Streaming music service Spotify is apparently seeking another round of funding that would value the company at a whopping $5.27 billion valuation.
The news comes from Swedish newspaper Dagens Industri, a financial publication that didn’t indicate exactly how much money Spotify might be trying to raise. It did, however, speculate that the new funding might come in the form of a loan rather than an equity investment that would cause the original founders to give up another portion of the company. Spotify has previously raised about $288 million in funding and is valued at an estimated $3 billion.
Spotify’s service, while the biggest on-demand music service in the world, still competes with a mountain of others, including Pandora, Rdio, and Slacker Radio. Its revenue comes from its free ad-supported service as well as its ad-free premium monthly subscription service. It currently has 20 million active listeners and 6 million paying subscribers, which is nearly double the number of listeners/customers it had a year ago.
Yet despite all of this apparent success, it only managed to bring in $577 million in revenue last year at a loss of $78 million.
That said, the bigger question here is why Spotify taking on more funding. Well, the service is still growing into new regions. It’s also attempting to become more than just an on-demand music library service by becoming (arguably) the first big platform for streaming music that allows others to build apps and services on top of it. So Spotify’s team still believes the service has a lot of room to grow, and with about 70 percent of its revenues being spent on content licensing alone, there’s not much room to spend money on helping that growth along.
We’re reaching out to Spotify for confirmation on the funding round and will update this post with any new information.