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Spotify is going public despite losses of $1.5 billion in 2017

By Polycount ยท 20 replies
Feb 28, 2018
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  1. Popular music streaming service Spotify is looking to go public according to a recent CNBC report. Though this news may come as a surprise to some, the streaming service has grown substantially since its launch back in 2006.

    Indeed, as of December 2017, Spotify boasted a whopping 71 million paid subscribers and more than 159 million ad-monetized monthly active users (MAUs). The company claims growth is strong with a 46 percent increase in subscribers year-over-year while MAU growth sits at around 29 percent.

    Interestingly, Spotify seems to be pursuing a slightly different method of going public than most other companies. Instead of hiring underwriters to set an initial share price, Spotify plans to simply list their shares directly on the New York Stock Exchange (NYSE) and begin trading. The company elaborates on this process in the following excerpt from their full IPO filing:

    As this listing is taking place via a novel process that is not an underwritten initial public offering, there will be no book building process and no price at which underwriters initially sold shares to the public to help inform efficient price discovery with respect to the opening trades on the NYSE.

    Pursuant to NYSE Rules, we have engaged Morgan Stanley & Co. LLC ("Morgan Stanley") as a financial advisor to be available to consult with the designated market maker (the "DMM") in setting the opening public price of our ordinary shares on the NYSE.

    Based on information provided by the NYSE, the opening public price of our ordinary shares on the NYSE will be determined by buy and sell orders collected by the NYSE from broker-dealers and the NYSE is where buy orders can be matched with sell orders at a single price.

    Despite Spotify's growing subscriber and revenue numbers, they also appear to be bleeding money at an alarming rate. As stated in their F1 filing, the company lost roughly $1.5 billion during 2017 - a sizable loss increase compared to their 2016 losses which amounted to roughly $662 million.

    Regardless, Spotify seems confident in their business model and their future. "We set out to reimagine the music industry and to provide a better way for both artists and consumers to benefit from the digital transformation of the music industry," the company's IPO filing reads. "Spotify was founded on the belief that music is universal and that streaming is a more robust and seamless access model that benefits both artists and music fans."

    Permalink to story.

  2. darkzelda

    darkzelda TS Evangelist Posts: 360   +153

    Spotify is loosing money? Hard to believe.
  3. Evernessince

    Evernessince TS Evangelist Posts: 3,999   +3,483

    Indeed, what the heck are they spending all their money on? 1.5 billion in losses. Are music producers charging too much?
    Theinsanegamer, H3llion and p51d007 like this.
  4. JaredTheDragon

    JaredTheDragon TS Guru Posts: 583   +383

    They're losing money because they're lying about their revenue and paying... whoever. It's the same with all of these garbage services.
    Theinsanegamer, EClyde and p51d007 like this.
  5. EClyde

    EClyde TS Evangelist Posts: 1,833   +678

    This kinda music service is over rated
  6. H3llion

    H3llion TechSpot Paladin Posts: 1,694   +438

    How is Spotify a garbage service? You still stuck in the past?
  7. H3llion

    H3llion TechSpot Paladin Posts: 1,694   +438

    Actually it is not. Youtube is not a substitute, radio is boring and storing music is a hassle. Spotify, Apple Music, Soundcloud are all great service for ease-of-use and hassle free listening. Same goes for Netflix. It's reducing piracy.
    andrewdoyle88 likes this.
  8. I agree with you that music streaming is the future for most consumers but the issue seems to be profitability. Apple has only half the numbers Spotify does and is probably propped up by Apple's massive warchest. Spotify is hemorrhaging money, apparently. And Soundcloud was already bailed out at the last minute.
  9. You still stuck in the "It says NEW and IMPROVED!!, it must be better! (reaches for wallet)."?
    If you enjoy Spotify, by all means use it, personally I find "storing music" as you stated, no problem at all and have zero use for Spotify or Apple Music. Our views merely make us people with differing opinions and when it comes to music that is just fine.
  10. H3llion

    H3llion TechSpot Paladin Posts: 1,694   +438

    The general markup of sub 30 year olds are not storing music due it being a hassle to do so hence why Spotify, Apple Music, Netflix etc are services worth having. The benefits outweigh the negatives.

    Well it is indeed "NEW and IMPROVED!!". There is a reason why downloadable music and CDs have been going out of date. With data driven society where you have 4G/5G cloud storage everywhere, the need for storing anything is becoming more redundant each year.

    It's like saying, well I prefer to mail letters rather than sending an email. Just because it can be done and it is done does not mean its actually an efficient way to do it, I am not having a problem with storing music, I used to have 250k library before I touched Spotify and lived happily ever after, there are just too many pros (outside of lossless ofc, but audiophiles are a minority)..

    Anyway my point was directed at the "garbage services" comment which is just moronic. Like you said, to each their own. Technology is a liberating mechanism.
  11. H3llion

    H3llion TechSpot Paladin Posts: 1,694   +438

    Indeed, the current monetary system is not great for these services. However they have the users, it isn't a problem of lacking a userbase. They should be looking at implementing with musicians more tightly. For instance, concert/festivals/events ticket sales, merch /etc... **** ticketmaster etc...
  12. Theinsanegamer

    Theinsanegamer TS Evangelist Posts: 1,550   +1,767

    Data caps make storing music,videos more and more relevant each year. Not to mention, steamed media is often lower quality then stored media, and this can vary by carrier.
    senketsu likes this.
  13. EClyde

    EClyde TS Evangelist Posts: 1,833   +678

    Is it free?
  14. Evernessince

    Evernessince TS Evangelist Posts: 3,999   +3,483

    Data caps shouldn't even be a thing. I can understand throttling after a certain amount with phones and phones only but anywhere else is ridiculous. Data is not a finite resource, it can be copied indefinitely.
  15. H3llion

    H3llion TechSpot Paladin Posts: 1,694   +438

    Nor is storing music unless you pirate but that's a mute point. Spotify/Soundcloud are free if you don't mind ads among other things...
  16. EClyde

    EClyde TS Evangelist Posts: 1,833   +678

    That's False, guess which part
  17. Kashim

    Kashim TS Addict Posts: 100   +83

    They're losing money because they're most likely lying about every aspect of their business and paying their "executives" exorbitant amounts. So now they're taking it public so they can get even richer before the whole thing collapses.
  18. Kashim

    Kashim TS Addict Posts: 100   +83

    Oh and this thing launched in 2006, so in 12 years they haven't made it... but hey, 2018 is going to be the year!
  19. Kashim

    Kashim TS Addict Posts: 100   +83

    Storing music is a hassle??!! Yeah, my microSD card can only hold 50,000+ songs and my hard drive a few million. What a hassle! I must subscribe to one of these garbage services and keep paying them in perpetuity to avoid this hassle!!
  20. H3llion

    H3llion TechSpot Paladin Posts: 1,694   +438

    If I had to manage folders, playlists and every time eject my SD card just to add something new to the library (or via USB) I would spend half of my time doing it. You still seem to forget the benefits of these services. I can log into my desktop and have all that music there, I can log into someone else account and my playlists are there. Offline listing? No problem, sync up to 3,000 songs for offline use. I want to play music from a different computer in the office that the speakers are connected to? No problem! Discovering new music, having podcasts etc. I do not know ANYONE even tech savvy people (developers, network engineers, ux/ui designers in my office) who store music and download it all manually, we all have Spotify accounts and sharing, syncing is just easy.
  21. H3llion

    H3llion TechSpot Paladin Posts: 1,694   +438

    What is? Spotify and Soundcloud are free, storing music is also not free, you have to buy it unless you are ripping CDs which in that case, you still have spent money. Care to enlighten me?

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