Spotify fights back: $526m funding secured to battle Apple Music

It’s on: artists are going to be at the centre of the biggest marketing war in digital music history.

Barely a day after Apple unveiled its attempt at a ‘Spotify killer’ – Apple Music – at WWDC in San Franciso, Daniel Ek‘s Swedish streaming giant has secured the biggest funding round in its history, to the tune of US $526m.

The new investment takes Spotify’s total funding since arriving in October 2008 above $1.1bn.

It includes the $350m Spotify was reported to have ingested in May and comes from 13 partners including Goldman Sachs, TCV, GSV Capital and Rinkelberg Capital.

According to CrunchBase, the Series G funding injection takes Spotify’s market valuation above $8.5bn.

It is likely that this huge chunk of money will be used to drive a worldwide above-the-line marketing campaign to tackle Apple’s own advertising warchest.

Doug Morris, Sony Music CEO and Chairman, said at Midem on Sunday: “Spotify has never really advertised because they’re still not profitable. My guess is Apple will advertise, that they’ll make a big splash.”

That all changes now.

“We have a great and long relationship with teliasonera.”

Daniel Ek, Spotify

A portion of Spotify’s new cash comes from the dominant telco company in Sweden and Finland, TeliaSonera.

An existing investor in Spotify, TeliaSonera’s new funding sees it takes a 1.4% equity stake in Spotify.

Both Spotify and Telisonera say they ‘are also committing resources, staff and other assets to ignite the joint innovation agenda within areas such as media distribution, customer insights, data analytics and advertising’.

A joint TeliaSonera-Spotify team will be set up to run these projects.

“We have a long and great relationship with TeliaSonera and I’m pleased we’re able to take this to the next level together with this strategic partnership”, said Daniel Ek, CEO and Founder, Spotify.

“We’ve set-out to create a New Generation Telco where innovation is key to our success. Spotify is a great company, loved by customers and with a world class take on innovation I’m excited to join Spotify’s journey as investor and key partner”, says Johan Dennelind, President and CEO, TeliaSonera.

Martin Lorentzon, Spotify Chairman of the Board, has been a member of TeliaSonera’s Board of Directors since 2013.

TeliaSonera’s board and management arranged the transaction directly with Spotify’s executive management.

Spotify: investment rounds to date

  • June 2015: $526m – Goldman Sachs, TCV, GSV Capital, Rinkelberg Capital, Teliasonera & more
  • November 2013: $250m – Technology Crossover Ventures
  • November 2012*: $100m – AFSquare, The Coca-Cola Company, Fidelity Ventures, Lakestar, Goldman Sachs
  • June 2011: $100m – DST Global, Kleiner Perkins Caulfield & Byers, Accel Partners
  • February 2010: $12.3m – Founders Fund, Sean Parker
  • August 2009: $50m – Li Ka-shing, Horizons Ventures, Wellingtons Partners
  • October 2008: $21.6m – Li Ka-shing, Creandum, Northzone, Horizons Ventures

* An additional funding round is believed to have taken place in 2012 for an undisclosed amount.Music Business Worldwide

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