Launched in 2008 in Stockholm, Sweden, by entrepreneurs Daniel Ek and Martin Lorentzon, Spotify is one of the most popular streaming music services, allowing free users to search or browse through music by artist, album, genre, playlist, or record label. There is also a paid “Premium” subscription for $9.99/month that removes advertisements and allows users to download music to listen to offline. Spotify is available for download for desktops, tablets, and mobile devices.

Spotify recently announced that they now have 60 million subscribers, 15 million of whom are paying for the service.

Controversies

Despite its popularity, Spotify has been plagued by negative publicity lately, mainly due to debates over their free advertising-supported service. This service allows people who are prepared to sit through occasional ads to listen to songs for free on demand.

Music labels—Spotify is in compliance with Sony, EMI, Warner Music Group, and Universal, among others—do not like the free service because it dismantles album sales, and pays less in royalties than the subscription does.

We all remember the Taylor Swift controversy. The pop star withdrew her entire catalog from the service, and in an interview with Time Magazine, argued for the “’inherent value placed on art,’” which she did not see happening on Spotify. Björk is another musician following in Swift’s footsteps, making her latest album Vulnicura unavailable to Spotify and other free music streaming services; however, her past music is still available on Spotify.

Seeking Funding

Announced in January, Spotify has hired investment firm The Goldman Sachs Group (GS - Analyst Report), Inc in order to raise $500 million in funding, a move that could delay the company’s highly anticipated IPO. This total funding amount could bring Spotify’s valuation to nearly $7 billion.

The company’s last round of funding was back in 2013, where they raised $250 million, and in 2012, Spotify raised $100 million. They have received investments from venture capital firms such as Technology Crossover Ventures, DST Global, and Kleiner Perkins Caufield & Byers.

Investors, take note: Spotify’s latest desired funding amount is their highest to date, making an IPO for this year almost unnecessary in some respects. Because of the company’s popularity, it is safe to assume they will raise every penny of that $500 million. There is no need to bother with the trouble of a stock market listing when large funding amounts are most likely guaranteed.

But don’t get too disappointed. This may very well be a strategic business move by Spotify.

With this new round of funding, Spotify is slowly edging out its competition; Pandora (P - Snapshot Report), Google Play (GOOGL), Rido, and now Apple (AAPL - Analyst Report) (thanks to a $3 billion deal with Beats that will incorporate the streaming service into its iTunes brand) are its biggest rivals.

The company also made a deal with Sony (SNE - Snapshot Report) where Spotify would replace Music Unlimited as the streaming outlet for Sony’s PlayStation Network. This massive deal covers 41 countries across North and South America, Asia, and Europe. Users will be offered trial access to Spotify’s premium version, as well as the ability to link existing accounts.

Final Thoughts

The Sony deal, coupled with strategic funding announcements, is a tacit acknowledgement of Spotify’s rapid growth and universal reach. Despite no official plans to go public, one can view these business moves as preparation for their inevitable IPO.

Spotify’s impressive valuation and high popularity will work in their favor when the day comes for the company to go public. Patience is a virtue, fellow investors, so sit back, relax, and wait out Spotify’s expected public future.