Spotify has halted the production of its current original video series, duly cancelling its unreleased shows as the music streaming platform’s foray into video proved ineffective.
Spotify has expended much energy developing an array of original video productions after deeming original video a potential source of un-infringed funds. More than 80% of Spotify’s revenue stream is paid out to record labels and other industry entities, rendering Spotify’s streaming business a particularly costly venture with a comparatively slim payout for the platform itself. Spotify has lead streaming rivals like Apple Music and Google through the existence of its free access tier, an offering subsidized by advertising that accounts for a mere 10% of the platform’s annual revenue.
After reporting fiscal losses for the year of 2016 at approximately $637-million on a revenue of $3.4-billion, Spotify identified original video as a solution to the company’s losses. Whereas the majority of Spotify’s content requires royalties and other licensing costs to be paid in association with use of such content, original video would be license-free. Spotify’s efforts to develop original video series, however, have not been particularly fruitful, as users of the streaming service gravitate towards Spotify’s musical offerings, paying little mind to the platform’s original video innovations.
Despite the video productions’ lukewarm reception, Spotify has actively attempted to build its original video platform, striking licensing deals with networks like Comedy Central and ESPN. Spotify has also explored a documentary style approach to original video, producing series like Spotify Landmark and Flash Frame that air interviews with a variety of artists, including Blink-182 and Green Day.
While Spotify will not abandon its original video pursuits altogether, the platform will increasingly focus on developing video formats “unique” to the platform.
H/T: The Verge