Spotify Clocks 20 Million Paid Subscribers, Raises $526 Million

Daniel Ek Spotify CEO
Andrew Burton/Getty Images

It’s on: Spotify has raised a massive $526 million round of funding to fight of Apple’s new Apple Music subscription service, according to a Wall Street Journal report.

The new funding comes from a large number of investors including TeliaSonera AB, Goldman Sachs via its Global Private Opportunity Partners fund and British as well as Canadian hedge funds. It brings the total amount raised by Spotify thus far to more than $1 billion, and comes at a valuation for the company of $8.53 billion, according to the Journal.

Spotify didn’t comment on the funding, but revealed some new milestones Tuesday: The music service now has 20 million paying subscribers and 75 million monthly active users. This means that Spotify doubled its paid subscriber base since May of 2014.

Spotify also announced that it has paid a total of $3 billion in royalties since the launch of the service in 2008, and the pace of payouts is accelerating: In the first three months of 2015, it paid $300 million in royalties, the company said.

In the context of the Apple Music launch, those numbers aren’t just growth metrics: They can also be seen as a validation of Spotify’s freemium model. Spotify is offering users free and ad-supported streams as a way to get them hooked and eventually convert them to its paid tier; Apple Music, on the other hand, doesn’t have such a free tier.

Some in the music industry have argued that Spotify should follow Apple’s lead and curtail its free offering, prompting regulators to look into the possibility that Apple colluded with record labels to force competitors to end its free tier.

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