Dateline—Right Now On The Internet: green-logo’ed music streaming service Spotify has officially filed to go public. (Now that that’s out of the way: here’s where I attempt to understand what “going public” means in the context of the music streaming world…)
Spotify has filed the relevant documents with the SEC, so the Stockholm-based company will soon be traded on the New York Stock Exchange, and people will also be able to scrutinize the lucrative and yet simultaneously unprofitable business even more than labels and artists already are as a justifiable response to their own royalty concerns.
Supposedly the benefits of going public include stronger financials and the potential to court a diverse array of investors/owners, but co-founders (and as it turns out, primary shareholders) Daniel Ek and Martin Lorentzon are set to take things easy at the start of their bottom line, G-rated exposure. Spotify is actually going the unusual route of pursuing a “direct listing,” which means…
Hey. WAKE UP! I’m still explaining stuff.
…WHICH MEANS that no new stock will be issued, and all trading will take place between investors who own shares already. I don’t think that’s an abundance of entities. Per some Poindexters who know what they’re talking about on this subject, Ek has 37.3% voting power over the company, and Lorentzon has 43.1%. The major record labels also have preexisting stakes in the company, but only Sony’s at 5.7% is listed in the filing. (Can someone explain what the advantage is of going public if new investors are initially barred via that unorthodox IPO move? Is this all an ego thing?) Surely the company’s status as a direct listing will change at some point, though; and that’s when the cage will be lowered as a precursor to streaming Stone Cold Stunners all around.
Anyway, yeah. Blah, blah, blah. According to the filing, Spotify’s value may be as high as $23.4 billion. It had a net loss of $1.5 billion last year, which was up from $650 million the year prior. Look to the near future (possibly this month) for when the company officially hits the NYSE under the ticker symbol, “SPOT.”