Spotify to launch music service in China

Venture with Chinese media conglomerate Tom Group

COLOGNE, Germany -- Fast-growing Swedish Internet firm Spotify on Wednesday announced an agreement with Chinese media conglomerate Tom Group to bring Spotify's digital music-streaming service to China.

Tom Group, which already has partnerships with eBay and Skype in China, said it would work towards creating a localized version of Spotify to provide music over computers and mobile devices. Spotify's current European-based services are only available online.

By its own accounts, Tom Group's companies serve some 300 million Internet users and some 400 million mobile customers in Greater China.

The deal will mark Spotify's first venture outside Europe. The company, launched in October last year by founders Daniel Ek and Martin Lorentzon, offers users a virtually unlimited library of songs to stream online. The company uses advertising and a premium fee-based service to generate revenue. Estimates of Spotify's user base in Europe range from 3 million – 6 million.

Spotify is also looking to launch stateside and is reportedly close to securing $50 million in new capital from a series of investors including the charitable foundation of Hong Kong billionaire Li Ka-shing and venture capital firm Wellington Partners. The investment would value Spotify at $250 million.

The four big music labels -- Sony BMG, Warner Music, Universal and EMI have reportedly already acquired minority stakes in Spotify, as have investment groups Northzone Ventures and Creandum.

Reuters contributed to this report.