• Home
  • News
  • Fortune 500
  • Tech
  • Finance
  • Leadership
  • Lifestyle
  • Rankings
  • Multimedia
Spotify

Spotify Wants to Go Public Despite a History of Losses

By
Aaron Pressman
Aaron Pressman
Down Arrow Button Icon
By
Aaron Pressman
Aaron Pressman
Down Arrow Button Icon
July 20, 2016, 10:19 AM ET
Spotify CEO Daniel Ek Makes Announcement
Daniel Ek, chief executive officer of Spotify Ltd., speaks at a news conference in New York, U.S., on Wednesday, Nov. 30, 2011. Spotify Ltd., the music-streaming service, will open its site to software developers to attract new users with features such as ticket sales and song lyrics. Photographer: Louis Lanzano/ Bloomberg via Getty ImagesPhotograph by Bloomberg via Getty Images

Spotify, one of the world’s biggest streaming music services, wants to go public next year.

The company, which has not reported a profit in the past 10 years, wants to list on the stock market in the second half of 2017, Bloomberg reported on Wednesday, citing unnamed sources. Spotify declined to comment.

Investors may be reluctant to go along with Spotify’s most recent private value of $8 billion, however, if the losses continue. CEO Daniel Ek has been expanding into new areas, like short videos and concert ticket promotions, in an effort to reach profitability.

More than 100 million people use Spotify, including 30 million paying subscribers. That’s about twice as many people as pay for Apple’s (AAPL) similar music service. Pandora Media (P), which is more like an online array of radio stations, has approximately four million subscribers among its 80 million active listeners. Spotify and Pandora users who don’t pay hear advertisements.

Get Data Sheet, Fortune’s technology newsletter.

But despite Spotify’s popularity—and $2.2 billion of revenue last year—the service hasn’t made a profit because it must pay a large portion of its sales to record labels and music publishers as licensing fees. The company paid a total of $1.8 billion in fees, or about 82% of its revenue, last year. That included about 55% paid to record labels such as Universal Music Group, Sony Music Entertainment (SNE), and Warner Music Group (TWX), Bloomberg reported. The labels also own minority stakes in Spotify.

Ek has sought unsuccessfully to negotiate lower fees. Apple pays more, 57.5%, Bloomberg reported, making the labels reluctant to go lower with Spotify.

For more about Spotify’s $1 billion deal, watch:

The pressure is on Spotify to go public because of the terms of a $1 billion convertible debt financing it completed in March. Under that deal, investors will be allowed to convert their ownership into public shares at a 20% discount, but the discount increases the longer they have to wait for Spotify to go public, Bloomberg reported.

Still, the IPO market has not been welcoming to tech startups lately. None went public in the first quarter and only a handful since, although they have performed well once they hit the stock market.

About the Author
By Aaron Pressman
See full bioRight Arrow Button Icon
Rankings
  • 100 Best Companies
  • Fortune 500
  • Global 500
  • Fortune 500 Europe
  • Most Powerful Women
  • Future 50
  • World’s Most Admired Companies
  • See All Rankings
Sections
  • Finance
  • Leadership
  • Success
  • Tech
  • Asia
  • Europe
  • Environment
  • Fortune Crypto
  • Health
  • Retail
  • Lifestyle
  • Politics
  • Newsletters
  • Magazine
  • Features
  • Commentary
  • Mpw
  • CEO Initiative
  • Conferences
  • Personal Finance
  • Education
Customer Support
  • Frequently Asked Questions
  • Customer Service Portal
  • Privacy Policy
  • Terms Of Use
  • Single Issues For Purchase
  • International Print
Commercial Services
  • Advertising
  • Fortune Brand Studio
  • Fortune Analytics
  • Fortune Conferences
  • Business Development
About Us
  • About Us
  • Editorial Calendar
  • Press Center
  • Work At Fortune
  • Diversity And Inclusion
  • Terms And Conditions
  • Site Map

© 2025 Fortune Media IP Limited. All Rights Reserved. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice | Do Not Sell/Share My Personal Information
FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. FORTUNE may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.