After its first day on the New York Stock Exchange, the music streaming service was valued at $26.5 billion, putting it in the company of firms like GM, reports The New York Times:
“For the music business, Spotify’s listing on the Big Board symbolized the ascent of streaming as the new dominant format. It also represented some rare good news for an industry deeply affected by technological change. Buoyed by subscriptions from services like Spotify and Apple Music, record labels have begun to have significant revenue growth for the first time in nearly two decades, drawing attention from investors.”
The Millennial’s guide to Spotify
So what does Spotify’s going public really mean for musicians and listeners? That’s the question sought answered by Quartz’ Amy X Wang. Millennials haven’t shown this much interest in an IPO since Snapchat went public a year ago, she reports: “The direct listing doesn’t give Spotify more money, so users won’t suddenly see a boom in new features.” But it will cement its position as market leader and keep the keep the free tier. A Spotify IPO is good news for musicians, as “major record labels all have equity in the company and stand to make billions of dollars from the IPO if it’s successful, and they have promised, albeit vaguely, to share that windfall with their artists.”
A word from the founder
In a blog post, Spotify CEO Daniel Ek said: “Spotify is not raising capital, and our shareholders and employees have been free to buy and sell our stock for years. So while tomorrow puts us on a bigger stage, it doesn’t change who we are, what we are about, or how we operate,” reports Music Business Worldwide, adding,
“[…] our focus isn’t on the initial splash. Instead, we will be working on trying to build, plan, and imagine for the long term.
The Spotify story in charts
Quartz regales us with the story of the company’s humble beginnings when, back in 2008, “a dozen people gathered in a tiny office in Stockholm, Sweden, and built something that would first shatter, then save, and ultimately rebuild music.” The article talks about how the company is taking a risk as it is going public through a direct listing rather than a traditional IPO. It also discusses its inability to turn a profit putting investors in a careful mode. However, as Spotify has also become a record label, a discovery platform and a hit-making machine and community in its own regard, Quartz has gathered some simple charts showing how the Swedish juggernaut came to dominate the music industry.
Barry McCarthy: The brain behind the listing
It was Spotify’s CFO Barry McCarthy who pushed for this week’s direct listing, reports Theodore Schleifer of Recode in a profile. He thinks the move could change life for Wall Street and for big tech startups:
“If the direct listing works, it could pave the way for other tech startups to follow suit. That could potentially cut out Wall Street banks and their clients from a lucrative revenue stream, and would roil the financial services industry.
But people who know McCarthy say he does not care about the broader implications of his plan — he isn’t motivated by some ideological crusade to stick it to Wall Street, nor by some high-minded attempt to chart a new future for the technology sector.”