According to Bloomberg Business, five individuals presumably familiar with Spotify have revealed that the online streaming giant plans to go public in the second half of 2017.
Despite its popularity as the largest streaming service in the world which brought in $2.2 billion in revenue last year, the company has been slipping into the red due to the expenses to the record labels which totaled $1.8 billion in revenue last year – over 80% of their revenue. While the majors understandably have the largest slice of the pie (55% of total Spotify sales) music publishers also take substantial cuts of that 1.8 billion as well. Spotify currently accounts for over 10% of the labels’ revenue but that number is expected to continue growing at a frantic pace per another familiar source.
Spotify has currently set its valuation at $8 billion having raised $1 billion in funding at that valuation back in March. Investors in that round were given the option of converting their stakes into shares at 20% of the eventual IPO price making it a race against time for Spotify to go public as soon as possible. Traditionally, music streaming services have struggled to remain profitable, but Spotify which boasts over 30 million paying customers could change that trend.
H/T: Bloomberg Business