The music streaming industry is one which has certainly made its mark on technology. However, it is also an industry that has been seeing a number of new companies looking to grab their fair share of the user base. A move which has meant the competition between these streaming services has increased dramatically. As most of these services make use of a monthly paid service, consumers do only have to wait a matter of weeks before jumping ship to another option which better suits their needs. In fact, the availability of options to choose from has grown even more now with the reports which came through early today confirming that SoundCloud has started their own subscription service.
One company who has carved out what many believe to be the leading position in the market is Spotify. In fact, it was only a couple of weeks ago when the company announced that they now had as many as 30 million subscribers on their books, which highlights a growth of about ten million per year, over the last two years. Although impressive, this does not mean that Spotify is immune to the growing levels of competition in the market and as a means of mitigating the rise of competition, it is now being reported that Spotify has raised $1 billion in new debt.
The confirmation comes from a report out of the Wall Street Journal which highlights that Spotify has agreed terms to raise the $1 billion in debt and is said to be largely coming from backers including TPG Capital and Dragoneer. According to the details, this is ‘convertible debt’, which essentially means it is debt which can be converted into stock at a later time. Further which, the report details that this convertible debt can be converted into stock at a discounted price, cheaper than the stock would cost to buy at the same time. From Spotify’s perspective, the logic is that such a move will allow for them to generate finance without having to worry about its stock price being reduced, which can be an issue with raising equity instead. According to the report, while the terms have been agreed and signed, the deal is expected to be fully closed by the end of the week.