When rebrands go wrong

(And how to avoid the pitfalls)

Spotify valued at $1bn (£618m) after new investment

Spotify has been valued at $1bn (£618m) after a new financing round led by a Russian technology investor who already has shares in Facebook, Groupon and Zynga.

The reported $100m investment, which is likely to include finance from a number of investors and said to be led by Digital Sky Technologies (DST), will be Spotify’s largest funding round to date.

Spotify has raised €83m (£70m) since it launched its online streaming service in 2009 but has yet to make a profit.

It is thought the new investment will help the digital music company move into the North American market and launch new services in order to steal share from Apple’s iTunes.

Spotify has over 10 million users but has attracted less than 1 million paying subscribers to its mobile and online ad-free services.

DST bought a $200m (£125m) stake in Facebook in 2009 which is said to have been increased to around 10%. It also has investment in Twitter, Groupon and Zynga, which makes Facebook games such as FarmVille.

DST’s founder Yuri Milner said in November that the firm was looking to invest in global companies that have more than a $1bn (£618m) valuation and are in the “social internet space”.

Readers' comments (4)

  • People say that groupon is losing its value but i think goup on is flying high! http://grouponbot.com site is getting increasing greater no. of visitors day by day only because of their user friendly deals of all kinds especially for the discount hunters...and you can see people are cloning groupon type of sites ...thats a fact but they can never provide services as good as groupon i bet on that!

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  • I check http://grouponbot.com more often then I check groupon now.

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  • The fact that Spotify have attracted over 10 Million free users, and only 1 Million paying customers is a testament to the quality of service they provide. Any service that offers the chance to listen to (almost every tune) in the world is always going to engage large numbers of followers.

    The free service is funded (supposedly) by adverts, but the fact that these do not get in the way of the content is a bit of a lesson to all. Do it right and you will attract large number of users.

    They just need to figure out a way to make the rest of the 9 Million users pay, my life would be a lot duller without Spotify.

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  • They have reduced the open and free accounts on spotify which has lead to an I think increase take up of premium accounts and the people like myself who don't or won't pay not using the service.

    It is a key weapon against piracy but the music industry was meant to have pressured spotify in reducing the number of free play hours as they were unhappy about the number of 'free' users.

    There are a number of options, namely more anonymous data harvesting to pay for spotify but these seem not to have been taken. Specially given some of the comments on the blog, over 7000 the last time I remember.

    Some have valid points as to keeping the free users, e.g. distribution of music and allowing people to know what music they are buying. Helping support artists if they can fund it by number of tracks played.

    It is very annoying as I suprisingly can't afford to pay for the service. I am trying to use less money each month to save cash.

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