Spotify to Close a $50 Million Funding Deal Soon

It's a good week to be a music streaming business as, after Pandora just struck a new advertising deal for audio ads, Swedish service Spotify is apparently close to securing a new round of funding from several high-profile investors, adding up to as much as $50 million while putting the company's value at $250 million according to the Financial Times, citing sources close to the deal.

The site has been a real success in Europe with over two million subscribers so far and boasting a catalogue of over six million tracks but has so far been less financially viable, similar to most Internet radios and music streaming services. It makes money from advertising in the free version of the service or from ad-free premium subscriptions though many argue that this may not be enough to offset the cost of licensing the music. The subscriptions run at £9.99 monthly or 99 pence for an ad-free, one-day pass.

Still the company does have some significant advantages, mainly its iPhone App, which allows users to stream the music when an Internet connection is available but also to “cache” the files for offline listening. The app will apparently only be available for premium subscribers and this interesting hybrid solution could prove a real asset attracting users from similar services or even from iTunes.

Some of the investors in this new round include Hong Kong billionaire Li Ka-Shing’s charitable foundation, London venture capital firm Wellington Partners and others with maybe a major music label involved in the deal, though they would most likely provide access to its catalogue rather than make a financial contribution to the company. Spotify isn't saying anything about the reported upcoming deal but it has “confirmed” that there may be something happening by saying “Great stuff!” when asked for a comment by VentureBeat.