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Spotify seeking another $500 million

By | Published on Thursday 28 January 2016


Spotify is looking to raise new funding of $500 million. And yes, it did just do that in June. But where does half a billion dollars get you these days? Hardly anywhere.

Swedish newspaper Svenska Dagbladet reports that the streaming service is hoping to raise the new funding in the form of loans from existing investors. Those creditors would then have the option to convert their loans into equity at a later date, with a discount of 17.5% if the company does its long-awaited IPO in the next year, according to the Financial Times.

Exactly what Spotify plans to do with all this cash isn’t yet clear, though with all streaming services currently focussed on driving growth, and the large-pocketed Apple now a direct competitor, increasing userbase (and especially premium userbase) would seem the most likely plan. Though Spotify has also been attempting to develop and launch a series of product innovations to differentiate its service from those of rivals, and further acquisitions to build on this are a possibility too.

Debt financing is all the rage in digital music at the moment, of course. What with SoundCloud confirming earlier this month that it had pulled in $32 million through such a scheme last year. Oh how people were up in arms about that $32 million! It doesn’t seem like so much now, does it?

Investors could be quids in once IPO time arrives. Although if the naysayers are right and all this somewhat more risky new financing means that several of the big streaming services are going to fall down the toilet, we might get that consolidation of the market people like to talk about. How about a future where the choice is YouTube, Apple Music or Amazon Prime?

Spotify’s proposal, drawn up by the company’s financial advisors at Goldman Sachs and Nordea, will apparently be put to investors at a meeting at the latter’s offices in Stockholm next week.