Apple recently unveiled Apple Music at the WWDC 2015, hopping on to the music streaming service bandwagon as it joined the likes of Spotify. Now, rumor has it that Spotify has allegedly received $526 million in funding to strengthen its position.
With the advent of Apple Music, the tug-of-war for dominance in the music streaming sphere will undoubtedly intensify. To ward off threat from Apple Music, several investors are reportedly pumping in money into Spotify, according to The Wall Street Journal's sources.
"Spotify has closed a massive new round of funding from a wide range of global investors who are betting it can fend off a new threat from Apple. The music-streaming company closed a $526 million round of funding valuing it at $8.53 billion," reported the WSJ.
The financing of the deal per the publication closed on June 9.
Spotify could plausibly be looking at expanding its services and generating new content as its rivals grow. It is believed that the new foreign investors for Spotify include Britain-based asset managers Baillie Gifford, Canada-based hedge fund Senvest Capital, TeliaSonera (a Swedish Telecom company), Discovery Capital Management, Rinkelberg Capital and Landsdowne Partners.
The WSJ's source also divulged that the investors from the U.S. include GSV Capital, Technology Crossover Ventures, Halcyon Asset Management, Northzone, D.E. Shaw & Co, PSAM and Global Private Opportunity Partners fund, which belongs to Goldman Sachs.
Earlier in April, an individual familiar with the deal had revealed to the publication that Abu Dhabi's sovereign-wealth fund was also agreeable to invest in Spotify.
With Apple Music set to lure people, Spotify will be looking to pull up its socks and diversify so as not to lose its market share. An advantage Apple Music has over Spotify is that it will be offering a free trial for three months compared to the 30-day period on Spotify. This would give people ample time to judge if they want to stick with Apple Music.
The monthly fee for both the services is at par, but Spotify has a slight edge as it already has iOS and Android apps available, whereas Apple Music has to create an Android app. Moreover, Spotify can be accessed via Uber cabs and Sony's PlayStation.
What Spotify intends to do with the alleged $526 million in funds is not known at this juncture. A strong possibility exists that it will use the funds to foray into new types of media. In May, Spotify had let on that it intended to add podcasts and videos from NBC, Comedy Central, Conde Nast and ESPN.
In any event, Spotify seems flustered by the arrival of Apple Music—if the company's CEO Daniel Ek's alleged deleted tweet of "Oh ok" after the latter's announcement is anything to go on.
Photo: Sorosh Tavakoli | Flickr