Spotify Added 5 Million Users to Digital Music Service

(Corrects name of investor in final paragraph of story published July 31.)

Spotify Ltd. said 5 million more users have signed up for its advertising-supported music service since January with the company’s expansion to countries including Australia and New Zealand.

Spotify also added 1 million paying customers who get ad- free music accessible on computers and mobile devices, Ken Parks, chief content officer, said today at a conference in London. The company provided details of his remarks.

Spotify is adding new markets, including Germany, and features such as incorporating the service on Facebook Inc. (FB) and other social networks to build subscribers. The company released an application for Apple Inc. (AAPL)’s iPad in May and one for Google Inc. (GOOG)’s Android operating system last month.

The London-based service has 15 million users of the ad- supported music service, which is limited to playback on computers. Spotify has 4 million subscribers paying $4.99 a month for ad-free access on desktops and laptops or $9.99 including mobile devices.

Spotify has deals with Sony Corp. (6758) ’s Sony Music, Vivendi SA (VIV)’s Universal Music, EMI Group and Warner Music Group. Under those agreements, artists, record companies and publishers receive a cut of ad sales and subscriber fees.

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

Spotify raised $100 million last year from investors including DST Global, Accel Partners and Kleiner Perkins Caufield & Byers, achieving a valuation of about $1 billion. The company was raising another $100 million to $200 million from investors that may include Goldman Sachs Group Inc. (GS), people with knowledge of the situation said in May.

To contact the reporter on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net

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

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