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Report Says Spotify Plans To Challenge Netflix, Hulu With It's Own Video Platform

Discussion in 'Off-Topic Discussion' started by CatfishRivers, Mar 26, 2013.

  1. CatfishRivers

    CatfishRivers Well-Known Member

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    Could Spotify Challenge Netflix With Online Video Platform Of Its Own? (click for full article)

    by Sam Gutelle - March 25, 2013

    "According to a report in Business Insider, Spotify has its long-term sights set on the online video. The report cites a pair of "sources briefed on the company's plans" who claim the popular music streaming service will add original video to its lineup in an attempt to challenge premium platforms like Netflix and Hulu.

    Business Insider also noted the sound reasoning behind Spotify's potential expansion. Right now, the company has to pay record labels for the rights to songs, and because there are so many other music streaming services available (with Google's proposed YouTube-powered option serving as the latest challenger), Spotify is completely at the whim of its business partners. By attracting more users with video options, Spotify can make its music platform into a killer app that music labels can't afford to bully."
     
  2. CatfishRivers

    CatfishRivers Well-Known Member

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    Spotify Plans To Take On Netflix And HBO With Streaming Video Service - Business Insider (click for full article)

    by Nicholas Carlson - March 25, 2013

    "Spotify the on-demand music service, is planning a major change.

    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.

    Ultimately, Spotify's metamorphosis would also put it into competition with content creators and providers such as HBO.

    Our sources said that Spotify is looking for partners that can help it fund and create exclusive content. It is unclear if these talks would lead to a new round of investment in Spotify itself.

    Spotify is already worth billions of dollars on paper thanks to several huge rounds of investment - the last of which we started hearing about this time last year and later closed in the fall. The $100 million investment from Coca-Cola and Goldman Sachs valued Spotify at $3 billion.
    Spotify has become a very popular service with consumers, but its business remains challenged. The reason: extremely thin margins.

    Spotify does not own the music its customers listen to. Music labels do, and Spotify has to pay the labels every time a customer listens to one of their songs. As Spotify gets more popular, the labels charge more and more.

    The original plan for Spotify was that it would grow so popular with music listeners that Spotify would be able to dictate negotiations with the labels.

    This hasn't happened. This is in part because there are several Spotify competitors all bidding for the same rights to the same music. Even though it has become a significant source of revenue for the labels, Spotify still depends on the labels more than they depend on it.
    How does becoming a video on-demand service like Netflix help solve this problem?

    A year ago, Netflix was dealing with a similar challenge - just in video instead of music."
     
    Last edited: Mar 26, 2013

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