We’re only a couple days removed from the announcement of Apple Music and already Apple’s competitors are gearing up for a long, drawn-out fight.
On Tuesday, The Wall Street Journal broke the news that Spotify closed a $526 million round of equity funding. Citing an unnamed source, the publication says that this latest infusion of capital helps raise Spotify’s valuation to $8.53 billion dollars. Not bad for a company that has yet to turn a profit.
The WSJ says Spotify plans to use the cash to expand and bring new types of content to its platform. Based on comments made by one of its executives, it’s also a safe bet to say that Spotify will use the money to introduce a more competitive family plan.
Of course, Spotify will also use that money to take on Apple, and while $526 million might seem like an obscene amount of money, in some way it’s the bare minimum the company will need to compete against Apple’s $155 billion war chest.
Still, of all the companies already in the space, Spotify is likely the best positioned to take on Apple. The company took to its blog today to announce that it has 20 million subscribers and 75 million active users. It has also paid out $3 billion in artist royalties.
To put those numbers in perspective, it took Spotify five-and-a-half years to get to get to its first 10 million subscribers; one year later, it has doubled that number. It’s likely for that reason investors are willing to bet so much against one of tech’s few near constant successes.
Source: The Wall Street Journal