Spotify raised $526 million investments

Spotify raised $526 million investments

Swedish streaming service Spotify raised $526 million investments from 13 private foundations

Telephone company and mobile network operator TeliaSonera, which invested $115 million become the main capital provider. As a result of a deal, the service was estimated at $8,5 billion, which is twice as much as Pandora the former leader on this market. It is known that this service was going to spend the raised investments on the development of new areas of focus, which includes videos and podcasts, and on a competitive struggle with Apple Music.

As soon as Tim Cook presented a new music service Apple Music, service Spotify announced the $526 million investments, part of which would be focused on overtaking the main competitor.

 So far, with a total number of Spotify subscribers, which is estimated in 75 million of people, 20 million buy the Premium paid account. Moreover, according to this year the growth ratio of paying users substantially accelerated.

In spite of the fact that the announcement about fund-raising interested the investors, it would probably not help in overtaking Apple. Apple Music will offer several competitive advantages among which are: application support for all Apple devices, reasonable monthly pay and a larger geography of service spreading. So if Apple Music will be in service in 100 countries around the world, Spotify on the other hand will be available only in 64.

Even the 47% increase in revenues of Spotify is not saving it from the negative profits, which during the last year increased from 68$ mln up to $197 mln.

It is difficult enough to withstand a competition with Apple Music, as Apple has in possession huge monetary holdings in an amount of $190 billion, which company is intended to spend on funding of its new projects.

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