Spotify Said to Recruit Goldman in Round of New Funding
Stock Chart for Goldman Sachs Group Inc/The (GS)
(Corrects name of investor in final paragraph.)
Spotify Ltd., the London-based music- streaming service, is recruiting Goldman Sachs Group Inc. (GS) as it seeks funding that would value the company as high as $4 billion, according to people with knowledge of the situation.
The company, co-founded by Chief Executive Officer Daniel Ek in 2006, is raising $100 million to $200 million, said two of the people, who weren’t authorized to speak publicly. Goldman Sachs Group Inc. may invest, said a third person.
Spotify is seeking money as it expands into new markets, Ek told Swedish newspaper Dagens Industri in an April 13 story. Each territory requires costly content licensing agreements, he said. Spotify operates in 13 countries, with 10 million users and 3 million paying subscribers, according to its website.
David Wells, a spokesman for New York-based Goldman Sachs, declined to comment. Graham James, a spokesman for Spotify in New York, declined to comment.
The New York Times reported today that Goldman is set to participate, accounting for about $100 million. The Financial Times reported Spotify’s funding plans in March.
Spotify most recently expanded into Germany on April 13, offering its free, advertising-supported service, as well as paid subscription plans. The company also offers service in the U.S., U.K., Sweden, Finland, Norway, Denmark, France, Switzerland, Austria, Belgium, The Netherlands and Spain, according to the website.
The service is trying to add more artists. Adele, the Black Keys, Coldplay and Tom Waits have withheld new releases from Spotify, which began U.S. service in July. In April, the company announced exclusive access to songs and albums by the Red Hot Chili Peppers.
The company lost about $91 million over the past two years, Dagens Industri reported. Ek said in the interview that revenue this year may exceed 6 billion kronor ($833 million). The service paid about $150 million to rights holders in 2011, compared with $55 million in 2010.
Spotify 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.
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