The music streaming wars are about to kick off in spectacular fashion with the news that Spotify – which has just notched up 20m subscribers – has raised a massive funding round of US$526m, valuing it at US$8.5bn.
The fundraising values Spotify at US$8.53bn.
Last night it emerged that Spotify has reached 20m paying subscribers out of 75m active monthly users.
Spotify is understood to be planning to invest the new funding in expansion and, in particular, new forms of content to face off Apple’s new service.
The US$526m investment comes from Baillie Gifford; Landsdowne Partners; Rinkelberg Capital; Senvest Capital; Discovery Management; Halycon Asset Management; GSV Capital; DE Shaw & Co; Technology Crossover Ventures; Northzone, P Schoenfeld Asset Management and Goldman Sachs.
It is understood that TeliaSonera also invested in the round, contributing US$115m. Abu Dhabi’s sovereign wealth fund also invested in the round, according to the Wall Street Journal.
Spotify also said its growth has been good for artists. “As we grow, the amount of royalties we pay out to artists, songwriters and rights holders continues to climb faster than ever.
“We have now paid more than US$3 billion in royalties, including more than US$300 million in the first three months of 2015 alone. That’s good for music [and] good for music fans.”
Let the streaming wars begin
Earlier this week, Apple revealed its much anticipated Apple Music platform, which will incorporate the streaming of more than 30m tracks, a Connect social platform and a Beats 1 24-hour streamed radio service involving top DJ and tastemaker Zane Lowe.
Apple is understood to be targeting 100m users within the first two years of Apple Music launching.
This is well within Apple’s grasp. iTunes has more than 800m accounts worldwide and continues to grow at a rate of 40pc. As well as this Apple is providing Apple Music for the competitive price of US$9.99 for individuals and US$14.99 for families and is offering the platform for free for the first three months.
Spotify image via Shutterstock