Spotify secures $250m funding boost

Spotify has amassed fresh funding to the tune of $250 million [£154 million] following a new funding round that will help it to cement its US business.

The new funding round is headed up by Silicon Valley’s Technology Crossover Ventures, according to an anonymous source quoted by Reuters, with the latest bout of financing taking the company’s value to $4 billion [£2.5 billion].

Spotify’s new funding is expected to be spent on challenging its competitors in the US where it trails behind other services such as Pandora and it could also set the Swedish owned company up for a shot at Japan and elsewhere.

The music-streaming site is one of just a few startups to have raised north of $400 million [£247 million] in funding along with Living Social and SurveyMonkey and investors, such as Goldman Sachs, plunged $100 million [£62 million] into the site last year. 2012 was a similar story with the same amount raised from the likes of Kleiner Perkins and Digital Sky Technologies.

Spotify currently has around 24 million active users across 32 countries, six million of them paying for the premium service with the company taking €435 million [£363 million] in revenue in 2012. Despite this its loss increased from €45.4 million [£37.9 million] in 2011 to €58.7 million [£49 million] in 2012 with much of it down to the royalty fees it must pay to be able to stream music to its users.

Apple decided to enter the online streaming space earlier this year with the release of iTunes Radio that is currently available in the US with plans to roll it out to the UK, Canada and New Zealand in early 2014.

iTunes Radio is available on all iOS 7 devices using the music app and via iTunes on Mac and PC with Apple TV owners also able to benefit from the new service. An ad-supported version of the app is free of charge whereas iTunes Match subscribers can listen to ad-free music at no extra cost.