Streaming Music Site, Spotify, Has Major Music Label Ownership

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Documents Reveal Major Labels Own Part of Spotify

Some of the world's largest music companies are among the owners of Swedish streaming music service Spotify, with the record labels buying their shares for a pittance, according to financial documents obtained by Computer Sweden.

When it launched in October 2008, Spotify publicized music rights deals with Sony BMG Music, Universal Music, Warner Music, EMI and Merlin.

Behind the scenes, these five music companies were at that time made shareholders in Spotify. Combined, the record companies paid just €8,800 for an 18 percent share of Spotify's stock, according to financial filings obtained by Computer Sweden from the Trade Register of Luxembourg, where Spotify is registered. Investments made this July, nine months later, have put Spotify's market value at €1.98 billion.

Spotify has attracted four million Europeans users since its launch last October, half of them Britons. A U.S. launch is planned for this fall. A key element in the rapid growth are the deals it has made with several large record companies, which have granted Spotify users access to millions of songs from the labels' extensive catalogues.

The Financial Times recently reported that Spotify is about to close a round of investments from Hong-Kong based business tycoon Li Ka-shing and British venture capitalists Wellington Partners. The Luxembourg filings show that the Wellington investment closed on July 10, when a Wellington fund bought shares equivalent to 3.8 percent of Spotify for €6.5 million. This investment confirms the €2 billion euro market value.

Li Ka-shing is set to invest US$30 million in Spotify, according to Financial Times. That would give Mr. Ka-shing approximately 10 percent of the company.

Previous investors in Spotify include nordic venture capitalists Northzone Ventures and Creandum, which as of July 10 owns 11.9 percent and 5.9 percent of Spotify's shares respectively. The majority of the stock is controlled by Spotify founders Martin Lorentzon and Daniel Ek by proxy of companies registered in Cyprus.

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