Spotify Ltd, the streaming music service, is close to raising US$400 million from investors in a round that will value the company at more than US$8 billion, people briefed on the matter said on Friday.
Included in the list of more than a dozen investors are a division of the Goldman Sachs Group Inc and an arm of the Abu Dhabi government, the people said.
Others are likely to include notable hedge funds and money management firms around the world.
HEDGE FUNDS
If the round closes, it will place Spotify firmly in the ranks of some of the most richly valued technology companies, joining the likes of Uber Technologies Inc, Airbnb Inc and Snapchat Inc.
A spokesman for Spotify declined to comment.
Spotify, which unveiled its app in 2008, is among a small class of fast-rising streaming music services that have grown drastically in just the past few years, which includes Rdio, Google Play Music, the Apple-owned Beats Music app and, most recently, Tidal, a new service backed by the hip-hop mogul Jay Z.
However, among that group, Spotify has displayed the most outward signs of success. In January, Spotify said it served 15 million paid subscribers, a 50 percent increase in its paid customer base from just eight months previous.
ADVERTISING
Users are also able to listen to a free version of the service, which is supported with advertising. More than 60 million people use Spotify in nearly 60 nations around the world, the company said.
The company’s fast ascent over the past seven years underscores the rapidly changing nature of how people want to discover music.
Just as quickly as Spotify has risen, sales of physical compact discs and digital downloads have plummeted, leaving artists and industry executives looking to cash in on the next frontier in music distribution.
STREAMING
However, streaming music is by no means universally loved by those in the music industry. Spotify, along with other streaming companies, like Pandora Media Inc, has faced increasing pressure over its so-called freemium business model, as well as the amount of royalties it pays to record companies and performing artists.
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