Coca-Cola is becoming a minority investor in Spotify, as part of a new round of financing that will bring in $100 million and value the streaming music service at about $3 billion. Spotify has completed the financing round, according to The NY Times. Of the $100 million, half is from Goldman Sachs, and Coke is contributing about 10%. Another new investor, Fidelity Investments, is also said to be chipping in about 15% of the financing round, with the remaining quarter coming from Spotify’s existing investors, said the story.
In April, Coke made a vague announcement about a marketing partnership with Spotify, with few details other than a promise to help the service reach new markets around the world. Spotify, which was founded in Sweden in 2006, came to the US last year and is now in 17 countries; this week it opened in Ireland and Luxembourg.
An investment of $10 million or so would be small for a company like Coca-Cola, which has a market capitalization of $162 billion. But it is a step toward technology investment for Coke, and it represents a potentially huge new pool of investment sources for digital music.
Almost all digital music companies have struggled to make a profit. Spotify, though it has 15 million users around the world, 4 million of them paying subscribers, is not profitable. Last year it lost about $57 million on $236 million in revenue.
Last year, Spotify raised another $100 million from Kleiner Perkins Caufield & Byers and DST Global, in a deal that then valued the company at about $1 billion. In addition to those companies, minority positions in Spotify are also held by major record companies and Merlin, an organization that negotiates digital licensing deals on behalf of independents.