Spotify
IN PHOTO: The logo of online music streaming service Spotify is reflected in an audio music CD in this illustration picture taken in Strasbourg, February 18, 2014. Spotify is recruiting a U.S. financial reporting specialist, adding to speculation that the Swedish start-up is preparing for a share listing, which one banker said could value the firm at as much as $8 billion. REUTERS/Vincent Kessler

In an effort to establish its dominance before Apple Music launches, Spotify released a report stating that it has closed a new round of funding from international investors for US$526 million [$685 million] , shooting up the company value to US$8 billion [$10.4 billion].

The Wall Street Journal initially reported the first stages of the funding in April, which includes investors such as British asset managers Baillie Gifford, Rinkelberg Capital and Lansdowne Partners. Canadian hedge funds got involved in the funding, with representatives from Senvest Capital and Discovery Capital management, a source told The Wall Street Journal.

The fundraising also included big companies in Europe, including TeliaSonera AB, which invested US$115 million for a partnership that will include media distribution, customer insights, data analytics and advertising services. Johan Dennelind, Teliasonera’s Chief Executive Officer is putting full confidence in the music streaming pioneer, referring to the service as an institution that leads an industry dominated by the likes of other services such as SoundCloud and Audioboom (London AIM: BOOM).

“This is a field where you will see a lot of competition and where it’s very clear that Spotify has taken a lead. We will see more and more shifting towards streaming in music and other things,” Dennelind said through a phone interview published by Bloomberg.

In the United States, the person knowledgeable about the details of the funding suggested that Halcyon Asset Management, Shaw & Co, GSV Capital, Technology Crossover Ventures, Northzone and P. Schoenfeld Asset Management were all involved. Spotify hired Goldman Sachs, which also participated in the funding through its Global Private Opportunity Partners funds, to rally up investors.

At the moment, Spotify caters to 20 million paying subscribers on top of 75 million active users, as reported in a statement released by the company on June 10.

Spotify recently revised its content plan for its subscribers. The revision included the integration of podcasts, videos, and a running-based service called “Tempo Mix,” in which Spotify uses the smartphone’s sensors to create a playlist based on the listener’s running pace. Tempo Mix was conceptualised in partnership with Nike and Runkeeper.

This fairly new effort to boost the company’s value and revenue could not have closed at a better time, since Spotify is currently on the dawn of Apple Music’s launch in June. Aside from access to more than 30 million songs, Apple Music is set to offer a different plane of services that includes a 24-hour radio called “Beats 1” that will be broadcasted from Los Angeles, New York and London.

Another unique feature of Apple Music is called Connect, where musicians can share their music, photos, and just about anything through social media accounts that they will sync with the app. Apple aims to be the online hub for all music-related online activity, including those of the artists. It has set the subscription bar on the same level as Spotify, charging subscribers US$9.99 a month after a 3-month trial for the said service.

Contact the writer: a.lu@ibtimes.com.au

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