Spotify to Raise $500 Million; Move Could Delay an IPO

Spotify, the popular streaming music service, has retained Goldman Sachs to raise $500 million (roughly Rs. 3,089 crores) in private investment, a move that would probably delay the possibility of an initial public stock offering in the near future.

As a result of this latest round of investment, Spotify's valuation would increase to at least $6 billion (roughly Rs. 37,078 crores), and possibly $7 billion (roughly Rs. 43,258 crores) or more, according to a person briefed on the company's plans, who spoke on the condition of anonymity. In its last fundraising round, in late 2013, it took in $250 million (roughly Rs. 1,544 crores) and was valued at more than $4 billion (roughly Rs. 24,719 crores).

News of Spotify's latest round of financing was first reported Thursday by The Wall Street Journal. A Spotify spokesman declined to comment.

Spotify, which started in Sweden in 2008 and is now available in 58 countries, is the leading provider of streaming music by subscription. It offers millions of songs in two versions: free with advertising, and an all-access paid version that in most countries costs about $10 a month.

Spotify says it has 60 million users around the world, 15 million of whom pay. On Wednesday, it scored a coup in the digital music market when Sony said it would soon shut Music Unlimited, its failed streaming outlet, and replace it with Spotify.

Streaming has quickly come to represent talk of the future of the music business, as sales of CDs and downloads drop. Apple, which transformed the music business with its iTunes download store in 2003, paid $3 billion last year for Beats - the headphone brand and fledgling music service - and is expected to revamp its music offerings this year with an emphasis on streaming.

As Spotify has grown, it has faced pressure over its business model and the royalties it pays to record companies and performing artists. In 2013, the company had just over $1 billion in revenue and $80 million (roughly Rs. 494 crores) in net losses. And late last year it was put on the defensive when pop star Taylor Swift removed all her music from the service over disagreements about how it would be made available to Spotify's customers.

Daniel Ek, Spotify's chief executive, defended the two-tiered streaming model, saying in November that his company had paid a total of $2 billion in royalties to the music industry.

© 2015 New York Times News Service