Spotify Planning Leap Into Web Video Business

The crowded world of Internet video content may soon be adding another name. The Wall Street Journal reported on Thursday that music streaming service Spotify is negotiating with digital media players and looking for a potential video content partner.

Spotify Originals?

According to the report, Spotify has been in contact with both companies that specialize in providing content for YouTube and several well-known traditional media companies. Spotify has discussed both acquiring third-party content and finding a partner to created new, original content.

Streaming Music Struggles

Spotify’s core business, streaming music, is already an intensely competitive space. Spotify music rivals include Pandora Media Inc P, Apple Inc. AAPL's Beats, and Jay Z’s recently revamped Tidal.

Such a competitive environment makes for tight margins. Although Spotify has 60 million users, its music business has yet to turn a profit.

Related Link: Reddit Takes On Google With New Video Division

New Rivals

A transition into video would bring about a whole new set of rivals for Spotify, and the company would be attempting to gain share in a crowded space by essentially starting from scratch. Google Inc GOOG GOOGL's YouTube remains the gold standard when it comes to ad-supported online video content, but other top players include Facebook Inc FB and Twitter Inc TWTR.

If Spotify intends to go with a subscription model, similar to its premium music service, it would be entering into Hulu, Netflix, Inc. NFLX and Amazon.com, Inc. AMZN territory.

Not only would Spotify have to deal with established competitors, new names are continually popping up in online video. Just Wednesday, social news site Reddit announced that it is launching a video division as well.

Disclosure: The author holds a short position in Amazon.