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How much of this is a selling point to investors right ahead of the IPO?
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Well, Spotify has tried very hard to convince people that its profit margins are gonna improve.
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Because the big challenge for them, as successful as they've been in creating this market for on-demand music
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and really lifting the record industry up after several years of decline,
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the company itself is not profitable because it pays out so much to rights holders.
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And all these other types of programming, whether it's news, culture, podcast, video,
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are ones where… if they're successful in them, they can bring in new customers,
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maybe sell some ads and they don't have to spend as much and it will improve the margin picture,
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which is a big concern both for the current investors and for future shareholders.
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Right, the cost of music rights is incredibly high, Spotify has been steadily diversifying,
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so what are some of the other projects they've been working on and how successful have they been?
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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.
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So they initially hosted videos from media companies like VICE and ESPN, then they funded original video series.
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None of the video projects really worked and the executives are pretty aware of that.
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Podcasting holds more promise.
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They've had some uptake with some of the big podcasts like the New York Times - The Daily.
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And now Spotlight is trying to fuse these two ideas together where you take audio and enhance a little bit with some visual elements.
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Because I think Spotify has come to the conclusion that
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having the original video and trying to compete the head-to-head and that way with YouTube won't work,
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but if they can take the thing that people come there to do, which is listen to audio, and make it a little better,
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then that can work and maybe they can sell ads at a higher rate because there's a visual element to it.
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What do you think consumer adoption will be like for news and political coverage on Spotify?
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I mean there's already a huge competition as you mentioned coming from Apple and Google.
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I think there's huge potential for it because if you think about someone, I mean I just think about it personally.
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On my way to work, I tend to toggle between listening to podcasts, listening to music and listening to the radio.
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And switching from the podcast app to Spotify for listening to music is kind of a hassle.
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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,
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that's the behavior that it's replicable for a lot of different people.
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But they do have a lot of competition and they do have to get the word out there
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that if you want to listen to podcasts, which is a growing medium, you can do so on Spotify.
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You don't have to do so using the Apple app, which is still the market leader
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and accounts for fifty or sixty percent of all podcast listening.