November 25, 2017
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Spotify has had little success in video thus far. — IStock.com pic via AFPSpotify has had little success in video thus far. — IStock.com pic via AFPSTOCKHOLM, Oct 27 — Spotify is planning to reboot its video strategy for at least the third time in as many years as the world’s largest online music service searches for ways to make money that don’t involve recorded music and costly royalties, people with knowledge of the matter said.

The company is cancelling original video series on the service, as well as shows it hasn’t released, said the people, who asked not to be identified discussing internal deliberations. Courtney Holt, the newly installed head of video and podcasts, is exploring the creation of a new format unique to Spotify, they said.

While Spotify is first and foremost a music service, the Swedish company has been looking for other ways to entertain users and generate advertising sales without incurring the same royalty and distribution costs — expenses that exceed 80 per cent of revenue. More than half of Spotify’s customers use the free, advertising-supported service, but ads account for just 10 per cent of sales.

The two largest online advertising companies, Facebook Inc and Alphabet Inc’s Google, have made significant investments in online video over the past few years to lure dollars away from mainstream TV. Online video advertising sales will grow 28 per cent this year, according to Magna.

Spotify has had little success in video thus far. Under Matt Baxter, the company licensed video from Walt Disney Co, Viacom Inc and Vice Media Inc. Under former Viacom executive Tom Calderone, who left in August, the company commissioned more than a dozen original video series with producers like Russell Simmons and Tim Robbins.

The shows suffered from a lack of promotion. Many consumers were never aware Spotify offered video and those who were struggled to locate shows within the app. — Bloomberg



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