Spotify valued at $1.1 billion after U.S. launch
With another round of funding completed and the recent expansion to the United States, Spotify's valuation has increased significantly in the last month.
The London-based digital music service actually hit the $1.1 billion mark following two closings that resulted in roughly $78 million and $20 million from existing and new investors respectively.
However, even though the debut of Spotify and interest in it spread like wildfire in July after the service thanks to positive word-of-mouth from Europe, the expansion didn't come cheap. PaidContentreports that Spotify spent approximately $98.15 million for its long-awaited launch in the U.S. market.
Additionally, Spotify is still only accessible on a rather strict invite-only basis. So it is going to take awhile for the service to build up a solid revenue stateside as Softpedia notes that the U.S. "has not been kind to the type of services," like Spotify, meaning paying for digital music lockers and streaming.
Within the first week of launching, Spotify attracted 70,000 U.S. paid subscribers. Today, AllThingsD reports that number has spiked to 175,000 with a total of 1.5 million paid and unpaid users.
Spotify has been met with a lot of enthusiasm, but it has yet to prove what it can offer that is truly remarkable in the face of its competitors, such as Pandora, Qriocity and Grooveshark, among others.
Although it seems unlikely, PaidContent also asks whether or not "record labels agreed to waive royalty advances up to a certain value" to help out Spotify financially while it tries to build a solid customer base.
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