Spotify aims for $23bn valuation
Launched in 2008, Swedish music streaming site Spotify has filed to list on the New York Stock Exchange, with initial share prices indicating a good result could boost the company’s value to $23bn (£16.7bn).
The company is also taking an unconventional approach to the listing, with shares being offered directly on the NYSE. This decision was made so Spotify's early investors and employees can sell their stakes, with the company not looking to raise new funding. Mark Mulligan, a UK-based music industry analyst at MIDiA Research, said: "It's about a company that is letting its investors get their returns, so it can move on to the next stage of its career."
As a business the company has struggled to make a profit, despite boasting an active user base in excess of 159 million globally. It nearest competitor, Apple music, has 36 million active users but doesn’t offer free advertising-based accounts similar to the ones which represent a large fraction of Spotify’s user base. The business has had to continually look for investment to ensure both good growth and the ability to pay its growing royalties bill. To date, Spotify claims to have paid more than €8bn in royalties to artists, music labels, and publishers.
In its filing, Spotify says it aims to "unlock the potential of human creativity by giving a million creative artists the opportunity to live off their art and billions of fans the opportunity to enjoy and be inspired by these creators."
"With our ad-supported service, we believe there is a large opportunity to grow users and gain market share from traditional terrestrial radio," it said. It will be interesting to see if investors use this opportunity to exit, or if they too buy into the potential future of the platform.