Spotify Launches Videos, Podcasts and Running Feature

21 May 2015 | Author: | No comments yet »

Faced with heightened competition, Spotify adds video streaming.

NEW YORK: Streaming leader Spotify announced an expansion into video and original content, reaching beyond music as the company faces challenges to its dominance and strives to turn a profit. Streaming music service Spotify will soon provide video content from musicians, news organisations and TV networks in a bid to sign up more subscribers, the company said.

Global music-streaming leader Spotify is adding video and customizable features to draw in more users and ad revenue as competitors such as Jay-Z’s high-fidelity Tidal and a rumoured forthcoming streaming product from Apple Inc. threaten to steal its market share.The world’s biggest audio music streamer, with 60 million active users, said Wednesday it decided to broaden its offering, in part to capitalize on Americans’ long commutes, Spotify’s CEO told The Post in a private interview. “A lot of Americans are sitting in their cars for a long time,” explained CEO Daniel Ek, who was in New York to announce at a press conference a slew of new business initiatives with the help of Tiësto, D’Angelo and Questlove. “Tens of millions had connected to Spotify via Bluetooth but they still didn’t play music their entire drive,” said Ek, adding that heavy Spotify users wanted news, weather, traffic and podcasts, too, so he approached content providers about what they could offer. Spotify, by far the largest company in the booming streaming industry, said it wanted to turn into a broader, and more personalised, platform to bring in subscribers throughout the day. A new recommendation function, similar to what rival Pandora Media Inc offers, will let people pick channels based on lifestyle activities, like “songs to sing to in the shower,” or “100 plus hits form the 1980s,” the Stockholm-based company said.

The changes chart a path that puts Spotify into direct competition with YouTube at a time when Apple is planning to relaunch its own streaming service. The streaming music giant wants to expand its user base in advance of a much-hyped IPO, looking to take on the likes of Snapchat, YouTube and Facebook with a collection of video clips. Daniel Ek, the founder and chief executive of the eight-year-old Swedish company, said that Spotify was recognizing the all-encompassing power of smartphones in modern life. “There is an incredible opportunity to soundtrack your entire day – and your entire life – in all of its complexity,” the 32-year-old entrepreneur told a launch event at a converted New York warehouse off the Hudson River.

Some features, such as playlists curated to taste for different times of the day, are aimed at people who use the service for musical discovery; others, such as in-app streaming video and audio from partners such as ESPN and Vice, are designed to keep people using Spotify when they’re tired of tunes. They include originals commissioned by the company and existing content from late-night comedians Jimmy Fallon and Jimmy Kimmel, ESPN studio shows and clips from everywhere from BBC to Condé Nast Entertainment. In one of the more inventive features, Spotify unveiled a new function for runners that will detect motion through the smartphone and select music based on the pace. Spotify struck a myriad of partnerships with news organisations like the BBC, Vice, Walt Disney Co’s ABC, podcasts from Slate, and short programme clips from Turner Broadcasting Conan and Comedy Central’s critically acclaimed hit, Broad City. Spotify isn’t the first streaming subscription service to include videos — Tidal and Xbox Music have libraries of music-related video content — but its service will stretch further into comedy, news, and other non-musical areas.

The video content, available on both the free and paid tiers, is likely to make Spotify’s free ad-supported platform even more attractive to users, which could make some music labels unhappy. Ek said the updated platform would be available immediately in the United States, Britain, Germany and Sweden, and would be rolled out in the coming weeks to the 54 other countries and territories where Spotify is present. The new features, he told the crowd, are all about “creating a true soundtrack for your life” as streaming services converge with the previously separate worlds of broadcast and owned music. If successful, Spotify could not only hold strong against music rivals but also challenge video behemoth YouTube and Snapchat, the fast-growing video- and photo-sharing app. Streaming music now represents more than $1-billion (U.S.) of the floundering $15-billion global recording industry, compensating for declining physical and download sales.

But competition, not only from streaming music companies including Apple Inc’s Beats, is intensifying when other platforms such as Snapchat are thrown into the mix. Subscription revenue from audio service will top US$5 billion (S$6.68 billion) in 2020, according to Generator Research, and by that date 100 million users will be paying for streaming music.

Spotify earlier this week announced a partnership with Starbucks, which will promote the streaming service and give accounts to baristas to choose tracks at the coffee chain’s 7,000 US stores. Even though the potential for lucrative ads is clearly part of the reason for Spotify’s video shift, the company didn’t make it clear how advertising would fit into its new service. Recent trends mark “the biggest change since the inception of sound recording,” said Ek, sporting jeans and a blue T-shirt with an image of a guitar. Verified email addresses: All users on Independent Media news sites are now required to have a verified email address before being allowed to comment on articles. The launch featured a surprise mini-concert by D’Angelo, the critically acclaimed R>B artist who recently recorded special sessions on Spotify, as well as the stars of the Comedy Central show Broad City.

Over time, Spotify’s vice-president of user experience Rochelle King said Wednesday, playlists will keep track of listening habits and adjust to them. By adding video, Spotify is asking users to interact with its service in a new way: Stare at the app on your phones; don’t just press play and stick it back in your pocket. Mark Mulligan, a music analyst who recently wrote a book on digital changes in the music industry, said in an interview that the content expansion is both a boost to Spotify’s value proposition and reassurance for the company’s investors in the face of increasing competition. Mulligan said acquisition costs for programming like Vice news hits are simpler, and video advertising a more proven revenue generator. “This is a way they could potentially create a viable advertising business, as opposed to the one they’re struggling with,” he said. He, too, pointed out the tight margins that come with music-licensing costs. “I don’t think Spotify or any music service will get far with just music streaming.” he said. “The video market is a lot bigger than the audio market in terms of advertising dollars.” While the video market is dominated by YouTube, Mr.

Spotify is taking a cue from Songza, an online radio startup acquired by Google last June, and will offer playlists that correspond to specific moods or activities (such as “chill” or “travel”). Verna said, Spotify doesn’t need to own the market to reap its benefits. “Video is such a broad market that you can carve out niches in it and still have a huge business,” he said. The company also announced a new feature that will use the sensors in a user’s phone to determine their pace when they’re out on a jog and then play music with beats that complement the workout. While Spotify is a private company and does not report its results, British newspaper The Guardian reported earlier this month that despite year-over-year revenue growth of 45 per cent in 2014, the company still posted a loss. But there’s not a straight line from more streams to better economics for Spotify, especially considering that it pays royalties on a per-stream basis.

YouTube’s Music Key is set up to be a Spotify competitor, and the Google-owned service is also working on a subscription service offering a way around pre-roll ads on its videos. In expanding to video, Spotify faces its first uphill battle for market share – it’s an audio Goliath, but a video David – but it’s betting that letting users watch video in its app will pay off in spades. The world’s most valuable company has an enormous arsenal of content, and rumours are swirling that it’ll be taking that to the streaming game under the Beats moniker at its June 8 Worldwide Developers Conference keynote presentation. A day before Spotify launched its sweeping content additions, Paris-based Deezer, which bills itself as the world’s second-largest music streaming service, announced a similar, but less sweeping upgrade: more than 20,000 podcasts to hear within the app. While both those offerings give it a higher price point than Spotify’s, Tidal has the market cornered for audiophiles and I-got-it-first consumers.

There really isn’t a problem here for Apple to fix,” says Mr Andrew Sheehy of Generator. “The only actual advantage that Apple has is the install base and its market power.” Then again, those are big advantages. Because Apple takes a 30 per cent commission of revenue from apps downloaded onto its devices, it will make much better margins when it offers a competing service at a similar price.

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