Spotify's IPO - A Bright Spot for Artists and Fans

 

By Jack Sharkey, April 5, 2018

 

At the close of its first day of public trading yesterday, Spotify was carrying a valuation of approximately $30 billion, settling at $149.01 per share – the most ever for a direct listing (not bank underwritten). The financial documents that accompanied Spotify’s IPO disclosed that Spotify maintains 159 million active users and 71 million subscribers per month (globally). In 2017 there were 35 million paid subscribers and in 2014 there were 7.7 million – this exponential growth spurred $4 billion in revenue last year.

 

But besides the windfall for the company and its investors, the real good news may be for the artists who provide Spotify with its content. Spotify co-founder and CEO Daniel Ek has stated his goal is to build a platform that will provide a living for 1 million artists. Josh Collum, co-founder of the Nashville-based music licensing company Sorted Noise said yesterday he is encouraged by that goal. “That, to me, is the number that’s impressive. It’s big and it’s a bold number, but it tells me that [Spotify’s] mission is to support artists.” Collum’s Sorted Noise partner, Nashville-based singer-songwriter Perrin Lamb earned in excess of $50,000 from approximately 10 million Spotify streams a few years ago. With the Spotify’s new valuation and war chest, that number – although already impressive – should only go up for other artists in the future.

 

While the rest of the US music industry is still trying to find firm footing in the new digital wild west, Spotify has become an important player. For the first time since 1999 (not quite coincidentally the year Napster launched) US music industry revenue has grown for two consecutive years. The vinyl revolution notwithstanding, on-demand streaming was the significant factor in that growth.

 

Despite the big revenue numbers, Spotify listed an operating loss of $461 million in 2017, and was also the subject of lawsuits from artists and publishers who claimed Spotify did not properly license their music. Several of these lawsuits resulted in large and expensive settlements from Spotify. But most in the industry are taking solace that this is all uncharted territory and as things settle out there is going to be more than enough revenue to go around for everyone on both sides.

 

In the midst of all of the rosy news, CEO Daniel Ek did sound a word of caution on Spotify’s website yesterday. “I have no doubt that there will be ups and downs as we continue to innovate and establish new capabilities. We will be working on trying to build, plan and imagine for the long term. 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.”

 

Let’s hope the future remains bright for all of the artists who make the music we love and for the people who provide that music to us – regardless of how it gets here.

 

 Direct streaming to the LS50W is available via Spotify Connect for Spotify subscribers.

Portions of this story were sourced from USA Today/The Tennessean.

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