Coca-Cola Shows Support for Spotify

on Oct 12, 2012

**Coca-Cola Invests in Spotify’s Friendship**

On Friday 12 October The Times reported that Coca-Cola (NYSE:KO), the most valuable brand in the world, is in talks to buy a stake in the fast-growing digital music company Spotify. According to the newspaper the digital service is set to carry out an investment round that would value it at about $4 billion (£2.5 billion).
The Atlanta-based soft drinks giant is considering a $10 million (£6.2 million) investment, which would give it a negligible stake in Spotify but also strengthen the partnership between the two companies.

In April Spotify struck a deal to provide the technology behind Coca-Cola’s music websites and platforms. The drinks company also integrated Spotify’s services into its Facebook page, which currently has almost 53 million likes.
“At Coca-Cola we have long recognised the power of music to connect people around the world. As we step up our activation through Coca-Cola Music, we are excited by the innovative music technology platform created by Spotify and the opportunity to create a truly global music network. The potential for this partnership is limitless.” said Joe Belliotti, a Coca-Cola director.

**Spotify’s Financial Woes**
!m[The Music Service Plagued By High Costs and Low Premium Subscription Numbers](/uploads/story/567/thumbs/pic1_inline.png)The music service has more than 15 million active users and around 4 million paying subscribers but recently leaked financial figures showed that the company registered a loss of $59 million (£36.8 million) last year. With its high “costs of sales”, which include distribution costs, royalty fees and other expenses, Spotify needs to convince a bigger chunk of its users to sign up for its “unlimited” or “premium” services.

The company showed promising growth with an increase of 151 percent in revenue to $244.5 million (152.5 million) but its sales expenses also rose by 98 percent reaching $239 million (£149.08 million). Its personnel costs were very high as well rising close to $32 million (£20 million) in 2011 from only $11.6 million (£7.22 million) the previous year.

Last year Spotify managed to raise $100 million (£62.36 million) from an investment round led by the Russian venture capital firm Digital Sky Technologies, which had previously invested in Groupon, Zynga and Facebook
**Spotify Partners With Samsung**
Through an official application which can be installed via Samsung’s Smart Hub interface, the music streaming service will become available on all Samsung Smart TVs across Europe. This is yet another attempt by Spotify to increase its paid subscription base as the app will be limited for use to only premium account holders, who are paying £9.99 per month.
“Great music demands great sound quality. With the new Spotify app, people no longer need to fuss about connecting cables from their laptop or tablet to hi-fi equipment. Spotify for Samsung Smart TVs and home theatre systems brings Spotify’s huge music library directly into your living room.” said Dan Saunders, Director of Content Services for Samsung Electronics Europe.
Starting next week 2112 E-Smart TVs will have Spotify available for installation – the rest of Samsung’s Smart TVs, blu-ray players and home theatre systems are expected to receive the service in the near future.


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