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# Spotify Chasing Major Financing Round, But Will Investors Bite?
- URL: https://www.hypebot.com/spotify-chasing-major-financing-round-but-will-investors-bite/
- Published: 2012-03-23T17:54:45.000Z
- Updated: 2012-03-23T17:54:45.000Z
- Description: Spotify appears to be the victim of it's own success. The more people listen, the more that they have to pay to the labels. And for a freemium on demand. Continue reading [https://www.hypebot.com/hypebot/2012/03/spotify-chasing-major-financing-round-but-will-investors-bite.html]
- Author: Bruce Houghton
- Tags: Uncategorized, #wp, #wp-post, #Import 2026-01-21 10:55

[![Spotify_logo-copy1-16](http://hypebot.typepad.com/.a/6a00d83451b36c69e201676426ff73970b-100wi "Spotify_logo-copy1-16")](http://hypebot.typepad.com/.a/6a00d83451b36c69e201676426ff73970b-popup?ref=hypebot.com)

Spotify appears to be the victim of it's own success. The more people listen, the more that they have to pay to the labels. And for a freemium on demand music service, like Spotify, making those payments can become increasingly difficult. That is why, according to [multiple](http://www.businessinsider.com/spotify-is-raising-at-a-stunning-35-billion-valuation-multiple-vcs-say-2012-3?op=1&ref=hypebot.com) [sources](http://gigaom.com/2011/12/11/why-spotify-can-never-be-profitable-the-secret-demands-of-record-labels/?ref=hypebot.com), Spotify is chasing a major new round of funding.

Spotify has already raised $100 million at a $ billion valuation. Now they are going back to the investor well, reportedly asking for a similar sum based on a $3.5 billion valuation. TCV and Andreessen Horowitz have already passed on the deal, according to [Business Insider](http://www.businessinsider.com/spotify-is-raising-at-a-stunning-35-billion-valuation-multiple-vcs-say-2012-3?op=1&ref=hypebot.com).

In addition to the $3.5 billion valuation, there other reasons that investors are wary of Spotfy "With most other businesses, if a supplier makes unreasonable demands, a retailer can turn to other providers, says serial music tech entrepreneur [Michael Robertson](http://gigaom.com/2011/12/11/why-spotify-can-never-be-profitable-the-secret-demands-of-record-labels/?ref=hypebot.com). "Since copyright law gives record labels and publishers a government-granted monopoly, no such option is possible with music. Digital vendors have only two options: Accept the terms or not include those songs in their offering."

**Too Big To Fail**

In the end, will Spotify be able to raise tens of millions more to keep going?

I wouldn't bet against them. Spotify is still a sexy investment and CEO EK & Co. are smart operators. They've grown impressive market share quickly; and that has value.

Additionally, in parts of Europe Spotify is already the second largest source of label income after iTunes. For those labels, some of who are part-owners of the music streamer, that makes Spotify too big to fail.