Spotify Desperately Needs Another $400 Million…

firedance

Riddle me this: how can one startup be so bad at making money, yet so great at raising it?

According to details just published by the Wall Street Journal, Spotify’s money-burning bonfire is about to devour another $400 million, its seventh financing round.  Goldman Sachs is bankrolling a large portion of the mega-round, with an Abu Dhabi fund also a source of cash.

Spotify has previously raised $500 million, though that money has largely been burned through.  At roughly $900 million in aggregate financing, Spotify now carries an incomprehensible valuation of $8.2 billion.

That dangerously high valuation makes the company almost impossible to sell, and according to Wall Street Journal, there isn’t even a timetable for an upcoming Wall Street IPO.  “Nine-year-old Spotify, which previously raised more than $500 million in equity funding, hasn’t established any timeline for a possible IPO,” the Journal reports.

“The money-losing company needs the cash to support its costly business model of paying nearly 70% of its revenue to rights holders as royalties.”

 

Spotify_losses_2013

 

Meanwhile, Spotify is facing massive pressure from the ‘big three’ major labels to close their ‘freemium tier’.  The majors, which carry an ownership stake of roughly 15%, and are rumored to have unsuccessfully shopped Spotify at a price tag of $10 billion.

So far, there have been no takers.

 

The post Spotify Desperately Needs Another $400 Million… appeared first on Digital Music News.


Source: Industry News

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *