We all use Spotify. Whether it’s milking the free version, or committing to premium, the streaming service can’t be ignored. They’re embarking on a seventh round of funding, hoping to raise another $400 million, which would bring its total valuation to $8.4 billion. Yes, that’s with a ‘B.’ That valuation is $1.5 billion more than the revenue for the entire recorded music industry in United States…
However, Spotify is still operating at a loss. This new valuation is 6.5 times more than Spotify’s 2014 revenue of $1.3 billion. Similar to Pandora, the ad-based service hasn’t yet proven its ability to generate enough revenue to make up for declining digital sales, and its current business model pays almost 70% of its revenue to rights holders. Still, Spotify refuses to withhold releases from its free users, rightfully arguing that these free services are key to generating new customers.
Despite the numbers, Spotify is pushing forward. The company already offers service in 58 different countries, and plans on expanding to Japan. There’s a bold future for music-streaming, and it’ll be interesting to see how Spotify defends itself in an increasingly competitive market.
Your move, Tidal.
Source: Wall Street Journal
Photo by CBC
