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Coca-Cola Teams Up With Spotify in Music-Sharing Deal

(Corrects name of investor in final paragraph.)

Spotify Ltd. will incorporate its music streaming service with Coca-Cola Co. (KO)’s Internet marketing, to help raise awareness and draw users.

The music-streaming service will be “the key underlying technology for Coca-Cola Music globally” and the soft-drink maker will “integrate Spotify into its Facebook presence,” Atlanta-based Coca-Cola said today in a joint statement with London-based Spotify.

Spotify’s top priority is to attract more paying subscribers and users to its advertising-supported service, Daniel Ek, founder and chief executive officer, said in an April 13 interview in the Swedish newspaper Dagens Industri. The company created a “play” button last week that allows legal streams of songs and albums to be embedded on websites. EK also added an artist radio feature that plays music by a particular band and similar acts, to compete with Pandora Media Inc. (P)

The deal with Coca-Cola will “will help bring Spotify to more parts of the world,” Ek told reporters in New York today.

Paying Listeners

Spotify added 500,000 subscribers two months after the service became available on Facebook Inc. (FB)’s social network, the company said in November, bringing the number of paying listeners to 2.5 million. Listeners pay $4.99 for the service on personal computers or $9.99 for PCs and mobile devices.

The service is also trying to win over artists. Adele, the Black Keys, Coldplay and Tom Waits have withheld new releases from Spotify, which began U.S. service in July. Last week, the company announced exclusive access to songs and albums by the Red Hot Chili Peppers.

The company is also facing competition from other subscription music services including Rdio Inc., as well as online ventures by Viacom Inc. (VIAB)’s MTV, AOL Inc. and Yahoo! Inc. (YHOO)

Spotify lost about $59 million on revenue of $250 million last year, Ek said in the Dagens Industri interview. The service paid about $150 million to rights holders in 2011, compared with $55 million in 2010.

The company raised $100 million last year from venture capital investors including DST Global, Accel Partners and Kleiner Perkins Caufield & Byers, achieving a valuation of about $1 billion.

To contact the reporters on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net; Edmund Lee in New York at elee310@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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