updated 07:20 pm EST, Thu November 21, 2013
Spotify secures quarter billion in new funding round
Popular music streaming service Spotify has completed a new round of funding, one in which it raised $250 million dollars, according to The Wall Street Journal. Silicon Valley firm Technology Crossover Ventures played a big role in the newest funding push, according to reports, and the new infusion of cash has sources claiming the firm is possibly worth more than $4 billion. Spotify, reportedly, will use the new cash to expand its global operations, pushing into Asian markets such as Japan.
The $4 billion valuation pushes Spotify near the territory of one of its biggest competitors, Internet radio station Pandora. Pandora, which has struggled to grow its income in the face of licensing restrictions, has a valuation of about $5.7 billion.
Both companies struggle with the realities of widely licensing music. The major record labels require prices that cut into the firms' income, and even Spotify's six million premium subscribers - paying $10 per month for ad-free streaming and mobile access - have so far been unable to pull the company into profitability. Pandora, meanwhile, posted $180.4 million in revenue and a $1.7 million loss in the last quarter, having spent more on content and sales and marketing.
Over the last few years, Spotify has grown into a major player in the digital music market. The service is a distant second to Apple's iTunes Music Store, but it contributed to the first revenue increase the music industry has seen since 1999 earlier this year.
The new round of funding stemmed in part from Spotify's continuing expansion. Over the past year, the service has opened in 15 more markets, and it now operates in 32 countries. It has also inked deals with 25 telecom companies worldwide.
In 2012, Spotify raised more than $100 million from numerous investors, including Kleiner Perkins Caufiled & Byers and DST Global. The service ended the year with a valuation in excess of $3 billion.