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Spotify Closes Seventh Investment Round

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Spotify, one of the most successful music streaming sites online, allows an individual to listen to music on demand as well as download them. This allows individual?s preferences to govern the playlist, instead of having another person deciding what to play or not to play. In this system, the user is master of what is enjoyed as music at any given time.

The Business Side of Spotify

Now, Spotify AB recently announced it is about to sign a deal worth USD400 million as capital infusion, according to tech.firstpost.com. In another report, the new deal would value the company at USD8.4 billion.

This new funding round, the seventh for the company, is expected to draw to a close within the next few weeks. Amongst those investors eager to capitalize on the meteoric growth of Spotify are the Goldman Sachs Group as well as the sovereign wealth fund of Abu Dhabi. There were also discussions made with venture capitalists and other portfolio asset managers.

Spotify’s Investment Stature

With the new investments, Spotify would be one of those start ups that have become worth over a billion dollars. This elite group, according to a report from CNET, ?would include AirBNB at USD 20 million, Snapchat at USD15 billion, Dropbox at USD10 billion. Topping the list re Uber and Xiaomi with USD40 billion average valuation.

The music streaming site and application counts 60 million active users from all over the globe, with 15 million paid consumers.

The Terrain Spotify would Navigate

There is trouble in the horizon though for outfits like Spotify, as music mogul Jay-Z is launching his very own music streaming app and website, named Tidal. Its core strength would be in its line-up where music superstars such as Rihanna, Madonna, Coldplay, Beyonce, Kanye West and Taylor Swift are major backers of this new streaming service.

There is also a move from music labels to work together to find ways to combat the loss of revenue directly attributable to the music streaming sites. In a report from bgr.com, both the music streaming business and the piracy has dwindled the revenues for music labels. One music industry insider, namely Bob Lefsetz, ?Here?s the skinny? Jimmy lovine and the major labels are conspiring to get rid of free. Not only the free tier on Spotify, but YouTube too. Apple writes a check to the labels on 40 million subscribers for years, whether they reach the number or not, and everybody pays for the music.?

Image courtesy of Creative Commons.

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