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Spotify has a video business you've never heard of, and it's hoping a new 'surgical' approach will change that

Spotify
Spotify

Given all the noise surrounding aggressive moves into original video by everyone from Facebook to Twitter, you'd be forgiven if you forgot about the unlikely entrant: Spotify.

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The music-streaming service first rolled out video on its app early last year, but its fair to say that since then it has been quiet.

Web-video producers and dealmakers say they still see big potential in Spotify as a video outlet but have often been left somewhat befuddled by the company's strategy and execution.

Several firms grumbled about projects that made it all the way to the finish line before Spotify suddenly pulled the plug. The company has produced a handful of original shows. None, it's fair to say, would be considered a breakout hit.

In fact, original video isn't always featured prominently on Spotify's app.

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"There have been a lot of fits and starts," said one content producer. "They are not active in the market right now."

Meanwhile, on the ad front, many ad buyers say they aren't tuned into Spotify's plans.

"Anybody who's got a digital platform with massive reach is asking themselves right now: 'How do I create a unique proposition in video?'" said Michael Law, executive vice president and managing director of video investment for the media-buying firm Amplifi US. "The scale around [what Spotify is doing in video] is what we are trying to get a better handle on. It's probably not at place where we are going to be moving our TV money right now."

And yet as its much-anticipated IPO approaches, Spotify says it still has serious ambitions in video. Just maybe not on the level everyone once expected.

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Tom Calderone, global head of Spotify studios, acknowledged that the company is being more cautious and picky than it has perhaps been in the past. During an interview with Business Insider, he used the term "surgical" several times in describing the company's video strategy.

"Right now, we are mostly in the ideation and development part of things," he said. "We're looking at a lot of pitches." For example, he mentioned exploring a hip-hop-themed show tied to the popular Spotify playlist "Rap Caviar." "We are making a concerted effort at learning from what we've done." That's a contrast from a few years ago.

'Broad City'

broad city comedy central
"Broad City" stars Abbi Jacobson and Ilana Glazer. Comedy Central

Back in 2015, the Swedish music company hosted a splashy press conference in New York during which CEO Daniel Ek unveiled plans to distribute video content from a wider array of partners, including ABC (clips from “Jimmy Kimmel Live”), ESPN, and Vice Media.

The duo behind Comedy Central's “Broad City” headlined the event, joking about how users may end up watching some videos on the toilet.

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Those licensing deals finally went into effect in early 2016. And by the end of last year, they had run their course and were not renewed.

Also last year, Spotify rolled out a handful of music-themed originals, including “Trading Playlists,” which features professional athletes sharing favorite songs with one another.

It's not clear if any of these shows have broken out. Spotify has yet to release any numbers on overall video consumption or individual series.

"We're very much in the early stages," said Calderone, who joined the company from VH1 last year after the licensing deals had been inked. "All the energy last year was spent soliciting for ideas."

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"It's a habit we're trying to build," he said. "The opportunity is huge. We also make sure we do it right. We're being very selective and surgical."

Ad buyers say that running standard video ads on Spotify to unlock music content for nonsubscribers has proved effective. Yet one ad buyer said he hadn't heard Spotify bring up video to his team over the past year, originals or otherwise.

Of course right now the market for original web content is robust, and ever more crowded by the day. One thing Spotify has going for it is that in a world where many people stick to using a half-dozen apps on their phone, Spotify is often a favorite. It recently eclipsed 50 million subscribers. But getting an audience to start regularly watching video on a service primarily geared for music listening is no easy task.

"If I'm there to listen to music, I'm not necessarily looking for video," said Law. "They have to change the mindset of consumers."

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