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  • How much of this is a selling point to investors right ahead of the IPO?

  • Well, Spotify has tried very hard to convince people that its profit margins are gonna improve.

  • Because the big challenge for them, as successful as they've been in creating this market for on-demand music

  • and really lifting the record industry up after several years of decline,

  • the company itself is not profitable because it pays out so much to rights holders.

  • And all these other types of programming, whether it's news, culture, podcast, video,

  • are ones whereif they're successful in them, they can bring in new customers,

  • maybe sell some ads and they don't have to spend as much and it will improve the margin picture,

  • which is a big concern both for the current investors and for future shareholders.

  • Right, the cost of music rights is incredibly high, Spotify has been steadily diversifying,

  • so what are some of the other projects they've been working on and how successful have they been?

  • It's been mixed, you know, for the past few years they've dabbled in video and then forms of audios that aren't music.

  • So they initially hosted videos from media companies like VICE and ESPN, then they funded original video series.

  • None of the video projects really worked and the executives are pretty aware of that.

  • Podcasting holds more promise.

  • They've had some uptake with some of the big podcasts like the New York Times - The Daily.

  • And now Spotlight is trying to fuse these two ideas together where you take audio and enhance a little bit with some visual elements.

  • Because I think Spotify has come to the conclusion that

  • having the original video and trying to compete the head-to-head and that way with YouTube won't work,

  • but if they can take the thing that people come there to do, which is listen to audio, and make it a little better,

  • then that can work and maybe they can sell ads at a higher rate because there's a visual element to it.

  • What do you think consumer adoption will be like for news and political coverage on Spotify?

  • I mean there's already a huge competition as you mentioned coming from Apple and Google.

  • I think there's huge potential for it because if you think about someone, I mean I just think about it personally.

  • On my way to work, I tend to toggle between listening to podcasts, listening to music and listening to the radio.

  • And switching from the podcast app to Spotify for listening to music is kind of a hassle.

  • So if they can deliver podcast and news in a way where I can do that in the same app where I'm listening to music,

  • that's the behavior that it's replicable for a lot of different people.

  • But they do have a lot of competition and they do have to get the word out there

  • that if you want to listen to podcasts, which is a growing medium, you can do so on Spotify.

  • You don't have to do so using the Apple app, which is still the market leader

  • and accounts for fifty or sixty percent of all podcast listening.

How much of this is a selling point to investors right ahead of the IPO?

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Spotify's Plan to Lure Listeners Away From Radio and Podcasts

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    Ann posted on 2018/01/19
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