The Business On... Daniel Ek, Founder, Spotify

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Another internet billionaire?

It is beginning to look as if he may turn out to be. Last year, Spotify raised cash from investors in a financing round that valued it at $200m. Now it is said to be in talks to raise more money and this time the valuation is $1bn.

Goodness, does he run a hugely profitable business?

Not as such. Spotify's last accounts – admittedly for 2009 – reveal that it lost just shy of £17m on sales of alittle over £11m.

That's chicken feed. How can it be worth $1bn?

Who knows, other than to note that online valuations are in a bubble just now. Ek thinks Spotify is worth it, however – though he says he'll never sell, he told reporters recently that he expected Spotify to be worth "tens of billions" in a few years' time.

So who is this guy?

He's a Swedish entrepreneur. Though he turned 27 only last weekend, this is at least his third start-up business – he founded his first venture aged just 14. He's already sold on an online advertising company and an auction company, and has also worked in senior positions at a string of other businesses. Spotify is the big one, though.

Why is it such a big deal?

It appears to bridge the gap between online music pirates and the music industry. Ek founded Spotify in 2002 when Napster, the file-sharing music website got shut down. Its 7 million users can listen to millions of songs for free, as long as they're prepared to put up with some advertising, or pay £9.99 a month for music unsullied by commercial breaks. It's all legal and it ensures revenue is generated for the music majors.

If the idea is so brilliant how come it's not making money?

These things take time. Still, not everyone is convinced Ek has really struck gold. A move into the USmarket has been endlessly delayed while Spotify works to convince the American labels the model can work. And music executives point out that while they make money from Spotify (unlike the pirate sites), they make more from downloads.