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According to The Wall Street Journal, Spotify is now worth more than the entire US music industry. The company’s latest $8.4 billion valuation helped outperform and in some ways, outclass the traditional $6.97 billion sector.

The Recording Industry Association of America (RIAA) confirmed that the industry’s sources of revenue are the following: retail sales, digital downloads and streaming services.

Other tech startups within the billion-dollar range include AirBNB at $20 billion, Snapchat at $15 billion and Uber at $40 billion.


A Closer Look at the Numbers

First, it’s important to consider that Spotify has never actually turned a profit. The comparison between the company’s valuation, or estimate of future profits, and the music industry’s revenue, or actual income, are two entirely different figures. Instead, what the numbers suggest is that the online music streaming service could be worth more based on current trends.

Moreover, Spotify is an international company with a dominating presence in almost every territory, from Argentina to the Canary Islands. The US music industry accounts for- well everything within the boundaries of the United States. A closer look suggests that the two are polar opposites in the same ecosystem.

Nevertheless, Spotify’s accomplishments are still amazing and have forced other businesses in the space to rethink their strategy just to avoid getting left behind. A more realistic comparison is Pandora, the company’s closest direct competitor, which is currently worth roughly $3.5 billion.


Subscribers and Active Users

Spotify’s latest growth report in 2014 showed it has amassed over 15 million paying customers worldwide. It also boasts 60 million active users with no signs of slowing down. In addition to Pandora, the company is competing with several big players in the tech arena, namely Google Play Music, Amazon Music and iTunes Radio. Spotify also has to watch out for up-and-coming startups such as Jay-Z’s Tidal and Deezer.

The streaming provider’s strategy goes beyond low cost subscriptions. Partnerships with influencers and brands have helped deliver the service right into the hands of its user demographic. As a result, the company has been able to deploy the app quickly in a widespread manner, further solidifying its status as the go-to service for digital music.

Spotify is also known for leveraging customer data for targeted ads. “We’ve been able to aggregate this idea of launching playlists as a proxy for the activity or mood you’re in,” said Spotify’s VP-North America advertising and partnerships Brian Benedik.

Another Successful Round of Funding, Delayed IPO

The global music streaming service finished a strong $400 million funding round earlier this month. Notable institutions that participated in the latest financial campaign includes Goldman Sachs and Abu Dhabi’s sovereign wealth fund.

Analysts expect the tech giant to launch at least one more fundraiser in the near future, as it slowly reaches its goal of $500 million in venture funding. Spotify’s talks with firms known for investing in companies prior to an initial public offering (IPO), such as T. Rowe Price Group, hints that the highly anticipated event could be coming very soon.





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