Spotify Adds Videos to Music Streaming in Push for More Ads

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The Spotify Event in 80 Seconds

Spotify Ltd., the world’s largest subscription music-streaming service, will add podcasts and video content to attract more advertising revenue and fend off competition from Apple Inc. and Google Inc.

Chief Executive Officer Daniel Ek announced the new offerings at an event Wednesday in New York, highlighting videos from the online media outlet Vice News and TV channel Comedy Central. The videos will complement the Swedish company’s lineup of songs and other audio programming.

Spotify joins other online-content companies looking to video to accelerate advertising growth, because marketers spend more for the spots than for audio, print, photo or text promotions. Facebook Inc. has expanded its use of video, as have Twitter Inc. and publishers like the New York Times Co. and Conde Nast Inc.

“A digital video service from Spotify is a logical extension of the company’s success in digital music streaming, since these are complementary businesses that use much of the same technology infrastructure, marketing expertise, and vendor relationships,” Paul Verna, senior analyst at researcher eMarketer, said in an e-mail before the announcement.

Most of Spotify’s more than 60 million users around the world listen to its free, advertising-supported music-streaming service. Yet the company makes most of its money from subscriptions, which cost $9.99 a month in the U.S. It has more than 15 million paying customers.

Spotify Revenue

Of the more than $1 billion in revenue Spotify generated in 2013, less than $100 million came from advertising, the New York Times reported in November. The company isn’t profitable, the newspaper said.

Podcasts and video will offer “increased opportunities for our marketing partners,” Ek said. He ceded the stage to Chris Hardwick, host of the popular “Nerdist” podcast, and Abbi Jacobson and Ilana Glazer, the two stars of Comedy Central’s “Broad City.”

“What a perfect marriage to put audio content on one of the best audio platforms in the world,” Hardwick said over a live video feed. “We also make video content, as is evidenced by what’s going on here.”

Ek is betting video will encourage Spotify users to spend even more time on the service, rather than leave for a competing site.

Spotify faces increased competition. Apple is about the unveil a new subscription streaming service using some of the technology it acquired in its $3 billion deal for Beats Electronics and Google’s YouTube is plotting a subscription video product.

With music purchases shrinking in stores and online, streaming has emerged as the industry’s primary source of growth. Record labels acknowledge its significance, while complaining streaming has failed to replace lost retail sales.

“Music is ready to grow again,” Ek said. “Streaming is growth in music and Spotify is growth in streaming.”

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