Streaming is here to stay. Now it’s just a case of which 3 month trial you get sucked into first.
Spotify has raised $1 billion dollars in its bid to maintain dominance of the music streaming industry over its main rival Apple Music, which reportedly reached 10 million subscribers in 6 months in January, a feat which took Spotify 6 years to achieve.
The Wall Street Journal reported that Spotify has taken on the funds in convertible debt financing. This means Spotify’s investors have the option to buy shares in Spotify at a 20% discount if the streaming service is to go public in the next year. Spotify has agreed to take on this debt with a range of terms that will put pressure on the company to go public sooner then expected. Spotify was valued at $8.5 billion dollars in June last year (which is more money than most of us can comprehend) but its competition is Apple – the biggest and most well-funded tech company in the world.
Speculation about the reason for Spotify taking on the debt is already rampant. One of the investors, TPG Capital, told Tech Crunch, “This financing gives them the strategic resources to further strengthen their leadership position,” and that funds will be used for growth and marketing. Others have said the money could be used to buy out smaller competitors like Pandora Internet Radio or Soundcloud who recently launched their own subscription service, Soundcloud Go.
Don’t get excited because it’s only available in the US but the service is said to feature more underground songs from little known artists, an extended catalogue of podcasts, music supplied by UMG, Sony, Warner and Merlin as well as offline and ad-free listening.
Exciting stuff, but Soundcloud has a long way to go before it will be able to compete with Spotify’s 30 million paying subscribers. The majority of us will be paying $12 ish a month to stream music for the rest of our lives so it’s no surprise Spotify is taking every precaution to maintain it’s lead in the industry
Image: Tech Crunch