The popular music-streaming service Spotify is reportedly close to closing a $100 million round of financing that would value that company at slightly more than $3 billion, according to a report from the Wall Street Journal. That's a $1 billion dollar drop from its much-rumored valuation from May of this year.

While the Journal did not name the majority of prospective investors, the report claimed that the new capital would come from multiple investors, including Goldman Sachs.

Co-founded in 2006 by CEO Daniel Ek in Stockholm, Sweden, before relocating corporate headquarters to London, Spotify Ltd. has raised already capital from outside investors even before the core music-streaming application was first launched in 2008.

Six months ago, The New York Times' Dealbook section reported that Spotify was aiming for an additional $200 million in capital for a $4 billion valuation, leading critics to wonder where the company’s additional $1 billion in venture capital went.

Prominent venture capital firms such as Kleiner Perkins Caufield & Byers, Accel Partners and others have invested about $189 million in Spotify in the company’s previous rounds of financing.

As a music service, Spotify has won near universe critical praise from audiophiles and smartphone app collectors alike. The freemium application, which offers a free ad-supported service and a $10 monthly subscription that offers unlimited, ad-free music streaming and integration with the user’s smartphone, has over 15 million active users and 4 million paying subscribers. Prior to its lowered valuation, the company has said that it could make about $900 million in revenue this year alone.

In a funding round last year Spotify reached a $1 billion valuation after raising about $100 million from venture capital firm Kleiner Perkins Caufield & Byers and Russian investment firm DST Global.

The company’s financial performance suffered in 2011. While revenue increased $244 million, a 151 percent from 2010's level, losses widened 60 percent to $59 million for the same period, PrivCo, a company that sells data on non-publicly traded companies, told CNET.

The Wall Street Journal’s report cited diminished expectations for Spotify’s initial public offering following the erratic post-IPO behavior of other much-hyped internet startups like Groupon (Nasdaq: GRPN) and Zynga (Nasdaq: ZNGA). The startup will also soon face increasing competition from companies historically entrenched in digital music such as Apple (Nasdaq: AAPL) and Microsoft (Nasdaq: MSFT), both of which have revealed plans to introduce their own music-streaming services to rival Spotify’s.

Last month, PrivCo called Spotify's business model "unsustainable,” according to CNET, telling its clients that "something must change soon on Spotify's business model if the company is to survive."