Home Uncategorized Spotify Desperately Needs Another $400 Million… Music NewsDigital Music News

Spotify Desperately Needs Another $400 Million… Music NewsDigital Music News

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firedance

Riddle me this: how can one startup be so bad at making money,
yet so great at raising it?

According to details
just published by the Wall Street Journal
, Spotify’s
money-burning bonfire is about to devour another $400
million
, its seventh financing round.  Goldman
Sachs is bankrolling a large portion of the mega-round,
with an Abu Dhabi fund also a source of cash.

Spotify has previously raised $500 million, though that money
has largely been burned through.  At roughly $900
million in aggregate financing, Spotify now carries an
incomprehensible valuation of $8.2
billion
.

That dangerously high valuation makes the company almost
impossible to sell, and according to Wall Street Journal,
there isn’t even a timetable for an upcoming Wall
Street IPO
.  “Nine-year-old Spotify, which
previously raised more than $500 million in equity funding,
hasn’t established any timeline for a possible IPO,” the
Journal reports.

“The money-losing company needs the cash to support its costly
business model of paying nearly 70% of its revenue to rights
holders as royalties.”

 

Spotify_losses_2013

 

Meanwhile, Spotify is facing massive pressure from the ‘big
three’ major labels to close their ‘freemium tier’.  The
majors, which carry an ownership stake of roughly 15%, and
are rumored to have unsuccessfully shopped Spotify at a

price tag of $10 billion
.

So far, there have been no takers.

 

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