Yes, you heard it right. Spotify, the all popular on-demand music service provider, has announced it plans to start a similar service for videos – meaning movies.
Some sources privy to Spotify has revealed that its future plans are based on incorporating on-demand movie and video service, as well. This service will feature movies as well as original content.
HBO is also in Spotify’s Crosshairs!
In other words, Spotify is taking on Netflix, Hulu, and HBO at the same time with its new venture as it will be hosting movies and media (like Hulu and Netflix) along with its own produced content (like HBO), as well.
Sources close to Spotify have revealed that it is already looking for new funding from investors to finance its new venture including funding for creating its own, exclusive content.
Spotify’s Huge Market Worth
If we analyze Spotify’s current market worth, including investments by Coca Cola and Goldman Sachs to the tune of $100 million, Spotify is worth close to a whopping $3 billion.
Being a free service, Spotify offers such an amazing cache of music to its users by hosting advertisements. Every song requested by a user is ‘bought’ from the music company that owns that particular label. In other words, Spotify pays for the music its users listen to.
So why does Spotify do this?
Well, the money it gets from hosting advertisements and the money it has to pay to music labels, there is some ‘profit’ left from the entire transaction. However, this ‘profit’ is quickly dwindling and spotify is banking on a technique perfected by HBO to increase its revenues.
The technique in question is ‘Original Content’.
The HBO Model
HBO was once just a cable television channel airing movies after their release. It took a gamble by producing really expensive original exclusive shows like Sex and the City, The Sopranos, Girls, Game of Thrones, and other such soaps and movies. These soaps and movies became hugely popular and allowed HBO in increasing its reach, revenues, and subscriber base.
Spotify aims to replicate HBO’s model, more or less, by coming with original content so that it would not have to pay any money to outside media entities.
Will Spotify’s big gamble pay off? Only time will tell.
Meanwhile, we can listen to some free music from Spotify. It is the users who will be the ultimate winners in any case!
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