a growing audience to see any meaningful ROI.”
With over 20 million subscribers, Spotify is in a position to take video–viewing market share organically should the company be able to strike the right balance between podcast-like content and narrative-driven formats that match well with streaming music.
Leading the charge is Global Head of Original Content Matt Baxter, who joined Spotify late last summer to oversee the licensing of content and commissioning of original content. Some of the projects already in progress include Amy Poehler’s Smart Girls’ ”Dance Move of the Day”, an MTV Unplugged style format called “Spotify Sessions” and “Turntable”, a food and music show. New projects said to come this Spring will continue to focus on comedy and news, according to Rajaraman.
How Spotify Can Win the Video Game — Discovery and “Spotify Now”
It’s a long-standing issue — and certainly one covered extensively by VideoInk — discovery. With the growing volume of content and platform options available to users, surfacing content is a significant hurdle for video programmers as they look to rise above the tide. Spotify has put significant product development behind its recommendations and discovery algorithm, posing what could become the unique selling proposition to content creators who ache for their content to find real eyeballs.
“[Spotify has] a wonderful set of listening data right now. Since Spotify works from the background and is a part of your day, you might use it for several hours everyday, so we understand your tastes,” Rajaraman said.
Spotify will replicate the two-fold approach it’s taken to music, combining a team of editorial curators with algorithmic recommendations based on user behavior so that the viewer has a window of uninterrupted playback and doesn’t “have to go hunting and gathering,” as Rajaraman put it. The content will live under their banner of “Spotify Now”
Users engaging most with video will see more video, while those who don’t, won’t. If Spotify can translate its powerful discovery engine for music into video the company can set itself apart from the other music and video streaming hybrid platforms in the market right now. And Rajaraman tells VideoInk that they are prepared to make big plays this year as they commit to video, with product and user experience at the forefront.
As the year unfolds, Spotify and YouTube Red could end up in a head-to-head competition to keep the user engaged with multiple media offerings for every occasion, and both have similar baseline scale to help them own the user.
Afterall, according to Carson, “Your odds of success are significantly improved when you start from a baseline of using it as a tool for new growth on top of a healthy core business versus more of a standalone catalyst to grow your audience.”