14 DAY TRIAL // Spotify is certainly popular, in that people talk about it all the time, and it has a decent user base, bigger than any other on-demand music streaming business. It's also growing all the time.
But that doesn't make it a successful company, because most of the money it makes go to the music labels.
So it seems that Spotify is looking at branching out in the hopes of making more money. And it plans to do that with a video service.
Meanwhile, on-demand video is just as cutthroat as on-demand music. So Spotify is hoping to minimize the impact of a low-margin business by entering another low-margin market.
Video does have one advantage, you can finance your own content, which you can't do, not as easily, with music.
That's the path Netflix took, it started working on its own shows to make it clear to rights owners that it doesn't need them as much as they'd like to believe.
Whether or not it's working remains to be seen, but Netflix's options at this point look a lot better than Spotify's.
Still, financing its own shows is not cheap and there's a high risk that it won't pay off. Even Netflix isn't sure its ventures will pay off and it's already a household name in video streaming.
Spotify also doesn't have any experience with video and people certainly would be expecting to use the Spotify app to watch video, especially long form.
The plan may be crazy enough to work. Netflix seems to be doing OK and wouldn't hurt some form of competition. In Europe in particular, where Netflix isn't available, an on-demand video streaming service with movies and TV shows could prove popular.
Spotify already has a solid user base in Europe. That said, take the rumors with a rather big grain of salt.
Update: Spotify initially refused to comment, but is now denying that it's working on a video streaming product.