Spotify, Apple Music Plot Divergent Video Strategies

Courtesy of Spotify
Still from the Rap Caviar video “2 Chainz: Booty Business Pt. 2.”

For a glimpse into the future of video on Spotify, spend five minutes with 2 Chainz as he dons a surgical gown, mask and booties and joins “Dr. Miami” in the operating room to watch the plastic surgeon perform a Brazilian butt-lift. As his expression veers from amusement to nausea, the hook of the rapper’s “Birthday Song” is audible from the surgical suite: "All I want for my birthday is a big booty ho."

Spotify has been peppering its influential playlist Rap Caviar with such clips to test its latest video strategy, which so far has helped the playlist earn 7 million followers and launch its own six-city concert series. At the same time, Spotify is leaning on outside partners to help cater to video-hungry fans with a new $5-per-month deal for students that bundles Spotify’s premium services with Hulu -- a $13 discount.

The one-two punch could help Spotify compete with its smaller but deeper-pocketed rival Apple Music, which has taken a starkly different approach to video, snapping up artist documentaries for up to millions of dollars apiece to stream exclusively for its 27 million subscribers while rolling out celebrity-studded shows such as James Corden's Carpool Karaoke and Planet of the Apps, in which developers pitch their app ideas to a panel of judges that include Gwyneth Paltrow, Jessica Alba and will.i.am. Apple Music is expected to spend $1 billion on original content next year, while Amazon is spending even more through its Amazon Studios as it grows its own pair of music services, Prime Music and Amazon Music Unlimited.

Now steering the video ship for Spotify is MySpace and Maker Studios veteran Courtney Holt, who took over this week as head of the Spotify’s original video and podcast programming. The former executive vice president of media strategy at Walt Disney Co. is charged with expanding the Rap Caviar video model to other playlists while helping Spotify curate videos as it does tunes. Holt could draw on his music industry experience to do it, having spent a decade working as an executive at Atlantic, A&M and Universal Music Group before joining MTV.

Video could be especially crucial to Spotify as the money-losing streaming service aims to go public due to its potential profit margins: On-demand music streamers pay north of 70 percent of revenue to labels and publishers, while video commands higher ad rates than music on Spotify’s free tier, and clips behind its paywall could help draw in subscribers. Apple and Amazon, by comparison, are less concerned with their music services making money because they reap most of their revenue from other goods.

Spotify’s video strategy has been evolving since 2015, when it licensed short-form videos from Comedy Central and the BBC, while Holt’s predecessor, Tom Calderone, developed original series such as Traffic Jams, in which one producer and a rapper work together to compose an original song while stuck in L.A. traffic. But such fare didn’t gain traction with Spotify’s users; issues ranged from video's positioning within the app to whether video benefited from the same algorithms that serve music recommendations, says industry analyst Mark Mulligan. Industry executives say Holt’s background developing products with engineering teams could help him crack the code.

While it’s an uphill battle, video will boost engagement, says Creatv Media chairman Peter Csathy: “The big trick is if Spotify can convert users’ ears to eyes as well.”

This article originally appeared in the Sept. 23 issue of Billboard.