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Inside Spotify's Video Play

Amid increased competition in the streaming world, the company widens its scope with the addition of non-music content.

Video, not music, could end up being spotify's secret weapon. With Apple's streaming service expected to relaunch in June, Spotify announced at a May 20 press event the most significant overhaul to its service since its arrival in 2008: the addition of non-music video content. Clips from ABC, BBC, ESPN, Vice News, evening talk shows and more -- although no music videos -- will be available to both free and paying Spotify users initially in the United States, the United Kingdom, Germany and Sweden.

Along with other new content like podcasts and original audio ­programming, video seems likely to continue the ­company's growth. Spotify's offer of unlimited free streaming -- which it claims drives 80 percent of its subscriptions -- has drawn increasing opposition as the company has expanded. Many record labels complain about Spotify's ­conversion rate and want to restrict or eliminate the free tier. Some ­artists, most ­notably Taylor Swift and Jay Z, whose pay-only Tidal subscription service offers 75,000 music videos in addition to its music catalog, believe people should pay for streaming services. But Spotify is using video to make its ­funnel even larger: More free users lead to more subscribers and more leverage in its licensing negotiations with labels and artists.

The move is not likely to assuage creators' discontent. A leaked 2011 licensing contract between Spotify and Sony Music shows that Sony received advances totaling $42.5 million and $9 million in advertising credits during a three-year period -- which it was free to resell at a profit. It is not clear that artists, songwriters or publishers will share in this revenue.

Even so, the addition of video presents no increased risk for creators and rights holders. A Spotify rep tells Billboard that the video content will not contain pre-rolls or other ads (and that the company is paying licensing fees to content owners, but declined to comment further). As a result, video content owners will not siphon off music rights-holders' revenue pool.

"After years of decline, music is ready to grow again," Spotify co-founder Daniel Ek told the crowd at the press event, which included a performance from D'Angelo and Questlove. After five years of flat revenue, the U.S. music business would certainly welcome that change.

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