Platform Update: Spotify's Strategy to Woo Investors with Visual Content

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TL;DR: In preparation for its long-awaited IPO, Spotify is taking a new approach to achieving profitability by focusing on adding news and political coverage, visual content to new podcasts, and optimizing new original video content.

Gearing up for its long awaited debut on Wall Street, Spotify is taking an aggressive approach to reversing its profitability woes with the announcement of news and political coverage content being added to the platform. The giant streaming service’s paid subscriber base has grown year after year, but so have its financial losses. Many experts cite the rising cost of music rights as the reason for Spotify’s struggle to find the green. Will a news and podcast ad sells push Spotify over the hump?

Spotify is boasting a 70 million subscriber count at the start of 2018, a pretty impressive figure considering its 140 million active user count in July of 2017. Even with such a large paying customer base, the costs of music licensing is still too much to overcome.

What’s cheaper and less complicated to host than music? Original content. Spotify won’t be the first streaming service to take this route in search of profitability. Netflix made headlines after announcing its 50 percent original content goal as a response to rising licensing costs and the threat of producers creating their own streaming platforms. With this strategy, Spotify hopes to sell ads on their original content to offset the high costs of music rights. Sounds good, doesn’t it?

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Where the challenge arises for Spotify and its new content plan is changing users’ in-app habits. The vast majority of users come to the platform for music or podcasts and play them in the background. Will adding visual elements to podcasts and pushing video content change the way we use the app?

If you’re one of the many people that listen while cooking, driving, working, or exercising, probably not. The visual focus is Spotify taking a stab at Youtube, which is host to popular content by Refinery29 and Buzzfeed, two names announced to be providing new content for Spotify. Spotify wants to become a one-stop-shop for all things media. Interestingly enough, Spotify stated in a blog post that, “79 percent of audio consumption takes place while people are engaged in activities where visual media cannot reach them.”

At Sparkloft, we see the importance of video content as a means of engagement and and storytelling. In Spotify’s case, will its new visual content be powerful enough to draw user attention back to their screens and give brands reason to shell out cash for ad placements, or will this venture fall flat like Spotify’s previous attempts at video?

If we were to recommend a visual format for Spotify to bring it, it would be live-streaming. Two important statistics investors would love:

  1. Viewers spend 8X longer with live video than on-demand.
  2. Breaking news makes up 56 percent of most-watched live content. Conferences and speakers is tied with concerts and festivals in second place at 43 percent.

Highly immersive live-streams of concerts and festivals plays right into Spotify’s hands as does the streaming of breaking news and politics. If an increased focus on visual content is just a small step in the right direction, live-streaming would a leap for Spotify.

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How do you feel about Spotify’s new approach? Will the new visual elements change when and where you consume your favorite podcasts or will Spotify continue to run in the background for you? As more and more brands recognize the importance of storytelling, expect to see more platform updates crafted around these 2018 trends to watch.

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