Music streaming service Spotify may soon be the first blockbuster market debut of 2018. Last week, Spotify filed the papers to take its business public, but there are still a lot of moving parts surrounding the company’s turn to public trading. Here’s an overview of everything investors need to know.
The Details
Spotify already has such a large base of private shareholders that it is attempting a direct listing on the NYSE. In that respect, Spotify won’t technically be an IPO. Instead, its private shares and shareholders will simply transition to the public market. Spotify is the largest company to ever attempt a direct listing.
Other large private companies, including Uber and Airbnb, will be watching closely to see how well Spotify pulls off the direct listing. Direct listings may be preferable to the private shareholders of these companies because their ownership stakes will not be diluted.
A New Model
Unfortunately, the subscription music model has a long way to go to prove its viability. In 2016, Spotify reported a net loss of $581.4 million, more than double its 2015 losses.
Potential Roadblock
Spotify has repeatedly dealt with royalty disputes in recent years. In 2016, Spotify paid out more than $20 million in outstanding royalty fees to the National Music Publisher’s Association. Last year, Spotify paid a $43-million settlement to the estate of bassist Jaco Pastorius and two other small publishers. Spotify also has two other outstanding royalty-related lawsuits that were filed last year.
A Unique Situation
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