Spotify, the music streaming Internet phenomenon, has signed a deal with Sweden’s largest mobile operator TeliaSonera but admits it is still working on a business model that will generate healthy profits. Following recent pushes into the mobile space via applications on Apple’s App Store and Google’s Android platform, the digital music service has scored a two-year deal with Telia to work on services for computers, mobiles and, eventually, TV. Mobile music services will be launched from Telia in the next few months.
Spotify has more than 5.5 million users globally and is funded by paid subscriptions and advertising. Recent reports highlighted the company is also in negotiations with UK mobile operators to bring a mobile version of its service to handsets. However, in a post on the company’s blog, co-founder Daniel Ek (pictured) warned that Spotify “has a long way to go” and was still trying to avoid joining many other start-ups in what he called the “digital music graveyard.” A Guardian report digs deeper, noting that, despite the buzz, the company’s finances remain unclear: the cost of streaming is likely to stretch into the millions of pounds, a problem that has hurt many similar services before. Spotify has raised more than EUR71 million from investors, and has, The Guardian claims, attempted to mitigate its expenses through a number of factors, including a reliance on peer-to-peer technology and other ways of saving bandwidth. The report goes on to suggest the company may have also defrayed some costs owed to record labels by giving them a stake in the company, noting that all parties have remained evasive over the details of any deal.