As NPR has reported, Spotify is not entering the market through an initial public offering, but will simply list its shares on the NYSE, saving the company an estimated $300 million in the fees usually associated with going public.
Spotify was launched in Stockholm in 2006, by Daniel Ek, now its CEO, and Martin Lorentzon, its director. It wasn’t the first “on-demand” streaming service — that distinction is Rhapsody’s, launched in 2001 — but it was the first to gain significant traction with consumers. According to its filing, Spotify is now used in 61 countries by 159 million people a month, 71 million of whom pay for the service.
Despite the fact that most of its users don’t pay, the 71 million who do generate 90 percent of the company’s revenue, according to the filing. But, like many tech companies that focus on acquiring users over generating money, it has yet to turn a profit — last year alone, the company made $4.98 billion, but lost $1.5 billion.
Despite its own questionable fiscal health, the company is given a lot of credit for turning around the fortunes of the recorded music industry. Most of the money Spotify makes goes right back into the source of the music it distributes to its customers. Of the nearly $5 billion is made last year, $3.95 billion went to pay for the music it streamed.
That money has been a lifeline for the recorded music business, which went through a long period of contraction, from 1999 through 2014, losing 40 percent of its revenues. In 2016, streaming added $1 billion in revenues to the global recorded music industry.