Will Spotify's video offering be a success?

Can the company challenge the likes of YouTube and take a share of the lucrative video ad market, Arif Durrani asks.

It has been two weeks since we were asked to "say hello to the most entertaining Spotify ever" as the streaming music service added video to its global offering.

Never one to undersell itself, Spotify positioned the move as a natural evolution into a "24-hour entertainment destination". There’s no doubt that the Swedish company has been on a mission since it launched in 2006.

It boasts, rather meaninglessly, that it has provided more than 25 billion listening hours during the past seven years. The only thing you really need to glean from this cumulative global figure is that it is big.

In fact, it’s an unimaginably huge figure. It’s the sort of stat you wheel out when you are puffing out your chest in potential investor meetings ahead of an initial public offering – which, of course, is exactly what is happening.

Spotify generated around $1 billion in revenue last year. Although it still posted a loss, it is certainly good at attracting attention.

And the introduction of video clips and "audio shows" to its music mix has maintained the momentum. It has also helped to overshadow the small matter of some of the world’s biggest pop stars – including Jay-Z, Kanye West, Madonna and Beyoncé – launching a premium rival service called Tidal.

"We’re bringing you a deeper, richer, more immersive Spotify experience," Daniel Ek, the founder and chief executive of Spotify, says. "We want Spotify to help soundtrack your life by offering an even wider world of entertainment with an awesome mix of the best music, podcasts and video delivered to you throughout your day. And we’re just getting started."

Interestingly, it was clips from comedy programmes such as Broad City – not music videos or interviews – that were chosen to showcase the new service at launch.

It didn’t take long for those ever-excitable tech hacks to start writing about "Spotify’s YouTube killer" or the "Net­flix annihilator".

Strategically, the business case is clear enough: mobile video adspend is the fastest-growing advertising market in the world right now, expected to generate more than $2 billion in 2015. But can Spotify tap into it?

MAYBE Steve Ackerman, managing director, Somethin' Else

"It’s interesting that Spotify is trying to broaden its offering at a time when music streaming is getting more competitive. The challenge is video means ‘lean in’ and, as such, is not its natural domain."

YES Daniel Fisher, senior vice-president, audience solutions, Rightster

"It’s tough and expensive to launch products. Spotify has a distinct advantage given its loyal user base. The opportunities are to increase its user base and the potential to disrupt video behemoths, start-ups and music-streaming competitors."

YES Christine Beardsell, managing director, Newcast UK

"I am excited to see Spotify’s video offering evolve. Last year’s acquisition of The Echo Nest confirms its passion for not just music but data. It will take its personalised recommendation algorithm and apply it beyond music."

MAYBE Thom Clark, head of play, iProspect UK

"A lot of new platforms are emerging. There is a huge pie out there and I think Spotify could be as eligible for a piece as much as any. As to whether it solves Spotify’s ad revenue challenges, I think I’ll sit on the fence a little longer."

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