So, Spotify’s long-awaited IPO is finally here, after the streaming giant filed last week. It could be the moment that seals its dominant position in music distribution, or maybe its first significant mis-step.
Either way, the float looks set to be as idiosyncratic as the company itself. In choosing to have a private listing, co-founder, CEO and chairman Daniel Ek is clearly trying to protect Spotify from having bankers tell it what to do, although it does mean that the market will effectively set the initial share price. That in itself could have a major impact on the worth of the major and indie labels' equity stakes, plus the money eventually passed on to rights-holders.
But it’s rare to see any pitch to investors couched in such romantic language as Daniel Ek’s letter to potential shareholders found within the filing.
He talks of “passion”, “dreams”, “caring deeply”, even of “a mission to unlock the potential of human creativity” and “build a better world”.
At times, it makes Spotify sound more like a yoga retreat or a new religion than a multi-billion dollar business (albeit a loss-making one).
Beautiful and sincere sentiments, no doubt, that should play well with small investors. But – last time I checked – the New York Stock Exchange was rather more interested in cold hard cash than warm fuzzy feelings.
Ek’s sales pitch goes straight for the heart but, given that a large chunk of the music business’ future rests on the success of this float, you wonder if he’d have been better off aiming for the wallet.
After all, even profit-making tech companies have not always found Wall Street to be the most understanding environment.
And, while insulating Spotify from financiers’ direct influence is a sensible move, the IPO has to be the mechanism that sends Spotify into profit without putting the music biz back into recession.
It’s great that Spotify still dares to dream. But this is reality. Let’s hope the two prove to be compatible.
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