Fund-raising may value Spotify above $8 billion

Spotify, the streaming music service, is close to raising $400 million from investors in a round that will value the company at more than $8 billion, people briefed on the matter said on Friday.

Included in the list of over a dozen investors are a division of Goldman Sachs and an arm of the Abu Dhabi government, these people said. Others are likely to include notable hedge funds and money management firms around the world.

If the round closes, it will place Spotify firmly in the ranks of some of the most richly valued technology companies, joining the likes of Uber, Airbnb and Snapchat.

A spokesman for Spotify declined to comment.

Spotify, which unveiled its app in 2008, is among a small class of fast-rising streaming music services that have grown drastically in just the last few years, including Rdio, Google Play Music, the Apple-owned Beats Music app and, most recently, Tidal, a new service backed by the hip-hop mogul Jay Z.

But among that group, Spotify has shown the most outward signs of success. In January, Spotify said it served 15 million paid subscribers, a 50 per cent increase in its paid customer base from just eight months previous.

Users are also able to listen to a free version of the service, which is supported with advertising. More than 60 million people use Spotify in nearly 60 countries around the world, the company has said.

The company's rapid ascent over the last seven years underscores the rapidly changing nature of how people want to discover music.

Just as quickly as Spotify has risen, sales of physical compact discs and digital downloads have plummeted, leaving artists and industry executives looking to cash in on the next frontier in music distribution.

But streaming music is by no means universally loved by those in the music industry. Spotify, along with other streaming companies like Pandora, has faced increasing pressure over its so-called freemium business model, as well as the amount of royalties it pays to record companies and performing artists.

Late last year, the pop singer Taylor Swift abruptly removed all of her catalog from Spotify after disagreements with the company over how it would be made available to customers.

Daniel Ek, Spotify's chief executive, countered with a spirited defense of the company's business model, saying that his company had paid more than $2 billion in royalties to the music industry.

News of the investment round was reported earlier by The Wall Street Journal.

©2015 The New York Times News Service