Spotify, while still struggling to make money on their music service – they charge up to $10 a month – is now worth billions of dollars on paper. That said, they’ve built a reasonably sized subscription base that now stands, according to Wikipedia, at 20 million strong – 25% of those accounts for paying subscribers. Netflix on the other hand, a direct competitor should Spotify enter into the space, boasts over 27 million Instant Streaming subscribers in the US alone. So suffice it to say, Netflix has got a rather big lead and one that would be difficult to eclipse even with 5 million paying users already signed on to their music subscription service.
In theory Spotify could offer a package deal for both services. The price would have to be less than $18 a month (the price of both services combined) to compete with Netflix, and that’s not even taking into consideration how sparse their content offering would be. Netflix has been in the game for years now and still suffers from a robust catalogue of premium movies, though that is beginning to change. Moreover, Netflix has already solved the numerous technical hurdles when it comes to streaming video at a consistent quality, and by most accounts outperforms any other video streaming service available today.
The rumor also suggests that Spotify might consider producing their own content. This means they’d be competing with not only Netflix, who recently released their in-house produced show “House of Cards” starring Kevin Spacey, but HBO. HBO has yet to offer an online only subscription option, but it’s more than likely in the next 12 months since they’re leaving so much money on the table (i.e. illegal downloads of shows like Game of Thrones).
It goes without saying that TV is moving to the web, and that cable tv is a dying breed. But much like the music industry, squeezing money out of an all you can eat subscription model is a bit like trying to get water from a stone. It’s doable, though in order to accomplish profitable margins you must have an unparalleled reach, and that’s not something even Spotify has yet to accomplish in the music space.
I just realized that perhaps the nomenclature has been misconstrued by the source. Is Spotify perhaps looking to add music videos to their app?