Like most people, I really enjoy listening to music, discovering new music, and making playlists for some of my favorite people in my life.
I’m sure you’ve encountered at least one person who has asked if you use Spotify. Music connects people. It’s something that almost always allows us to find common ground with friends, acquaintances, or complete strangers.
Admittedly, it’s one of my favorite things to find out about a person when I first meet them. It’s my way of getting to know them, and if somehow we share the same music interests, it makes it a lot easier to get to know their other interests.
What Does Spotify Have to Offer?
Spotify has been connecting people since October 7, 2008, when its music, podcast, and video streaming service launched.
It’s a freemium service — it lets users choose between its free or premium service.
The free service gives users basic streaming features that include the occasional advertisement.
On the other hand, the premium service includes the basic features of the free service as well as additional features like improved streaming quality, offline music downloads, and no advertisements. Obviously, no advertisements is the real selling point of the premium service.
Spotify has grown into a huge company with influence throughout the world. It’s available in most of Europe, the Americas, Australia, New Zealand, and parts of Asia.
Its streaming service is available on mobile devices and computers. Spotify integrates with users’ social media accounts, giving people the option to share with their friends an artist, album, song, or playlist that they can’t get enough of.
Connecting people with other people… through music.
Spotify Wants to Avoid an IPO
Spotify Ltd. is ready to go public, but it wants to take a less traditional route than most private companies.
Private companies usually go public with two main objectives in mind: earning capital to fund business growth, and making the company’s presence known to investors so they can buy shares.
Spotify isn’t interested in those two objectives. As of 2017, it has 140 million subscribers and 60 million active users. It’s well known and isn’t interested in raising more equity.
A direct listing would also mean Spotify would get to avoid underwriting fees and restrictions on stock sales by current owners, in addition to not having to dilute holdings of executives and investors.
When the news came out that Spotify was planning to bypass a traditional share sale and list directly on the New York Stock Exchange, U.S. regulators weren’t too happy with the music company’s plans.
Senior Spotify executives met with U.S. Securities and Exchange Commission (SEC) officials last month. The SEC wanted to get more details and discuss Spotify’s plan to skip an initial public offering.
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Preparing to Go Public
Spotify has gone through its fair share of funding…
Two years ago, in April 2015, Spotify started another round of fundraising with the goal of earning $400 million, which would value the company at $8.4 million.
Three months later, in June 2015, the round of funding ended and Spotify ended up earning $526 million — giving the company a value of $8.53 billion.
The company has raised more than $1 billion in equity and has received a $1 billion convertible loan from investors led by TPG last March.
Spotify’s direct listing is expected to happen sometime late this year or in early 2018 on the New York Stock Exchange. The music streaming company would be one of the largest consumer technology providers to go public in recent years.
It will also be the first company to direct list on the New York Stock Exchange.
The SEC has been contemplating a rule change at the New York Stock Exchange that would allow listings to go forward a lot quicker.
It’s been a growing trend that tech startups decide to stay private to avoid underwriting and compliance costs. Staying private also allows them to avoid the daily volatility that can afflict money-losing companies in the public market.
SEC chairman Jay Clayton wants to increase the number of new U.S. listings, and he’s been very open about those feelings. Clayton has said there’s been a two-decade decline in the number of public companies, and that has been “a serious issue for our markets and country.”
He’s in favor of creating some type of policy that would allow companies to go public a lot sooner.
Spotify has become a market leader in music streaming. The company reported $3.45 billion in sales for 2016, up 52% from the previous year.
Other streaming music companies have found it very difficult to stay afloat.
Pandora and SoundCloud have been struggling to stay in competition with Spotify. Even Apple’s music streaming service Apple Music is a very distant second.
Spotify has a strong hold on the market and is able to offer a product and service that is simple to use and easily integrated into everyday life. Going public is the logical next step and has the potential to benefit investors since it dominates a market that will always be present.
Throughout history, music has always been an important part of societies and cultures, and it will continue to be so.
I know I couldn’t imagine my life without music. Spotify gives users the ability to stream and share the music that they love. And right now, no company has been able to capture the music industry as much as Spotify has.
Until next time,
Monica Savaglia
Wealth Daily
