If it seems like everyone is jumping into video content, you’re right – they are. In the last few weeks, several digital players announced they’re breaking into the ultra-competitive landscape known as video. Reddit, BitTorrent and the one I find most interesting, Spotify, have all made headlines discussing the original programming and content deals coming to their platforms.
During Spotify’s media event May 20, they revealed quite a few updates to the platform. First, they’ve increased their focus on relevance – breaking free of the music genre to focus on personalizing music through your history, your current activity (i.e. that new running feature) and even time of day. And of course, they’ll be adding video, news and podcasts with their initial media partners NBC, Slate, Vice NEWS, BBC, NBC, ABC, Conde Nast brands (GQ, Vogue, Wired), Comedy Central, MTV, E!, TeamCoco, Adult Swim, Maker Studios, Elite Daily, TED, CBS Radio and PRX.
What does this mean for Spotify’s 60M+ users?
Spotify has to come out the gate ready-to-win. It’s a really tough market with Netflix ruling the long-form segment and YouTube dominating short-form. But, Spotify has a 60M+ userbase with each average listener spending 148 cross-platform minutes. This audience is highly engaged and highly dedicated to all things music. So where should their content strategy begin, hopefully laser focused on music.
Case in point: we watched Taylor Swift’s music video Bad Blood break viewing records with 20.1 million views in 24 hours. We also watched the incredibly predictable Billboard Music Awards bring in their highest ratings in 14 years. (Events are the new content!) People still love music content and videos. There’s space for more music videos and more content around live music, festivals and curated playlists (i.e. less countdown and more genre-mixing).
For Spotify’s distribution play, I hope they plan to add Vevo, Revolt TV or any music-based channel to the mix of content partners. For their original programming, Spotify has the right connects within the music space to deliver top-notch, artist-focused content and the audience who will likely want to watch. If they focus on short-form content and avoid blowing massive dollars competing with the Netflix/Amazon/Hulus, they could compete in this niche and capture more than engaged listeners.
What Could This Mean For Spotify’s business?
Spotify has become the ubiquitous choice of music lovers. Despite the competition rolling in – Tidal and Apple’s new streaming service – they’re already high on the consideration set. They’ve been focused on growing their userbase but now need to think through strengthening their advertising revenue. Video could be the answer.
If Spotify could boost the amount of video, especially original content, on their networks, they’ll have an opportunity for higher CPMs and advertising solutions bigger than running :15 spots in between your music selections. They’ll now have more video inventory and an opportunity for branded content. This means bigger dollars and hopefully less pressure on the freemium model. If Spotify can find a sustainable way to share advertising gains with their key music partners, they could stand a fighting chance against Apple and Tidal as those guys try to eliminate free music and deliver more of what the music industry wants.
