spotify raises additional funding

Posted on February 25, 2010

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Spotify has reportedly raised further venture funding from Facebook and Friendster backer Founders Fund, for U.S. expansion. The company won’t comment on it when we asked.

Former Stardoll CTO Daniel Ek and TradeDoubler co-founder Martin Lorentzon put up €8 million of their own money to start the music service in 2007, then took an unspecified amount from Northzone Ventures and Creandum and last year sought further VC funding, taking between £20 million and £30 million from Wellington Partners, Li Ka Shing Foundation and Klaus Hommels.

Now TechCrunch says multiple, unnamed sources told it Founders Fund has added more funds, after several U.S. venture firms talked with the music service. The company tells paidContent:UK: “It’s always been our practice not to comment on financial matters.” We’ve asked Founders Fund.

Already popular in the six European and Scandinavian countries in which it operates, Spotify is seeking partner services with which to launch its premium offering in the U.S.. It’s doing the same at home, having already got bundled carriage options with Telia in Sweden and 3 in the UK. But U.S. music label reticence toward free, ad-supported music services makes premium billing partners all the more vital to its U.S. chances.

So, unless it turns out that Spotify is burning so much cash on music royalties that it already needs extra money, any U.S. venture funding would likely be as much to piggyback an American VC’s contacts book as to take money itself. TechCrunch says Napster co-founder Sean Parker led the funding for Founders Fund.

Competitors are piling in to the market – Mog.com launched a low-priced unlimited-music service in December, and Rdio is preparing for launch. Spotify hasn’t announced any carrier/service partnerships since October’s Telia and 3 deals. UK ISP TalkTalk has for now decided to give away Spotify subscriptions as competition prizes rather than as an actual service. But, after intensive pitching and networking at key events like Midem and Mobile World Congress, we would expect more to be announced before the summer.

from paidcontent

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