Spotify Ready to Introduce Video Product
Spotify AB is finally rolling out its video product to the masses.
The Swedish music-streaming service is planning to introduce video content on its Android app starting this week, followed by the iOS app by the end of next week in the U.S., the U.K, Germany and Sweden, the company said. Spotify had originally announced the plans to begin distributing videos and podcasts in May, with a lineup of traditional and digital content providers that included ESPN, Comedy Central, the BBC, Vice Media and Maker Studios.
Spotify has been gradually testing video on its apps over the past several months with less than 10% of its users in the four launch markets, said Shiva Rajaraman, Spotify’s vice president of product. The content mostly consists of short clips (think snippets from “ Jimmy Kimmel Live”), though some companies, like Tastemade, are also developing original, music-themed series specifically for Spotify.
While some media partners have privately grumbled about the video product being delayed and Spotify moving slowly on the rollout, Mr. Rajaraman said this launch timing was part of the plan.
“We are at the end of a journey of testing,” he said. “We are going out effectively as planned. Our goal was largely to get a wide breadth of content and experiment and test.”
What has Spotify learned so far? It’s early, but Mr. Rajaraman said that Spotify has found that presenting contextually relevant videos—based on the kind of music people listen to or Web videos that are simply tied to music—seems to spur people to watch clips. For example, Maker Studios’ popular comedic rap series “Epic Rap Battles” has clicked with users in early tests.
On the flip side, Spotify found during the beta period that it was offering too many ways for people to find video. So, the company has focused on compartmentalizing video content and creating programming packages, like “News of the Week” or “Laughs at Lunch,” Mr. Rajaraman said.
After all, despite having a large base of 75 million users globally, including 20 million subscribers, Spotify is largely a music-listening app for most people and one that is often running in the background, Mr. Rajaraman acknowledged. That means that getting people to watch video on the Spotify mobile app will require some consumer training. (People do use Spotify via desktops, but the video product is mobile only.)
“Obviously our primary user is a music fan, and they are not necessarily leaning in and looking into the app,” he said. “So there are no particular recipes for how to get this right.”
Spotify, which is valued at more than $8.5 billion, is entering a crowded realm, where platforms like YouTube, Facebook and Snapchat increasingly dominate Web video. David Anderson, an executive at United Talent Agency, said that Spotify will have a solid chance to compete, given its elegant user interface and its technology prowess.
“It will be interesting to see how they can leverage data and audience insights to inform a programming strategy,” he said.
The company, which isn’t yet profitable, is leaning on its content partners, which also include ABC, Condé Nast Entertainment, Turner’s Adult Swim, TBS and Fusion, to act as DJs of sorts, curating custom content offerings for Spotify.
Though Spotify is paying its partners to license content, it is not viewing video as a moneymaker—at least not initially. The product is launching without any advertising in the videos, as Spotify primarily sees video as a way to expand its audience and get existing users to spend more time with the app. Though, last year Chief Executive Daniel Ek said that video ads would eventually be “an important revenue source.”
Right now, Spotify makes money by selling an ad-free subscription service, or by showing ads to nonsubscribers. The new video content will be available to all users.
“This [launch] is fundamentally about giving music fans what they want,” said Mr. Rajaraman. “We are doing fine on monetization. This is primarily a demand play.”