Spotify Brings in Record $526M Funding Round

In wake of Apple Music’s announcement, Spotify raised $526M in a series G round at $8.53 billion valuation. It almost seemed like I had already seen this story before, somewhere…

The sizzle of meat hits the grill, two men sit across from each other in an informal mentoring discussion, and then Russ Hanneman drops what brought him to the three comma club 20 years ago. “So then it hits me, we can take this thing called the radio, and put it on this new thing called, the Internet, and nobody was doing it.”

For those of you who may not have already caught on, this is a conversation that played out on the hilarious HBO show Silicon Valley. While funny, they inadvertently struck up a topic that mirrored that of the real world; as this week two major events occurred in the world of internet radio.

On Monday during Apple’s annual WWDC they announced the launch of Apple Music on June 30, and today Spotify announced a series G fundraising round of $526 million bringing it’s valuation to $8.53 billion. Apple, now late to the game, is facing an uphill battle.

The history of internet radio fundraising and acquisitions has met each side of the pricing spectrum; however, Spotify’s series G fund has hit a new record. This falls on the heels of their announcement of achieving a paying subscriber base of 20 million, up from only 10 million at the end of May 2014. Spotify’s paying subscriber growth has doubled in the past year, where as the first 10 million took over 5 years. Further, there are a total of 75 million active users on the platform as well. As a result, they have paid out more than $3 billion in royalties ($300 million in the first 3 months of 2015).

In addition to a massive paying user base, Spotify also has the benefit of already being accessible on most internet connected devices.

A History of Internet Radio Funding and Acquisition

Over the years, there have been failures, flops, funds raised, and acquistions to boot. Though there are other still standing streaming music providers, many have been consumed and become part of the two largest contenders, Apple and Spotify.

  • Pandora Radio launched in 2000 and raised more than $56.3 million over six funding rounds and in 2011 went public. In late 2014, Pandora announced that they had 81.5 million active listeners.
  • In 2002, launched and later received a single funding round of $5M in 2006. It was then acquired by CBS in May 2007. In January 2014, integrated with Spotify to allow playback through their platform, thus further boosting Spotify’s reach.
  • In 2005, News corp purchased MySpace for $580 million. At its peak in 2007, it had a crazy valuation of $65 billion based on Facebook’s $15 billion valuation and $357 per user cost, which now has less impact on valuation in today’s market if they are not paying subscribers or driving direct revenue. It eventually sold for only $35 million and transitioned specifically to focus on streaming music.
  • In 2007, SoundCloud launched and received $123.3 million over five funding rounds, but focused primarily on independent labels and artists. In June 2015 they penned a deal with 20,000 independent labels to cut them in on royalties.
  • In 2008, BestBuy purchased Napster for $121 million. It was eventually acquired by Rhapsody (US, Canada, and Europe) in 2011 to complete against Spotify (Global user base). Just last month in May 2015, Rhapsody filled a $10 million loan from its investors after posting a $8.9 million net loss for the first quarter of the year, after only a $1.6 million loss in the Q1 of 2014.
  • Also in 2008, Rdio launched and since 2009 has received about six funding rounds for a total of $125.7 million. Though still active, in 2013 they launched their own movie and TV streaming service, Vdio, which closed down in December of the same year. They also had a bit of snark to add in for Apple after their announcement of Apple Music.
  • In 2010, WiMP launched in several European countries; however it is more commonly known in the US as Tidal. It was later acquired by Jay-Z in January 2015 for $56 million. The reception since its relaunch has been less than positive.
  • In 2011, launched and received $7 million in funding. It closed its doors in November 2013 to focus on their offspring company, Turntable Live, which also closed down in March 2014.
  • Although not involved with streaming music, Pono Music was launched by Neil Young in 2014 through crowdfunding on Kickstarter. It was supposedly to offer higher quality music, but since entering the market has received mediocre feedback at best.
  • In July 2012 MOG was acquired by beats for $14 million, and shut down in 2014. Prior to acquisition, it raised about $24.9 million over 4 years and seven rounds of funding. By 2012, Spotify already had 3 million paying subscribers vs. their 500,000 active users. MOG was reportedly the backbone for the streaming service Beats Music that would eventually become Apple Music
  • Apple acquired Beats in May 2014 for $3 billion, but not until after buying out Vivendi’s stake for $404 million in August 2014.

Image Credit: Flickr/Sorosh Tavakoli

Did you find this article helpful? Click on one of the following buttons
We're so happy you liked! Get more delivered to your inbox just like it.

We're sorry this article didn't help you today – we welcome feedback, so if there's any way you feel we could improve our content, please email us at

Written by:
Elliot is an award winning journalist deeply ingrained in the startup world and is often digging into emerging technology and data. When not writing, he's likely either running or training for a triathlon. You can contact him by email at elliot(@) or follow him on Twitter @thejournalizer.
Explore More See all news
Back to top