Why Spotify is worth more than $8.5 billion, explained in one chart

Spotify raised $US526 million at a $US8.53 billion valuation, The Wall Street Journal reported Tuesday. That gives the music streaming service more than double the valuation of its rival Pandora, and a good chunk of capital to prepare for mounting competition from the likes of Apple, Google, and Amazon.

Spotify’s growth has been phenomenal over the past 12 months. As seen in the chart below, put together by BI Intelligence, Spotify now has 20 million paid subscribers, which is more than 25% of its total 75 million userbase. By comparison, Spotify “only” had 10 million paying subscribers and 40 million total users in May 2014. That’s on average one new paid subscriber every three seconds in the past 12 months, according to Spotify.

To differentiate itself from competitors, Spotify has also added a video and podcast feature last month. Early launch partners include ABC, BBC, ESPN, and Comedy Central.

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