Spotify is the biggest brand in streaming music. Apparently, that's not big enough. The company took a big step Wednesday away from music and toward being an all-entertainment company with original video as well as content from producers like Vice, ESPN, Viacom and public media companies, including American Public Media.
The streaming music giant announced at an event in New York a number of key changes to its platform, including the redesign of its app, the launch of time- and context-specific playlists, and the addition of various forms of non-musical content, including podcasts and streaming video. It also is commissioning original music that responds to the way its users are behaving in real time.
“This is a next-generation Spotify for a new generation of music fans,” CEO Daniel Ek said.
The relaunched version of Spotify will be available first in the U.S., the U.K., Germany and Sweden, where the company began. It will roll out to additional territories in the coming months.
Over eight years, Spotify has grown from a music industry curiosity into a dominant force in the fast-growing streaming music space. Founder Ek said the company has streamed more than 25 billion years of music, and during Wednesday’s presentation, he stated that, of the tremendous growth that’s been occurring in streaming music, half has been driven by Spotify.
"Spotify is the growth in streaming," Ek said.
But streaming music has not gotten the company into the black on its balance sheets, and the changes offer new opportunities to monetize content through advertising. They also give Spotify another distinction now that Apple Inc. is expected to relaunch Beats Music next month and new streaming services, such as Jay-Z's Tidal, are emerging regularly.
The move into video, which was anticipated after reports trickled out earlier this month, will see Spotify add content from a huge trove of partners, including Vice, Viacom properties like Comedy Central, Disney properties including ESPN and ABC, original content produced by Nerdist, among many others. Abby Jacobsen and Ilana Glazer, the creators of the hit comedy “Broad City,” helped introduce Spotify's video offering, which they said will be focused on short-form content.
“It couldn’t be more perfect because we are the clientele,” Glazer said.
“We are constantly trying to convince Comedy Central to make our show shorter,” Jacobsen added.
There was no word of how advertising will figure into these new features, but it is sure to play a large role. Spotify already offers video advertisements on the ad-supported desktop version of its service. Those spots debuted in September of last year, and brands including McDonald's, Coca Cola and State Farm have already taken advantage of them.
But serving video ads against audio is not the same thing as serving video ads against video. While just about 100 million people listen to streaming music in the United States, more than 200 million Americans, or 79 percent of American Internet users, will watch digital video on a regular basis in 2015, according to eMarketer. The ad market for digital video is expected to total $7.7 billion in the U.S. in 2015, according to eMarketer, and $9.59 billion in 2016.
When reports of Spotify’s move into video trickled out, speculation focused on who would provide the content. Those partners include a number of the video partners noted above, but a big surprise from Wednesday’s announcement included the fact that musical artists will be creating custom content for the company as well, including music that responds to what users are doing.
Rather than commission untold numbers of songs tailored to individual users, Spotify worked with artists including the electronic music producer Tiesto to make music that responds to the pace at which people are moving. “Music is moving beyond linear, one-way playback,” chief product officer Gustav Söderström said. “The answer was to invent a completely new track format.”
Windowed, Not Exclusive
While content developed for Spotify will debut there, the company won't try to keep that content only on its platform. Content developed by Nerdist, for example, will be exclusive to Spotify for just three hours before it becomes available more widely. That will solve a problem that has plagued Tidal, which has seen content it intended to be exclusive to its users leak onto sites like YouTube and Tumblr within hours of their official debuts.
While Spotify is intent on delivering new music and video content, it is aware that it must be poised to deliver it at the right time to the right people. “If we truly want Spotify to be the soundtrack of our lives, we need to be able to deliver the right experiences,” Ek said.
To that end the company foregrounded a new array of context-specific playlists curated by its in-house editorial team. The app will surface these songs based on a user’s location, time of day, musical preferences and other past behavior within the app. The app will also respond to changes in that behavior over time. “Over time, Spotify is going to remember what you did,” said Rochelle King, the vice president of global user experience and design.
It may take months for a full picture of Spotify's content aspirations to emerge. But as streaming becomes the standard content delivery mode for rich media like music, movies and television, Spotify is seizing on its early lead in one medium to gain a foothold in others.
"Spotify will never be the same," Ek said Wednesday. "Just better."