Yesterday, Spotify announced its biggest set of changes yet with the addition of video, original content and a passel of personalization. It all comes just ahead of Apple's music relaunch, but the other target says consultant and analyst Mark Mulligan was YouTube.
By Mark Mulligan from his Music Industry Blog.
Yesterday's Spotify announcement was always going to be about Daniel Ek attempting to regain control of the streaming narrative in advance of Apple’s grand entry in a couple of weeks. But if you were expecting this to be the launch of a bunch of new music features then you were in for a little bit of a shock. Though there were some new music features outlined (such as swipe to listen, behaviour-learning programming and fitness features) the core of this event was positioning Spotify’s transition from a pure play music service into an entertainment destination with video taking centre stage. YouTube has been competing (on uneven terms) with Spotify for years as a music service. Now Spotify is fighting back by going after YouTube’s heartland.
Moving Beyond The Soundtrack
Spotify’s hook line for the event was ‘Soundtracking Your Day’ but in actual fact Spotify want to do much more than that (after all that’s what they already do), now they want to also be a visual part of your day too. Spotify announced a host of new video partners including native online video producers, next gen video creators like Vice News and traditional brands like Comedy Central. Spotify is creating a catalogue of video shorts that are designed to fit into your day. This is unashamedly YouTube, Vessel and Buzz Feed territory.
Lessening The Music Dependence
While music consumption is booming (25 billion hours of music has been streamed on Spotify so far) Ek and co are spreading their bets. The last 6 months have been tough for Spotify with the major labels casting doubt on its freemium model due to thinly veiled pressure from Apple. Spotify will quite rightly feel aggrieved with this shift in attitude considering the fact it now accounts for half of global streaming revenue and is doing a better job of driving subscription uptake than anyone has ever come close to doing. Running a music service can be a high effort, low reward and frustrating experience at times. So Spotify can be forgiven for wanting to weaken its utter dependence on the whims of a few big labels.
Reversing Into YouTube Territory
Reversing into YouTube and Buzz Feed’s front lawns though will be easier said than done though. The nature of the mobile consumption landscape is a diverse mix of content capsules, whether they be apps, mobile bookmarks or notification feeds. Users have learned to consume mobile content in bite-sized chunks. Facebook has done what it can to re-aggregate content via timeline but has found that asset more useful for sorting users personal content and shared content snippets. Messaging platforms are now looking like the place where content audiences are best aggregated. In fact the history of content audience aggregation can be summarised as:
1 – websites
2 – portals (e.g. Yahoo, AOL)
3 – social networks
4 – messaging platforms
Which is why Facebook is disrupting itself with WhatsApp and Facebook Messenger, it knows where things are heading. This is the environment in which Spotify will be competing, with Snapchat and Line as much as it is with YouTube and Vice. In Spotify’s favour is the fact that many of the digital first content destinations, Buzz Feed especially, are entirely willing to envisage a future in which their content could exist entirely on third party platforms.
Return Of The Portal?
In a lot of ways Spotify’s video mini-pivot feels like a back-to-the-future spin on the 20th century portal model but there is clearly an opportunity to re-aggregate our fragmented digital entertainment lives. Whether Spotify can do that or not is another question and even if it can, it will be a long-term play rather than some short term hit. Ek might have said he wants to ‘soundtrack our day’ but his product strategy actions show us that he feels Spotify has outgrown being the soundtrack alone.