Aug 8, 2011 14:30 GMT  ·  By

It has been confirmed that Spotify raised money in a new funding round this summer which valued the company at over $1 billion. Existing investors as well as new ones contributed in a round which raised close to $100 million.

Spotify raised $98.15 million, €69 million, in the latest round at a valuation of $1.1 billion, or €774 million, paidContent reports.

The startup used the funds mostly to pay for its US launch and the accompanying marketing effort.

Existing investors put in €55 million, or $78 million, though it looks like not all of it was in cash. Since Spotify numbers all of the four major labels as investors, these parties may have gave up future licensing revenue in exchange of having their stakes kept intact.

€22.5 million, $32 million, of the €55 came via this route. New investors poured in an additional €14 million, or 19.9 million.

Spotify recently launched in the US and the funding is very likely linked to the move. While it has millions of users in Europe and over one million paying subscribers, the company is struggling with profitability, mostly due to the crippling music licensing fees.

Still, Spotify is marching forward with the help of funding rounds like this, since investors are convinced that the market potential is too great to ignore.

If Spotify manages reach the kind of success it registered in Europe in the US as well, it may find a very solid new revenue stream. However, the US market in particular has not been kind to the type of services, music streaming, Spotify offers.

What's more, there are already a number of powerful competitors, Rdio, Mog and so on, in the US, all fighting for the same money. Still, Spotify is confident that it can become a smash hit in the US and integration with Facebook, which has been rumored but not confirmed yet may help with that.