Since launching in Sweden in 2006, music streaming service Spotify has expanded its reach to 17 countries; becoming available in Australia and New Zealand earlier this year and just last week, adding Ireland and Luxembourg to its international reach.
It has broken records with Mumford & Sons’ sophomore release Babel becoming the most streamed album ever on Spotify with 1 in 10 users having listened to at least one track, and now the service is set to lift their valuation to $3 US billion and it’s thanks in part to Coke.
As the International Business Times reports, the Coca-Cola Company have invested $10 million dollars towards the music streaming service, taking a further step into the technology market after spending the last twelve months dipping their toes in the water.
While the relationship between the two companies may come as a surprise to some, Coke have actually been partnered with Spotify since earlier this year. However, other than to say that the soft drink maker would help the streaming service reach more markets around the world, the details were vague.With today’s investment, it’s clear that Coke are looking to take part in what is a growing, yet unstable business.
Coke used Spotify to “power” their music sites, as well as adding the digital music service to its Facebook page, and sponsoring the company during the Spotify music “hackathon” in New York earlier this year.
Now with today’s investment, it’s clear that Coke are looking to take part in what is a growing, yet unstable business.
The capital raised today is made up of multiple contributions, with investment firm Goldman Sachs contributing 50 percent of the $US 100 million, Coke contributing their 10% share, Fidelity Investments contributing $US 15 million and the remaining 25% made up of existing Spotify investors.
2012 has been the year of the streaming service with changing habits in the way listeners consume music leading to a vast array of streaming start ups launching all over the world, including the likes of Rdio, Deezer, and Pandora.
Although globally popular, Spotify has been struggling to build a lasting business model, according to the New York Times Spotify lost $57 US million last year on revenue of $236 million.
News of the additional $100 US million raised for the company follows French streaming service Deezer raising $130 US million last month, with a notable amount contributed by holding company Access Music, owned by Len Blavatnik of Warner Music Group.
The $3 US billion valuation of Spotify improves on the $1 US billion value placed on the company a year ago, but the Swedish service was reportedly aiming to reach a $4 billion valuation, looking for an additional $200 million in capital.
Although growing steadily, Spotify faces increasing competition in the streaming market with Apple readying to launch their own service alongside the popular iTunes, and Microsoft launching Xbox Music across multiple devices including PC, mobile, tablet, and its own video game console, the Xbox 360 after which the new service is named.
But with the confidence and backing of the most profitable soft drink maker in the world, one has to assume Spotify’s market share and popularity are of more value than a sustainable profit as it continues to build its brand and mind share worldwide.