Amuse scores $15.5M for its free music distribution service and next gen record label

Amuse, the Swedish startup that offers a free distribution service for artists wanting to get their music on Spotify, Apple Music et al ., coupled with what it’s calling a “next generation” record label, has raised $15.5 million in Series A fund. The round is led by Lakestar, and Raine Ventures, and will be used to expand the company operations globally, including building out a bigger presence in the U.S.

Founded in Stockholm in 2015 by a team of music industry experts including Diego Farias, Christian Wilsson, Jimmy Brodd, Andreas Ahlenius, and Guy Parry — and later joined by music artist and entrepreneur — Amuse is aiming to create a new route for musicians to distribute their music globally and, crucially, to be discovered.

As co-founder and CEO Farias explained in a bellow, it does this via a free music distribution services that are makes it easy and cost-free for new and unsigned artists to get their music into all of the major music services like Apple Music, Spotify, and Deezer etc ., and in such a way that means they maintain 100 percent of the royalties. Similar services typically either charge an annual fee or take a cut of any revenue generated or both.

Amuse also provides a dashboard displaying and helping to make sense of data relating to how well your ways are performing on the streaming apps and download stores you have chosen to distribute on. And its this data — or, rather, the value of it — that underpins the startups unique business model: come for the free distribution, remain for the record deal.

Namely, Amuse uses the data that it has access to via users of its music distribution service to analyze music consumption and listening habits to identify” rising talent “. The company then offers to sign the most promising artists to its own re-imagined record label through a licensing bargain whereby they still own the performance of their duties, rather than a traditional recoding contract. This consists of a 50/50 split of streaming and download revenue and entails artists have access to what Amuse claims is large-scale promotion.

Throughout our conversation Farias was very keen to stress that he find this as a partnership of equals, where the interests of scaling up the success and reach of an artist signed by Amuse are equally aligned. The type of value-add that the Amuse team will bring will vary depending on artist and what they need most, but will include things like public relations, marketing, branding, and having a more direct line to the online distributors it partners with. Farias didn’t rule in more traditional A& R services either, such as help with record or preparing an artist for follow-up releases.

Meanwhile, I’m told Amuse’s board of directors includes Edgar Berger, former Chairman and CEO of Sony Music International, and Jorg Mohaupt, former Warner Music Group board member. Gordon Rubenstein, Managing Partner, Raine Ventures, is also joining as a board observer.

Dharmash Mistry, General Partner at Lakestar, says that the Amuse team have” reimagined every step of the A& R process from inverting the commercial model to be artist-friendly and detecting new musicians to changing how individual sungs are marketed “. He is also talking up Amuse’s early success in Sweden — I understand the startup has already signed licensing deals with 40 or more artists — and says the investment will help the company roll out the model across the U.S. and Europe. To that aim, Farias tells me Amuse is opening an office in L.A.

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Spotify beefs up its free tier

Today at the Gramercy Theater in NYC, Spotify’s Chief R& D Officer Gustav Soderstrom announced a brand new free version of the Spotify mobile app.

By leveraging their investment in machine learning, Spotify’s new free tier recommends music to users on the fly. That said, the free tier has always limited users to shuffle. With the new version, users can listen on-demand to whatever song they want, as many times as they want, as long as those sungs appear on one of the 15 personalized discovery playlists like Daily Mix, Discover Weekly, Release Radar or Today’s Top Hits.

In total, that’s around 750 tracks (> 40 hours of music) that Spotify is serving up to users for on-demand listening.

Spotify will also make recommendations in the free mobile version based on existing user-made playlists, from the ballads on those playlists to the name of the playlist itself. The company is calling this” assisted playlisting ,” which essentially means that each time you search for a song to add to a playlist, Spotify will make recommendations similar to it as well.

Finally, Spotify has built in a low-data mode( called data saver) that cuts data consumption by up to 75 percentage. In the past, Spotify didn’t allow offline listening for free, meaning that users were somewhat tethered to wifi if they needed to conserve data.

With the new data intake system, which caches music ahead of time to river via 3G, users can actually listen to much more music with wireless data. Alongside utilizing 3G, Spotify is also optimizing the streaming itself as well as the app( including imagery and other UI parts) to save data and power.

All that told, advertisings will still run on the free tier of Spotify. Which is part of the company’s strategy not only for funding a free tier but for converting users to premium.

In 2014, Spotify introduced its free tier to mobile, letting users listen to their playlists on shuffle with ads. It was a huge part of Spotify’s free-tier growth. In fact, today Spotify has 90 million users on the free tier. And many of those convert to paid users — the company now has 70 million paid subscribers.

” If you’re on a date listening to music, you’re not going to want an ad to come on ,” said Spotify’s Global Head of Creator Service Troy Carter.

The company has focused heavily on mobile since 2014, especially where it concerns the premium mobile player.

Spotify is built upon three tiers: ubiquity, personalization and freemium. Soderstrom explained that Spotify guesses of itself as the broadcast radio of the 90 s, where discovery of great music was supported by ads and drove people to the record stores.

Spotify’s free tier represents broadcast radio for Spotify, and is a critical piece of Spotify’s overall strategy as paid services like Apple Music continue to grow.

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What to expect when Spotify goes public Tuesday

Digital music giant Spotify is joining the stock market on Tuesday, constructing it the biggest consumer tech company to go public since Snap debuted early last year.

But unlike Snap, Spotify isn’t doing an IPO. The “o” part of IPO stands for offering and Spotify isn’t creating any money.

Instead, existing Spotify shareholders will be selling shares immediately onto the stock market. This means that employees, venture capitalists or anyone else who managed to buy Spotify shares on the” secondary markets” can make money right away. But Spotify doesn’t know yet how many will want to sell their shares.

In fact , no one actually knows how this” direct listing” is going to go. Even in Spotify’s prospectus, the company acknowledged that what it’s doing is “risky.” Smaller companies have listed without an IPO, but for a company of Spotify’s size, this is unprecedented.

Co-founder and CEO Daniel Ek claims that they are doing things differently because” Spotify has never been a normal kind of company .” In a release today, he wrote that” our focus isn’t on the initial splash. Instead, we will be working on trying to build, scheme, and imagine for the long term .”

In a recent investor presentation, Ek said Spotify is doing this because of” our desire to become more transparent and more accessible .” Unlike a traditional IPO where employees don’t sell shares for months, known as a “lock-up,” Spotify insiders can sell on day one.

But like a typical IPO, Spotify will still be working with” market manufacturers” to help determine the price that the company should begin trading. I’m told that this could anytime during the trading day on Tuesday.

Spotify doesn’t know how many people will be selling shares. If few people opt to sell, it will drive the share price up, because of restriction render. If a lot of people sell, the reverse could happen, if investor demand doesn’t match it. It’s likely that this process will lead to increased volatility in the first few days or weeks of trading.

But in the long-run, Spotify’s performance in the stock market will largely depend on investor doctrines about the company and its business model.

Some are concerned that Spotify will operate the course of competitor Pandora, which has struggled on the stock market, partly due to hefty artist fees. Others argue that Spotify could be viewed as a Netflix, which has been successful at its entertainment licensing agreements.

But regardless of what happens Tuesday, Ek said that listing day is not time to celebrate.” You won’t see us ringing any bells or hurling any parties .”

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Spotify goes public with a bang after flag snafu to mark first day of trading

NYSE hoisted the Swiss , not the Swedish, flag outside its historic build to celebrate the deal

Spotify, the Swedish music streaming service, went public with a bang on Tuesday as the nine-year-old company sold shares on the New York stock exchange that initially valued the loss-making company at $29.5 bn.

The initial public offering( IPO) of the world’s largest music streaming company is one of the most heatedly anticipated in years and goes as other similarly loss-making tech titans are also shopping for exchanges to host their share sales.

Trading was delayed as investors struggled to find a price for Spotify, which opted the unusual road of selling existing shares directly rather than the usual IPO route. The decision resulted the company to predict Spotify’s shares could prove a volatile investment as buyers try to determine the company’s true worth.

The price fell $17 over the day ending at $149.01 a share, a sharp fall but still enough to ensure Spotify was one of the largest tech IPOs in history and valuing the company at $25 bn.

The IPO goes at a distressed moment for tech companies. Despite astronomical valuations ahead of their share marketings the recent IPOs of Snap Inc, owner of Snapchat, and Blue Apron, a meal-kit delivery service, failed to live up to their hype. Meanwhile the shares of some of tech’s biggest names , notably Facebook and Amazon, have tumbled amid fears that greater government scrutiny and the rules of procedure will dent their profits.

The Spotify sale get off to a bum note after the New york stock exchange hoisted the Swiss , not the Swedish, flag outside its historic house to celebrate the deal.

One of the first people to spot the mistake was Sven Carlsson, a Swedish tech reporter who encompasses Spotify for Di Digital.” Extremt mycket lol pa Wall Street nar NYSE hissar en schweizisk flagga ,” he wrote on Twitter. For non-Swedish speakers that’s:” An extreme quantity of’ lol’ at Wall Street when the NYSE raises the Swiss flag .”

Sven Carlsson (@ svenaxel_)

Extremt mycket lol pa Wall Street nar NYSE hissar en schweizisk flagga. $ SPOT #sthlmtech snA6P 1i7OX

April 3, 2018

The error was corrected 15 minutes later with the NYSE creating the right flag.

The snafu marked the first day of trading in a highly unusual share marketing. Spotify chose to shun the usual IPO roadshow and sell its shares immediately to the market.

While this method saved the company millions in banking fees, it is also a risky move as a traditional IPO guaranties purchasers and decides a price for the sale in advance.

Analysts expected the company to be valued at around $23 bn but have warned that its direct listing could lead to volatile sways in its value as the market decides its future prospects.

Spotify is expected to reach 170 million listeners this year, up from the present 157 million, with paying subscribers slated to increase from 72 million to 90 million. It accounts for 40% of the global market for music sharing.

The company is growing revenues fast too- analysts predict its sales topped EUR4. 9bn ($ 6bn) last year, up from EUR7 46 m ($ 915 m) in 2013.

But it is expected to report a loss of EUR3 30 m ($ 408 m) for the 2017 financial year and faces stiff rivalry from Apple, Google, Pandora and others.

Paul Verna, eMarketer principal analyst, was bullish on the company’s prospects.” Spotify has been the driving force in nothing less than a turnaround in the US recorded music industry. Last year the industry made its highest revenue mark in a decade, and it was led by streaming, largely subscription-based ,” he said.

” This is a huge vindication of Spotify’s on-demand model, which has proven more popular than paid downloads. Apple’s original model, curated streaming, the Pandora model, and even streaming of live radio stations( the iHeart Music model ).”

Fortunately Spotify’s execs were not present for the flag flap. Its executives declined to participate in another of the usual rites of an IPO, ringing the opening buzzer.

At Spotify’s investor day in March, Spotify’s chief executive, Daniel Ek, said:” For us, going public has never been about the pomp or the circumstance of it all .”

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Spotify’s stock market debut: all you need to know

Music streaming firm has 157 m customers and could be valued at $25 bn in its New York IPO

Spotify is poised to make its stock exchange debut on Tuesday, in a flotation on the New york stock exchange that could value the company at $20 bn- $25 bn( PS14. 2bn to PS17. 8bn) according to analysts.

The music streaming business was launched 12 years ago as a free-to-use service, shall be financed by advertising. Spotify now has 157 million clients, and has managed to convert 71 million of those into paying users of its premium subscription service.

However, Spotify has never made a profit, making it more tricky for potential investors to value the firm. It also counts the likes of Apple and Amazon as challengers, a daunting prospect given the depth of their pockets.

Here are some of the key questions as the Swedish firm prepares to go public.

What is different about this flotation ?

Unlike most companies that float, Spotify is not issuing any new stock, which means it has not set a price for the market share in advance. Instead it is selling shares currently held by its private investors, rather than handling it in the usual way with the process managed by investment bankers. It will save the Swedish company fund but it is likely to create volatility when the shares go live on Wall street( 14:30 BST) as investors try to settle on a price. The company has constructed losses of virtually EUR1bn( PS870m) over the past three years, so investors will not be able to rely on a traditional price earnings ratio as a guide.
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Why does Spotify want to float ?

Spotify made a commitment to its original investors that they would have the opportunity to cash in their investment, and this is it. The flotation will help to fund expansion of the business, but it will also ramp up pressure on the management. By going public, Spotify’s strategy and performance will come under increased scrutiny, and investors will expect progression, fast.

What is it worth ?

Analysts are predicting Spotify could be valued at $20 bn- $25 bn on its debut on the New york stock exchange but the reality is no one knows. It is more difficult to predict than usual, because no advance cost for the shares has been set. Investors will be weighing up possibilities for growth against the fact Spotify has failed to turn a profit in its 12 -year existence. The company’s costs- including the royalties it pays to record labels and artists- are greater than its revenues, although that gap is constricting. A successful float will depend on whether or not investors believe Spotify’s claim that it can become profitable and fend off bigger challengers such as Apple and Amazon.

What are Spotify’s strengths ?

Spotify has proved be permitted to drive strong revenue growth, with revenues rising from EUR7 46 m in 2013 to a predicted range of between EUR4. 9bn and EUR5. 3bn last year. With an estimated 40% share of the global music streaming marketplace, Spotify is the dominant player in key sectors, increasing its bargaining power with labels and artists over the royalties it pays them. Meanwhile user numbers are expected to increase to 170 million this year, with paying subscribers expected to rise from 71 million to 90 million. One of current challenges will be persuading more non-paying customers to sign up for paid-for services.

What are the threats ?

Simply put, it’s possibilities for competitor. Spotify is currently the market leader but tech giants such as Apple and Amazon have deep pocket and could cause some injury should they decide to mount a key challenge. Both companies already offer hardware such as the iPhone and Amazon Echo which are available with their own, pre-loaded music-streaming services. Spotify’s restriction supplier base, with only four music companies controlling the rights to 87% of the music streamed on Spotify, is another hazard, according to analysts at Hargreaves Lansdown.

What will it mean for customers ?

The flotation will mark a new era for Spotify but it is not yet clear what changes the firm has schemed. Analysts say it are gonna have to diversify over day, to ensure that it stands apart from rival streaming services. One alternative would to be create more original content, in accordance with the video shot for Spotify by Taylor Swift for her single Delicate. Spotify has already moved into podcasts and rendering original music.

How have other recent tech floats performed ?

Recent technology floats have proved volatile and investors have been selling off shares in the wider sector, concerned by the prospect of greater regulation for tech firms such as Facebook. Cloud storage company Dropbox is up 40% since it floated last month, but shares in Snap- the company behind social media app Snapchat- are down 15% compared with their float price.

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Heres what Spotify shares will be worth when they start trading

Spotify has finally filed to go public. But unlike most tech offerings, Spotify won’t be raising any fund by issuing new shares. Instead they’ll only permit existing shares owned by investors and employees to be traded publicly on the New York Stock Exchange.

No IPO means there are no investment banks to underwrite and cost the offering, meaning the public marketplaces will basically be the only thing ascertaining what Spotify shares will be worth when they start trading.

However, Spotify’s F-1 enrollment does disclose what its shares have historically traded for on the private marketplace. The most recent private transactions should give us a pretty good clue of what shares will be worth when they start being publicly traded.

As you can see in the chart below, in 2017 Spotify shares were bought and sold privately for anywhere between $125.00 and $37.50, which is a pretty wide range. But in the last two months the value has become a little more defined, with shares trading anywhere between $132.50 and $90 in January and February 2018.

That means we can expect shares to trade somewhere in this scope when Spotify runs public, with the price likely leaning towards the higher end ($ 132.50) to account for the increased demand once they are available to a broader investor base.

Of course the more demand there is the higher the shares will trade, and since Spotify’s public offering has been much anticipated don’t be surprised if we see share prices closer( or upwards) of $150.

In its F-1 enrollment, Spotify notes that these share costs and amounts all reflect a 40 -to-one share split, which the company tells is being done to “reduce the per share price of our ordinary shares to a more customary level for a freshly listed company on the NYSE”.

Of course the above numbers are just historical pricing, and legally can’t be an indication of what Spotify actually supposes their shares will be worth. Spotify confirms this, saying “this information may, however, have little or no relation to broader market demand for our ordinary shares and thus the opening public cost and subsequent public price of our ordinary shares on the NYSE”.

Expect to see Spotify shares actually start trading on the NYSE in the next month or so, for the purposes of the ticker “SPOT”.

To read more of our coverage of Spotify’s public listing you can check out all associated posts here, or the main post here.

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Even with double the subscribers, Spotify says Apple will always have an edge owning the app store

Spotify just filed for a direct listing in the U.S ., sidestepping the traditional IPO process, and now we’re starting to see some of the true fiscal intestines of the company — and some of the significant risks it faces from challenging services from Apple and Google.

Apple, for example, charges apps a percentage of revenue for subscriptions processed through the App Store. Apple Music, meanwhile, will always deliver Apple 100 percentage of the subscription revenue that it receives from subscribers( sans record fees and all that kind of stuff, of course ). Apple, too, has a direct integration with its iOS devices and also a huge amount of brand recognition, even though Spotify is a massive service. Spotify says it has 159 million monthly active users and 71 million premium subscribers, while Apple has 36 million paying subscribers as of February 2018.

Here’s the full boilerplate from the filing 😛 TAGEND

Our current and future competitors may have higher brand recognition, more established relationships with music and other content licensors and mobile device manufacturers, greater fiscal, technological, and other resources, more sophisticated technologies, and/ or more experience in the markets in which we vie .

In addition, Apple and Google also own application store platforms and are charging in-application buy fees, which are not being levied on their own applications, thus creating a competitive advantage for themselves against us. As the market for on-demand music on the internet and mobile and connected devices increases, new challengers, business models, and solutions are likely to emerge .

As owners of the platforms themselves, Apple and Google will always be able to dictate the terms. And while Spotify is a massive service, its success still hinges on users listening on their mobile devices. It may be able to build a strong brand and create some inertia against potential changes from Apple that could instigate user backlash, but at the end of the day, Apple runs the system where its users actually get the service.

As Apple begins diversifying its revenue streams to create a services branch that the company likes to say will be the size of a Fortune 100 company, music is increasingly becoming a core part of that. Google, too, owns its app store platforms, and will recognize 100 percent of the revenue from its own service. We haven’t find the full potential of these companies’ approaches to the music space, including with regard to with Apple Music, which appears to be steadily growing, but Spotify is clearly distinguishing it as an existential threat.

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Spotify has filed to go public

Music streaming service Spotify is going public and it merely unveiled its filing .

The documents state that it is targeting a$ 1 billion IPO, but this is just a placeholder. The company actually plans to go public without the standard fundraising event. In other words, Spotify isn’t selling its shares on the stock market. Instead, the event known as a “direct listing” will be a series of transactions from existing stockholders( like employees and investors) selling shares to stock market investors. Spotify’s filing even acknowledges that this unusual process is “risky.”

Its public debut is likely to happen in late March or early April, but it is unclear how much shares will cost when it listings under “SPOT” on the New York Stock Exchange. Spotify says that for 2018 its shares have traded on the private markets for between $90 and $132.50, valuing the company at $23.4 billion at the upper part of the range. But that these transactions “may have little or no relation to the opening public price of our ordinary shares on the NYSE.”

Spotify says it is present in 61 country level its platform includes 159 million monthly active users and 71 million premium subscribers.

Spotify faces $1.6 billion lawsuit from music publisher alleging copyright infringement

Spotify is facing a $1.6 billion lawsuit from Wixen Music Publishing, the publisher that represents artists like Tom Petty, Missy Elliot, Stevie Nicks and Neil Young, The Hollywood Reporter first reported. The suit, filed December 29, alleges copyright infringement, specifically alleging Spotify is using thousands of its sungs without a proper license. The suit attempts at least $1.6 billion in damages and injunctive relief.

Before Spotify launched in the U.S ., the company made are dealing here with major record labels to obtain the appropriate rights to the sound recording copyrights in the ballads, the lawsuit countries. What Spotify failed to do, according to the lawsuit, was “obtain the equivalent rights for the compositions.”

The lawsuit goes on to say, “As a outcome, Spotify has built a billion dollar business on the backs of songwriters and publishers whose music Spotify is using, in many cases without obtaining and paying for the necessary licenses, ” the lawsuit alleges.

Wixen also alleges Spotify has “knowingly, intentionally, and repeatedly” reproduction those anthems over the internet to California residents.

This suit comes following a proposed $43 million settlement involving music rights holders and Spotify in a class-action lawsuit, Ferrick v. Spotify. That suit, Wixen alleges, “does not adequately compensate Wixen or the songwriters it represents.”

In that settlement, Spotify admitted to failing to obtain necessary statutory licenses to reproduce and/ or distribute musical compositions on its platform, the lawsuit says.

“Consequently, while Spotify has become a multibillion dollar company, songwriters and their publishers, such as Wixen, have not been able to somewhat and rightfully share in Spotify’s success, as Spotify has in many cases use their music without a license and without compensation, ” the lawsuit states.

I’ve reached out to Spotify and Wixen. I’ll update this story if I hear back. The example is Wixen Music Publishing, Inc. v Spotify USA.


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Spotify files to go public

Spotify has filed confidentially to go public, sources told Dan Primack at Axios.He became aware that the music streaming company filed with the SEC at the end of December.

The timing is consistent with what we are hearing. Sources told us that they’ve been targeting a debut for the first quarter of this year. We’ve gotten clues that it could happen within the next month or so.

But there’s also been chatter that it will not technically be an IPO, but rather a “direct listing.” Spotify has been investigating the possibility of setting up listing on the stock market without the fundraising event.

Many in the tech community have carried frustration with the traditional IPO process, and it looks like Spotify is looking to be a guinea pig and try out something different. Other companies have done direct listings, but it is an unusual scenario for a company of this size. Spotify was valued at $ 8.4 billion in 2015.

Spotify was lately dealt a $1.6 billion suit, alleging copyright infringement.

Spotify is a leader in the digital music space with more than 140 million active users and 60 million paying subscribers.But it’s a competitive scenery that also includes Apple Music and Pandora.

Pandora, which went public in 2011, has had a tough time on the stock market. It is currently trading at$ 5, less than one-third of its $16 IPO price.

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