SPOTIFY SEEKING MORE FUNDING

Spotify is working with Goldman Sachs on a new round of private funding, which could delay its IPO for another year, sources tell The Wall Street Journal. The Daniel Ek-led company has expressed a desire to raise about $500m in new financing, and investors have heard talk of valuations north of $6 billion, according to the sources. Spotify declined to comment.

The fundraising move will play out against the backdrop of a continuing tug of war between Spotify and the major labels, who collectively own just under 15% of the service. The majors want Spotify to redouble its efforts to convert free users to paying customers, while Spotify argues that its free tier, from which the money-losing company derives all-important ad revenue, is key to attracting new subscribers, and it has steadfastly refused to hold back high-profile releases from its free users, despite the wishes of labels and artists.

UMG and Sony’s expiring deals are being renegotiated, and as rights holders, the big music groups would appear to have a great deal of leverage. They’re believed to be pushing for higher royalty rates on both tiers, but Spotify will likely continue to lose money until 2019 unless it can negotiate lower rates, according to analysts. So it sure looks like something’s gotta give, one way or the other.