Spotify is celebrating its 12th birthday by going public, making it the latest tech company to file for an initial public offering after Snap Inc.
Debuting on the New York Stock Exchange, Spotify shares will finally become publicly traded. Becoming a publicly traded company is a major move for a company that, unlike its streaming-based rivals such as Netflix, has never been particularly profitable.
Spotify began as a relatively small Swedish startup music platform that people use to stream music. Now, the service has 71 million paying customers, making it the most successful music streaming company to date, surpassing Apple Music, Google Play Music, and Tidal among others.
What Changes Does This Spotify IPO Bring?
Becoming publicly traded involves a lot of changes for investors, artists, and regular customers as it will affect the platform's dealings with its collaborators and clients. Investors will most likely weigh the company's potential for growth, considering its 12-year streak of failing to turn a profit. Spotify's costs — including artist and record label fees — are greater than its revenue, although this gap is apparently narrowing, The Guardian notes.
Better Deals For Independent Artists
For artists, particularly smaller, independent acts, this serves as a chance to enter into beneficial agreements with the service even if they are not associated with a major music label.
Spotify has a great relationship with major music labels, but this will change. Big labels provide 87 percent of total streams while the company provides these labels billions in revenue.
Citing people familiar with Spotify's plans, Recode reports that the idea isn't to cut out massive labels or compete with them by handing out recording deals to musical acts. However, the company also envisions a future where independent acts will forego big labels and work with Spotify directly for distribution. Should that happen, Spotify will be able to command better terms from these artists and labels than it gets from, say, Universal Music.
Exclusive Content On The Way?
Most important of all is how the Spotify IPO will affect regular consumers — the listeners. The service already hosts podcasts and radio shows, and it's easy to imagine Spotify will eventually venture into more exclusive content, akin to Taylor Swift's Spotify-only music video for her newest single, "Delicate."
Furthermore, MIDia Research's Mark Mulligan believes Spotify can also bolster original content by bringing in music documentaries, artist information, special music features, news articles, and even comedy. If Spotify chooses to take this route, it will mimic the offerings of Apple Music and Tidal. Both services feature exclusive content from artists including music videos and interviews.
Whatever happens, CEO Daniel Ek is confident about his company's future.
"Sometimes we succeed, sometimes we stumble. The constant is that we believe we are still early in our journey and we have room to learn and grow."
