News

POV: Spotify - Video Marks the Spot

Mindshare Point of View:

Background

Last week Spotify founder Daniel Ek revealed “Spotify Now” – a service that will offer both videos and podcasts through the Spotify platform. The intention is to turn Spotify from a background radio station or ‘poor man’s iTunes’ into a one-stop-shop entertainment destination.


Details and Implications

The announcement comes after years of controversy surrounding the competitive business models and rocky relationships between streaming services, record labels and artists. For example, Zoe Keating published a Google doc back in 2012, citing that only 3% of her digital royalties could be attributed to streaming services, with the majority coming from sales on iTunes, Amazon and her own website. However, despite this, Keating and others have argued that streaming services do in fact provide a valuable insight into who will eventually buy an artist’s music and concert tickets etc. It could therefore be speculated, that Spotify have recognized this as an opportunity to capitalize on its unique user data, and further develop its service with the creation of Spotify Now in order to increase advertising opportunities.

Spotify Now has a partner list that reads like a who’s who in professional digital content: Vice News, TED, Viacom, YouTube network Maker Studios, Comedy Central, MTV, BBC, GQ, Vogue, Wired, podcast network Nerdist, Epic TV, Elite Daily, NBC, Slate, and YouTube network Tastemade are among those on board.

The implications of the launch, from a media perspective, are three-fold: Ad-serving, content and data.

Beyond the existing audio ad placements, it seems quite likely that Spotify will open the door to video ad placements as a way to generate revenue – and partner with brands. Not a bad way for brands to target users (76% of whom are subscribed to the free model) by mood or occasion.

More and more we’re seeing that original content is king. Partnering with Spotify on content creation or distribution opens the doors for brands to be present during relevant moments and triggers; The Nike Running Tempo Mix is a great example of adaptive content.

The move also opens up the data floodgates as the Spotify Video offering will open even more doors to understanding user behavior in relation to video, and even the fluidity between video and music consumption.

Summary

Spotify’s core product offering remains music, so it will be interesting to see how its users take to the video offering and whether Spotify will be able to replicate the success it has had with audio. But it is clear that Spotify is increasing its offering - alongside the Spotify Now announcement Ek also revealed Spotify Running, a truly adaptive initiative which will use the phone’s movement sensors to locate a track (including a Spotify original made by Tiesto) that will keep pace with a user’s feet when he or she is working out.

The bottom line is, Spotify is taking massive strides towards becoming a curated, customized content hub, not just a ‘poor man’s iTunes’.