Coca-Cola In Talks To Buy Spotify Stake
Coca-Cola is in talks to buy a stake in fast-growing digital music company Spotify, I have learned.
The Atlanta-based soft drinks giant is in discussions about acquiring a shareholding worth about $10m (£6.2m) in Spotify, which is in the process of raising funds expected to value the company at roughly $4bn (£2.5bn).
At that valuation, a $10m investment would give Coca-Cola a negligible stake in Spotify.
The discussions between Coca-Cola and Spotify are not yet complete but are likely to be in the next few weeks, according to people close to the beverages group.
Assuming the talks do result in a deal, the acquisition of a stake in Spotify would cement a partnership struck in April through which the two companies collaborate across a series of digital music projects.
It would also underline the growing trend for major consumer brands to acquire shareholdings in digital ventures. In August, Starbucks invested $25m (£16m) in Square, the mobile payments company set up by Jack Dorsey, co-founder of Twitter.
Under the terms of the deal reached between the two companies earlier this year, Spotify will provide the underlying technology for Coca-Cola's music platforms around the world.
The drinks company is also integrating Spotify into its Facebook presence and timeline, in an attempt to tap into its Facebook audience of more than 40m fans.
Speaking in April, Spotify founder and chief executive Daniel Ek said: "Coca-Cola is the most recognised and respected brand in the world and we are proud to be their music partner.
"Spotify and Coca-Cola both believe that music, technology and creativity can connect people around the globe."
Joe Belliotti, a director at Coca-Cola, said: "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."
Spotify, which launched in Britain in October 2008, has more than 15m active users globally and more than 4m paying subscribers.
In the UK, customers pay up to £10 a month to allow them to play an unlimited number of songs from a library of music. Spotify then pays royalties to record labels for each song played.
The company has narrowed its losses in the UK in the last year, although it is unclear when its operation is likely to break even.
The latest Spotify fund-raising is being co-ordinated by Code Advisors, which specialises in raising money for technology companies.
Coca-Cola declined to comment, while Spotify could not be reached for comment.