Swedish music service Spotify the latest internet company to get swept up in the current dotcom bubble.

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Swedish music streaming website Spotify, legally offering instant access to millions of tracks, is now being valued it at stunning one billion dollars (£616 million). The company -- launched in October 2008 -- is reported to be seeking around 100 million dollars from Facebook investor Digital Sky Technologies (DST) and Silicon Valley firm Kleiner Perkins for a combined 10 percent stake.

"The price tag is the latest in a flurry of valuations for internet companies, which has sparked comparisons to the dotcom bubble a decade ago", a report by the AP newswire said, pointing out that social networking site Facebook was valued at 50 billion dollars last month while Twitter was reported to be worth up to 10 billion dollars.

The digital music market is set to be shaken up as soon as this summer as Apple, Google and Spotify race to deliver new services that labels warily hope may reverse a decade of declining revenues, the Financial Times said. A deal with DST and Kleiner Perkins would "put Spotify in an elite group of European internet companies to achieve a billion-dollar valuation, in spite of still being lossmaking".

The funds will help it to challenge Apple's iTunes as the dominant retailer of music online and to launch new services, people familiar with its strategy told the FT.

Spotify is a Swedish music streaming service offering unlimited streaming of selected music from a range of major and independent record labels including Sony, EMI, Warner Music Group and Universal. Launched in October 2008, the service has some ten million users as of September 15, 2010 and about 750,000 of these are paying members.