Photo: Ellis Hamburger, Business Insider
Spotify is trying to raise another round of funding at a $3.5 billion valuation, we just reported.So far, Silicon Valley moneymen are sceptical, wondering why they should give Spotify such a high valuation.
Spotify doesn’t own its content or even have exclusive rights to it, and a company in a similar position, Hulu, was going to be sold for just $4 billion last fall.
So what is Spotify telling investors?
We’re not privvy to the details of those conversations, but a Spotify executive did recently lay out the bull’s case for the company for us.
Here’s what he told us:
- Spotify is seeing “extraordinary and unprecedented” growth – both in user adoption of its free products, and in conversion from those free products to its paid subscriptions.
- Spotify is still introducing premium options in new geographic markets: “As Spotify introduces other premium offerings on more platforms in more countries I see no reason to believe that conversions won’t increase.”
- Spotify benefits from network effects: “the best possible social sharing experience will occur on the largest social music platform, currently Spotify. Until that changes (and Apple of course could be a threat in this regard) then by most new digital music users will gravitate towards Spotify where their friends’ have chosen to share their music collections.”