As Apple Launches Apple Music, Spotify Raises $526M in Funding

Apple is starting its new Apple Music streaming service on June 30, but Spotify has a healthy head start as Apple enters the market.

Spotify, Apple Music, music streaming service, Pandora, antitrust, attorneys general,

The online music streaming market is an interesting place today as Apple prepares to enter the marketplace on June 30 with its new Apple Music offering.

On the heels of Apple's June 8 announcement, major music streaming competitor Spotify is getting $526 million in new funding and Apple was named in an antitrust probe by the attorneys general of two states who are looking into how Apple has conducted talks with record companies for music for its new service.

Spotify's latest funding round, which includes a $115 million investment from Nordic telecom operator TeliaSonera AB, was revealed in a June 10 report by The Wall Street Journal that was based on information from unnamed sources. With the latest investment money, Spotify, one of the most popular players in the streaming music market along with Pandora, is valued at some $8.53 billion, a source told the paper. The remaining new funding came from several investment funds in Europe and the United States, the story continued.

The additional money will used to help fortify Spotify as it prepares for the new competition from Apple, which has a large user base and an established iTunes business that has been selling music by the song or album since 2003.

Spotify's premium music streaming accounts cost $9.99 per month for the first user, with a 50 percent discount for each additional family member who wants to use the service.

In a June 10 post on Spotify's blog, the company said that it had just reached the 20 million subscriber mark, barely a year after hitting the 10 million subscriber mark in May of 2014.

"What a difference a year makes!" the post stated, highlighting the addition of 10 million subscribers in just one year. "That's an average of one new subscriber every three seconds over the last year." The company claims about 75 million active users, including a majority who use its free ad-supported streaming services. Spotify, which is available in 58 countries, says it has about 30 million songs in its collection, with about 20,000 added daily.

The company has now paid out more than $3 billion in royalties to musical artists for the content it is providing to subscribers, including $300 million in the first three months of 2015, the post continued. "That's good for music, good for music fans … and good for music makers."

The new Spotify investment money comes just after June 9 reports that Apple is undergoing new antitrust probes from the state attorneys general in New York and Connecticut in connection with how Apple has been working with recording companies to make deals for its new Apple Music streaming service. The attorneys general are looking into whether recording companies were being pressured by Apple to sign on for Apple's music offering at the expense of competing services like Spotify, Pandora and others, according to reports.

Apple did not respond to an emailed inquiry from eWEEK about the investigations.

The latest inquiries follow a similar move in May when U.S. officials from the Federal Trade Commission began looking at whether Apple was using its market power and influence from its hugely successful iTunes store to try to shut out or harm competitors like Spotify and Pandora, according to an earlier eWEEK report. The earlier FTC antitrust inquiry is reportedly in its early stages and has included discussions about Apple's practices with executives from several record companies.

Apple Music will launch June 30 in 100 countries, including the United States, and will join the iTunes store to give music lovers a new way to find a huge catalog of music in one destination. The service will be compatible with iOS 8.4 on the iPhone, iPad and iPod Touch and as an update to iTunes on Mac computers to start, though Windows and Android versions will be available later in the fall.

Apple Music will be priced at $9.99 per month after a free 90-day trial, or up to six family members can share a membership for $14.99 per month, according to the company.

For months, reports said that Apple would be launching a new music streaming service as an update of the Beats Music service it acquired in May 2014 when it bought Beats Electronics, which also included the company's headphone business. That purchase was made with $2.6 billion in cash and $400 million in Apple stock. Beats Electronics, founded by rapper Dr. Dre and pop music producer Jimmy Iovine, makes high-end headphones and also operates Beats Music, the popular streaming radio service. Beats had launched Beats Music, a $9.99-a-month streaming music service for iOS, Android and Windows Phone devices, in January 2014, according to a previous eWEEK report.