Spotify: From Netflix to Youtube

Spotify just had their Stream On event, which gave more insight into Spotify’s vision of the future. In short, that vision is to be less like the audio version of Netflix and instead be Youtube.

AI trying to Merge Netflix/Youtube’s logos

I’ll lay out the vision that Spotify spent 90 minutes laying out in Stream On.

  1. Video
  2. Ad Network
  3. Discovery

This sounds a lot like… Youtube.

The Big Difference

The discovery problem for Spotify isn’t an easy one to solve. Audio naturally isn’t as engaging as video. Spotify helped solve some of this with Discover weekly for music, but this can’t be directly applied to podcasts. Songs are 3 minutes long, while podcasts can be 3 hours long. The cost to discover for the user is so much lower. Spotify is trying to solve for this by using advanced data to clip portions of the podcast.

Spotify tries to differentiate these clips from competitors in that they aren’t optimizing for engagement, but instead for how many of the episodes are saved to be played later. All of this sounds great, but I’ll remain skeptical of how successful this will be until I can see it first hand. I just got access and while initial uses are cool, it still has a long way to go. Unlocking podcast discovery is key to Spotify’s success in podcasts and an area that Spotify has a ton of catch up to do versus Youtube.

Spotify remains an audio company (for now), but they are leveraging video to help drive discovery. Youtube is a video company that is playing around in audio. Both of these have their distinct advantages and disadvantages, but I think it’s important to call out.

Wrap It Up

Pivoting towards the Youtube strategy is interesting because the biggest competition to Spotify is… Youtube. Yet it makes sense. Youtube is an absolute monster. They are everyone’s competition and they have an amazing business model plus amazing economics. I think Spotify will dominate this fight. Sometimes the monster lacks focus.

Author: fatbabyfunds