Thursday, October 11, 2012

Coca-Cola in Investment Talks With Spotify

Coca-Cola is in discussions with Spotify to make a small investment in the digital music company. Sources tell Billboard the two companies are in negotiations, but a deal is far from being reached. 

Sky News
 first reported on Thursday that the two companies are in discussions. Spotify previously announced a strategic partnership with Coke in April. 

A $10 million investment from Coke is one of several investment stakes being discussed, Billboard has learned. Spotify has been reported to be raising funding at a $4 billion valuation. A $10 million investment - or any investment in that ballpark - would represent a tiny fraction of equity in the company. 

Coca-Cola would most certainly be considered a strategic investor. Spotify has raised large sums of money from such venture capital firms as Kleiner Perkins Caufield & Byers, Founder Fund and Digital Sky Technologies.  

Multiple executives from Coca-Cola and Spotify declined's requests for comment. 

When Coca-Cola and Spotify announced a strategic partnership in April, several executives indicated that an investment might eventually be a part of the equation, as Coke looked for ways to associate itself with music discovery. The two companies held a hacker event in New York in mid-April where they commissioned computer programmers to create ideas for location-based apps, or "placelists," as they dubbed them. 

Wendy Clark, Coca-Cola's senior VP of integrated marketing communications capabilities, later told Billboard, "If you think about mobile and location and the role that mobile plays in our business, if we know where you are and that you're thirsty either for music or for a beverage, the ability to get to you and connect you with Coca-Cola is very powerful. It moves our business from point of sale to point of thirst, which is a whole new reality for us. To unpack layers around location and what that means for us is pretty amazing, to the degree that consumers want to share that location. Teenagers, for example, are much more comfortable with that - part of their lives is sharing their location. It would almost look ham-fisted if you didn't take advantage of that."

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