Spotify could rival Netflix with own video service and original content

Spotify, which recently updated its iOS client with a brand new biography feature in the artists view, is reportedly considering getting into video with a rumored streaming product meant to take on the likes of Netflix and HBO. Conveniently enough, the Swedish startup has kicked off its first-ever advertising blitz around music as it steps up efforts to sign up more people to its service.

Spotify battles Pandora and Rdio (and quite possibly Apple and Google soon) and has emerged as the most popular streaming music service out there. It offers two basic tiers that bring the best of both worlds, an ad-supported free desktop streaming and a $9.99 a month premium tier for unlimited ad-free music.

Though the firm does have lots of experience negotiating media deals and moving chunks of data through Intertubes, a full-blown video streaming service would be an entirely different pair of shoes, one marking a radical shift in strategy for the young company…

Nicholas Carlson, writing for Business Insider:

According to two sources briefed on the company’s plans, Spotify intends to become an on-demand music and video service – one that would invest in original content and compete heads-on with Netflix.

The part about investing in original content should presumable be similar to how Netflix funded its “House of Cards” original series or how HBO invested big money in exclusive original series such as “The Sopranos” and “Sex And The City.”

Interestingly enough, a Spotify spokesperson didn’t deny the rumor and wouldn’t comment on it.

Rumor mills previously speculated Spotify was working on a video streaming service and today’s report adds a new bit of information, that the company is now actively looking for partners that can help it fund and create exclusive content.

CNET cites CEO Daniel Ek’s recent words remarking that taking on Netflix would be an uphill struggle for the five-year-old startup:

I won’t rule it out because we’re a company that looks at what we’re doing incredibly long term. But right now, we’re all focused on music.

He also pointed out other people are already doing an awesome job in the video streaming space, namely Google’s YouTube and Vevo, a joint venture music video web site operated by Sony Music Entertainment, Universal Music Group and Abu Dhabi Media.

I don’t know what the user experience would be where we would do that considerably better than anyone else.

If we did think we could make it better than YouTube or Vevo, then maybe. But it would seem easier to partner with them.

Here, two more ads Spotify posted today on its YouTube channel.

The rumor makes perfect sense to me.

In becoming a two-pronged entertainment provider, Spotify stands poised to branch out in new markets and attract more advertisers, especially should its video platform take off.

Don’t forget that Spotify has only that much room to grow under its current business model, which is limited due to razor thin margins on tracks it streams to music lovers. Spotify will pay labels about half a billion dollars this year alone for streaming rights, making it the labels’ second-biggest partner behind Apple.

If the firm could offer both music and video streaming, then it could get creative by giving us an option to sign up for the combined music/video offering for a flat monthly fee.

At any rate, the Spotify brand along with its clout among the C generation – youngsters raised on social media – is the perfect match for a branded premium video service.

Spotify has 24 million active listeners and more than six million paying customers, way more than Rdio and other streaming music players have.