Mike Murphy is a web producer at the Mercury News, and also writes for Good Morning Silicon Valley and 60-Second Business Break.
Spotify is reportedly gearing up to challenge Netflix as a streaming-video provider.
According to a report by Business Insider?s Nicholas Carlson, the Sweden-based streaming music giant is seeking partners to help fund original ? and exclusive ? video content.
Entering the streaming video field already dominated by Netflix, Amazon and Hulu appears to be a daunting task at first glance, but it may be a profitable option for Spotify. According to the report, the high cost of licensing rights for streaming music makes Spotify?s profit margins razor thin, and the music labels can dictate their terms ? much like the problems Netflix has faced with streaming video. So instead of competing with rival services for studio-produced movies and TV shows, Spotify would create a new revenue stream by producing original content.
It?s a strategy that seems to be working for Los Gatos-based Netflix. After years of costly negotiations with studios and competing with cable channels for streaming rights, Netflix last year launched an effort to develop its own original content, and with it add more subscribers. Its first venture into original content, the David Fincher-Kevin Spacey drama ?House of Cards,? has proven to be a hit, and Netflix is betting on repeating that success with a new season of the cult-favorite sitcom ?Arrested Development? later this year.
Spotify is not the only one taking notice. YouTube, the home to billions of free online videos, is also considering adding subscription channels to create new revenue streams, according to a recent report by the Wall Street Journal. While still in the planning stages, subscription channels could be a boon for video makers with ?passionate but very narrow audience segments,? Lucas Watson, head of YouTube?s global sales, told the Journal.
Launched in the U.S. in 2011, Spotify already has more than 6 million subscribers and is launching an aggressive effort to land more with? its first major advertising campaign, according to a report by The Verge. By first solidifying its place as a leader in streaming music, the company could be in good position to branch out into new video ventures as home entertainment moves from the living room to the smartphone.
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Mike Murphy is a web producer at the Mercury News, and also writes for Good Morning Silicon Valley and 60-Second Business Break.
Source: http://www.siliconbeat.com/2013/03/25/spotify-may-be-taking-a-cue-from-netflix/
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