Spotify confirms latest round of funding
The digital-music industry is humming.
Two days after Apple (AAPL) unveiled a $9.99 a month streaming service, Spotify confirmed reports it closed on a $526 million round of funding.
Companies are scrambling to dominate the fastest growing segment of music distribution, with online streaming one of the only portions growing.
The popularity of streaming rose 54.5 percent between 2013 and 2014, while sales of digital albums fell 9.4 percent and single track sales declined 12.5 percent, according to statistics from Nielsen SoundScan. Overall album sales, including digital and physical, were down 11.2 percent. Vinyl album sales, however, surged nearly 52 percent in 2014 and now represent six percent of all physical album sales.
Apple, Spotify, Pandora (P), Google Play Music (GOOG), Rhapsody, and Rdio all offer ad-supported free versions as well as options with monthly fees.
But turning a profit is another matter. Pandora has lost money for years, even if with an occasional profitable quarter. Spotify reached a revenue high last year but still operated at a significant loss.
Some argue the royalty fees companies pay musicians, their labels and rights management groups curtail online streaming's bottom line, while some big-name artists have said that streaming leaves them broke, as labels consume much of the cash.
Spotify has paid more than $3 billion in royalties, including more than $300 million in the first three months of 2015, the company said Wednesday in a release.
Exactly how much of that money went to musicians rather than labels is not clear.