Spotify Sings New Tune: $100 Million Raised In Funding
Digital music service Spotify is close to raising another $100 million in funding from investment banks and venture capital firms, according to The Wall Street Journal, which
reported the news on Friday. The list of investors for the most recent round of funding includes Goldman Sachs.
The latest capital infusion values the company at around $3 billion, down from roughly $4 billion around the middle of this year. Previous rounds of funding have included investors like Kleiner Perkins Caufield & Byers and Accel Partners, among others.
Like Pandora, still the dominant online streaming audio service, Spotify has grown rapidly -- the platform currently has around 15 million active users, including 4 million paying subscribers -- but is struggling to find its financial footing. From 2010-2011, Spotify’s revenues increased 151% to $244 million, but losses also jumped 60% to $59 million, according to CNET.
Even as listenership increases in tandem with smartphone and tablet ownership, the business model for digital radio services remains far from settled, as illustrated by Pandora’s woes since going public in June 2011. After a stock market debut at $16 per share, Pandora’s share price has dipped to less than half that, trading at $7.81 at press time.
Digital radio services like Pandora and Spotify may face an even bigger problem in the form of Apple’s rumored plan to launch its own streaming audio platform sometime in 2013. Analysts say it poses a major threat, as it would leverage the ubiquity of Apple devices and the strength of the tech giant’s iTunes business.