Motley Fool
0
All posts from Motley Fool
Motley Fool in Motley Fool,

Spotify Joins Apple Music's Original Content Arms Race

With a fresh $1 billion to burn, Swedish streaming upstart Spotify has big plans to expand its subscriber lead over Apple (NASDAQ: AAPL) Music. However, to do so, Spotify is apparently pursuing a strategy that actually borrows a page from Apple Music's own playbook.

According to reports, Spotify is developing its own suite of original video programming, paving the way for the privately held unicorn to potentially compete with the likes of Netflix (NASDAQ: NFLX) and Amazon.com (NASDAQ: AMZN).

From Sweden with love

Initially reported by Bloomberg, Spotify has laid plans to develop a total of 12 original video series, featuring a number of well-known entertainment industry veterans. Spotify has enlisted the likes of Academy award winner Tim Robbins, and Def Jam Records founder and entertainment mogul Russell Simmons.

Source: Spotify

Simmons' project, under the title Rush Hour, will follow two hip-hop artists as they collaborate to create a new track, and perform it in front of a live audience. The Tim Robbins production is reportedly a "mockumentary" series a la American Idol, in which contestants compete to become the next major dance sensation.

Spotify is also developing its own documentary series called Landmark, to chronicle major watershed moments in the history of music, such as the release of The Beach Boys' album Pet Sounds, and the rise of the band Metallica.

Spotify already carries a limited amount of third-party video, but the move into original content represents a major expansion of the company's video strategy under its new partnerships chief Tom Calderone, who spent the previous 17 years in programming development at Viacom.

This is just the beginning, though. Spotify's moves represent only the first phase of the company's plan to expand deeper into video content.

Blurred lines

In addition to the 12 new series, Spotify also plans to develop a slate of comedy and animated series to further engage the service's relatively young audience. In doing so, Spotify hopes its expanded content offerings will convert a greater numbers of its 75 million users into paying subscribers -- of whom 30 million or so are believed to be paying users -- while also attracting new users to its platform.

Source: Apple.

Spotify's timing seems fitting as competition appears ready to increase once more in the streaming media space. With its own original video content strategy already in place, Apple is reportedly planning to unveil a redesigned version of Apple Music at June's World Wide Developers Conference. Apple reportedly hopes the updated version of Apple Music will help it narrow the gap between itself and Spotify after the first year of Apple Music reportedly fell short of expectations.

In a broader sense, the moves do reflect a new direction for the on-demand music space, which has long struggled to make money, as evidenced by the perpetually money-losing Pandora Media.

In many ways though, this move seems like a natural progression for the likes of Apple and Spotify. As Netflix and Amazon Prime streaming have proven, hit original content is one of the most-effective ways for media platforms to differentiate themselves. Apple and services like privately held Tidal try to do this with highly anticipated albums, so why not try to do it via video, as well?

Shifting into video also expands the service's appeal to a large, additional swath of media consumers, which it hopes will translate into more paying subscribers for Apple and Spotify. It isn't immediately clear how far Spotify and Apple Music hope to take their original content efforts. Will they remain tightly focused as adjacent, music-related offerings cited above, or do they merely represent the first steps toward competing with Netflix and Amazon Prime Streaming?

It's hard to tell. Either way though, with Spotify joining Apple in moving into original video content, the growing emphasis on video is a trend, which appears here to stay.

A secret billion-dollar stock opportunity
The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.