This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
Digital Top Stories
New Spotify funding values company at a billion
By CMU Editorial | Published on Tuesday 22 February 2011
A new round of financing could bring another $100 million into Spotify’s coffers, according to reports. Russian firm Digital Sky Technologies is thought to be leading the latest round of investment in the streaming music service, which would reportedly value the digital music platform at a neat $1 billion.
In terms of securing new capital, Spotify is benefiting from renewed interest in investment circles in web-based companies amid expectations that a string of digital content and social media firms will float in the next two years, delivering big pay days for early investors, even if it remains unclear how many of those companies will ever really deliver decent revenues.
DST already has a sizable stake in Facebook, believed to be in the region of 10%, and recently invested in American social media games company Zynga. TechCrunch reckons that the Russian company has a reputation in some circles for being shrewd in its digital investments, suggesting that Spotify’s business plan remains sound despite the ongoing challenges of making digital streaming services add up.
Though whether the company would be worth anywhere near $1 billion in the real world, ie were we not at the beginnings of a new dotcom bubble, is highly debatable.
That said, the continued delays to Spotify’s US launch, which has tarnished its reputation as the big grower in the digital music space to an extent, could be over within the year given it is now generally believed both EMI and Sony Music have signed up for an American launch. Though getting Universal Music on board remains the big challenge.
Meanwhile, insiders say Apple’s recent announcement that it will start taking a 30% cut of subscription revenues generated by its app store – which could have a big impact on Spotify for which iPhone users are premium customers – doesn’t seem to be bothering those considering investing in the firm.
