Could Spotify 'IPO' (without an IPO) as early as September?

After two years of on-and-off negotiations, Spotify Ltd and the world's biggest record company have finally agreed to a licensing deal that paves the way for Spotify to go public and gives the music industry more flexibility in how new albums are streamed.

"Starting today, Universal artists can choose to release new albums on Premium for two weeks only, offering subscribers an earlier chance to explore the complete creative work, while the singles are available across Spotify for our listeners to enjoy". And as streaming became the dominant means of music consumption, UMG, like other labels, needed the service to convert more users of its controversial free tier into the subscribers that are fueling the recovery of the recorded-music business. "Spotify needs to reduce its split [of revenue that goes to labels] in order to have an IPO, and we get that", says a label source, "but why would we do a deal that's meaningfully worse?" For a company like Spotify with a valuation between $8 billion and $10 billion, avoiding those costs could save Spotify as much as $100 million, he added.

The "narrative" required to fire up investors isn't just that Spotify is reducing its royalties burden and inching toward profitability; it's one of confidence that it can survive and prosper in the long-term, against competition from the deepest-pocketed tech giants.

A normal IPO involves a company issuing shares of stock.




The companies did not disclose the financial terms of the new contract, but according to three people briefed on its terms, the deal allows Spotify to cut the royalties it pays for Universal's recordings to about 52 per cent, from about 55 per cent.

Going public isn't without risk for Spotify.

The ability to limit music to Spotify's paid tier may no longer be as valuable as it would have been a year ago, however. Is there then going to be tension between the label and the artist?

Find the streaming service's full announcement here.

(Copyright © 2015. All Rights Reserved.)
 
Recommended

Tyler Clinton Signs Contract with Major Modeling Company
Tyler, who landed a modelling contract with IMG, is the son of actor and musician Roger Clinton, Bill's half-brother. In the end, charges were not pressed.

Body-camera maker offers 1-year trial to police agencies
Axon said 41 of 69 major USA cities are using, or have made a decision to use, body-camera technology - and 36 have chosen Axon. Management will host a conference call tonight, April 5, 2017 at 6:00 p.m. (ET) to provide further information to investors.

'Mowgli girl' found living with monkeys in Indian jungle
The officer said: "When rescued she had unkempt nails and hair and there were wounds all over her body". The girl, who was discovered by an officer on a routine patrol, could not speak or understand language.

Pence Secret Service agent reprimanded for alleged hotel meet-up with prostitute
The agency says it takes allegations of criminal activity very seriously and is exploring a range of disciplinary actions. The representative spoke on the condition of anonymity to discuss details of the incident beyond a public statement .

Fed minutes reveal debate over inflation and Trump
USA stocks SPX, +0.56% pared gains after the release of the minutes, and the yields on government bonds TMUBMUSD10Y, +0.30% rose. Fed watchers were not expected such a granular discussion at the meeting, thinking it would wait until the May or June meeting.

Twitter Sues Homeland Security Over Attempt To Unmask 'Alt' Immigration Twitter Account
Majority were probably fake, but one of these "rogue" accounts has actually drawn the ire of the Trump administration. Customs and Border Protection Commissioner Kevin McCaleenan and two other agency officials.

Homeowner Arrested After Shooting Intruder Dead
Around 8 a.m., the man arrived at the residence and noticed a window screen was in the yard and someone had kicked in the door. The homeowner called the Sheriff's Office to report the incident and cooperated with the investigation, Lt.

EU Offers Pre-Brexit Trade Talks, Tough on Transition
However, Europe would not adopt a punitive approach as "Brexit in itself is already punitive enough". Populist voices in Britain have urged the Conservative government not to pay a penny.

USSF, USWNT ratify new CBA through 2021
Soccer will pay the NWSL salaries of full-time national team players, who in turn are committed to playing in the NWSL. The ratification of a new deal ends over a year of negotiations, including over 20 meetings in the past two months.

'Pink Star' diamond sells for record $71.2 million in bidding war
Its color, fancy pink, is the highest grade, and the purity of its crystals rank the diamond among the top 2% in the world. NY diamond cutter Isaac Wolf agreed to pay $ 83 million in 2013, but that deal later fell apart after the buyer defaulted.

Obama adviser Susan Rice denies targeting Trump team
Rice was routinely briefed on intelligence that was collected and then deemed relevant by USA spy agencies. The Daily Caller News Foundation Investigative Group published a report Monday quoting former U.S.

US House Speaker backs intelligence panel chair in Russian Federation probe
House Speaker Paul Ryan continued to express confidence in Nunes Tuesday, saying there is no need for the chairman to resign. In any case, the subject of Flynn - presumably the topic of Yates's testimony - is only one corner of this scandal.

Gael Clichy backs under-fire Arsenal boss Arsene Wenger
Arsenal's Laurent Koscielny is a doubt for Wednesday's London derby after being forced out of the City game at half-time. You could see that the team were touched on the confidence front and that the fluency in our game suffered.

Ryan confirms talks underway on health care bill
After the debacle in Congress over repealing and replacing the Affordable Care Act, it's time to stop calling it "Obamacare". "Many of them have already left, and many of them as you know have already given us their vote".

Retired Seahawk Marshawn Lynch visits Oakland Raiders
The Seahawks control Lynch's rights because he had two years remaining on his contract when he retired last offseason. If Lynch does indeed decide to comeback to the National Football League it will likely be to play for the Raiders .


More News

News
More News