San Francisco-based 8tracks might be overshadowed by big names like Pandora and Spotify, but the Internet radio service continues to grow quietly. The company announced Thursday it secured a $2.5 million debt financing from Silicon Valley Bank. The amount consists of $2 million-line of credit against receivables and $500,000 of "straight venture debt," according to CEO David Porter. The deal brings 8tracks' total funding to $3 million.
The influx of money allows 8tracks to further build its engineering and product teams. Already on board is vp of product John Maples, a former product executive at music subscription service Rhapsody. Porter says 8tracks has added two sales people in Los Angeles and New York and plans to hire another in San Francisco. The company currently has 32 employees and claims to have reached profitability in 2012.
The company also announced new partnerships with digital distributor TuneCore, classical distributor Naxos, Black Hole Recordings and Armada Records, the record label of world-famous DJ Armand Van Buuren, adding about 2.5 million tracks to 8tracks’ library of licensed tracks. About 6.5 million tracks were added in April through partnerships with INgrooves, CD Baby, Dim Mak and DashGo. A larger, independent-focused catalog -- now at 9 million songs -- means 8tracks playlist creators can create better playlists from mobile devices.
Online radio is often overshadowed by subscription services like Spotify, which announced Wednesday has surpassed 20 million global subscribers, and Apple Music, the technology giant's first foray into paid, on-demand music. Subscription services generate more revenue than Internet radio, but Internet radio has more listeners. Pandora alone has over 79 million monthly listeners in the first quarter.
"There's a large swath of consumers that won't pay or will pay very little," says Porter in explaining 8tracks place in the digital music marketplace. According to a survey by Edison Research and Triton Digital, Internet radio services are the most popular streaming music brands of Americans 12 and over: 45 percent have used Pandora, while 17 percent and 16 percent have used iHeartRadio and iTunes Radio, respectively. Spotify is fourth, at 13 percent.
This large swath of potential customers is opportunity for smaller services like 8tracks. "Most of the people most of the time -- assuming there's good programming -- will opt for radio."