Streaming music service Spotify hasn’t made many friends in the music industry, mostly because it’s bringing fewer paid subscribers to the table than record labels had anticipated. But, that isn’t stopping the startup from trying to pick up more funding.
In an interview with Swedish business-focused daily newspaper Dagens Industri, Spotify CEO and founder Daniel Ek confirmed that his company had posted losses of around $96 million in its two years of existence, saying, “The question of when we’ll show a profit actually feels irrelevant.”
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Nevertheless, Ek said, Spotify is still open to taking more high-dollar rounds of venture capital funding from big-name firms.
But first, the company will be focusing on, if not turning a profit, at least beefing up revenues. Saying the company is focusing on sales and is expecting to show more than $800 million in revenue for 2012, Ek continued, “We know we are making money on each new user we get, whether it’s a free user or paying. Therefore, all user growth [is] positive for us.”
Like most businesses, Spotify has had to spend money to make money. Ek revealed that one of the company’s biggest barriers to profitability has been coming into new markets, including the U.S., which has taken a heavy toll on the company’s coffers. “Every time we enter a new market, it is extremely capital intensive because we need to invest in local music rights,” the CEO told DI.
As for funding, Ek said, “We have no need of more capital in the current situation in order to operate the business plan we have. But I have learned to always take the money when you do not need the money. We utilize the principle that if an investor can add strategic value and the valuation is good, we are interested.”
And by a good valuation, Ek means something in the range of $4 billion.
But don’t get your hopes up for a Spotify IPO. “We want to build this company long term. Therefore, the stock exchange is not an option for us,” Ek concluded.
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