Spotify valued at $1 billion, massive investment incoming

Spotify valued at $1 billion, major investment on the way from DST
Spotify valued at $1 billion, major investment on the way from DST

Spotify has been valued at around $1 billion according to a number of venture capitalist sources, with a major new round of investment on the way to the Swedish music streaming service.

The exact extent of the latest round of financing is not clear, with Spotify quickly returning a 'no comment' when asked about the matter by TechRadar today.

US music label deals pending

However, TechCrunch reports that numerous sources are claiming that Digital Sky Technologies (DST) are leading the Spotify deal, said to be at least $100 million.

DST is the company founded by Yuri Milner and the same group of venture capitalists that has given significant backing to Facebook, Groupon and Zynga, valuing Spotify at around $1 billion.

Spotify has recently been working hard to finalise music label deals in the US, in order to finally launch the service to the massively lucrative American market.

Is Spotify worth a billion dollars?

"I guess if DST think that Spotify could be worth a billion dollars then who are we to argue?," says digital music industry analyst Steve Mayall, from Music Ally Ltd.

"Particularly since their previous investments look so smart. We can see a couple of reasons why DST might be so bullish: for one thing there seems to be a very high awareness of Spotify in the US already - and Spotify has demonstrated its genius for large scale viral marketing in Europe.

"Also given the way Spotify's open APIs work it could provide the engine for a lot of extra growth as more and more people share URLS rather than download files. If you look at what a company like Playdio is doing with Spotify streams you can see how we're still at the beginning of the curve for streaming music.

"But the US is a tough market to crack with an established base of great music services like MOG, Rdio and Rhapsody; not to mention whatever is stirring at Apple and Google. They'll need the money.

While music industry execs and bands and artists alike will no doubt debate the valuation of Spotify at $1 billion over the coming weeks, it looks like DST could well follow the successes it has had with Zynga, Groupon and Facebook with Spotify in the near future.

We have contacted the major record labels - Sony, Warners, EMI and Universal – in addition to a number of digital music industry experts for further comment on this story, so stay tuned for updates as they come in.

Via TechCrunch

Adam Hartley