Spotify woos YouTube creators for new streaming-video business: report

New report says Spotify may be considering its own streaming-video service, offering both ad-supported and paid tiers. Spotify is one of the most popular streaming music services, but the company isn't turning a profit yet.

Spotify is one of the most popular streaming music services on the planet – the service has more than 60 million active users, 15 million of whom are paying $10 per month for higher-quality streaming.

Now, Spotify may be aiming to move into the streaming-video market as well, according to a report by Mike Shields and Jens Hansegard at The Wall Street Journal.

Spotify is reaching out to media companies and YouTube affiliates “to discuss both acquiring their material and co-creating original video series,” the report says, citing people familiar with the matter. If those negotiations are successful, we might see a Spotify video service similar to its music service, with free ad-supported videos and a subscription option for ad-free watching.

The streaming-video market would be tough to break in to, even for a company as well-known as Spotify. Google-owned YouTube, which recently turned ten years old, is the biggest incumbent. Last month, Bloomberg Business reported that YouTube is considering introducing a subscription service whereby users could pay to bypass the ads that play at the beginning of many videos. Facebook and Twitter are also pushing into the streaming video arena. The subscription front is dominated by Netflix, Hulu, Amazon Prime Video, and a few other companies.

It’s no surprise that Spotify may be considering producing its own video content. That strategy has worked well for Netflix and Amazon, as original shows such as “Unbreakable Kimmy Schmidt” on Netflix and “Transparent” on Amazon have become huge hits.

The Journal’s report says Spotify’s understanding of its users’ listening habits might give it an edge in serving up video. Someone who listens to downtempo, relaxing songs might be shown different video content than someone who listens to more aggressive music, for example. Of course, existing steaming-video services also build “taste profiles” to better gauge users’ entertainment preferences.

Spotify has had an eventful year already. In January, Sony shuttered its Music Unlimited service and partnered with Spotify to create PlayStation Music, a service that lets gamers listen to tunes while they play. And last November, Spotify launched Spotify Family, which lets multiple listeners in a household subscribe to Premium streaming at a steep discount.

Despite its huge base of users, Spotify isn’t turning a profit yet. In 2013, the company lost about $80 million, down from a $115 million loss in 2012. Even though the company’s revenue is growing steadily every year, Spotify is investing a lot of that money into developing its software and expanding internationally. The company announced last week that it will hold a media event in New York on May 20, but hasn’t said what the event will be about.