Spotify IPO: Music streaming app files for public offering

Swedish streaming service believes its model can rescue the ailing music industry

In May, the Stockholm-based company agreed to pay more than $43m to settle a proposed class action (Reuters)

Music streaming service Spotify is going public.

The company revealed its plans in a filing with the Securities and Exchange Commission. It plans to trade under the ticker designation SPOT and noted a maximum public offering of up to $1bn (£725m), though that number was an estimate intended to calculate a registration fee.

The filing said Spotify was planning a direct listing, which involves floating existing shares rather than issuing new ones.

In the filing, Spotify argued it had helped reverse the music industry's declining financial fortunes and predicted that music streaming would continue to be a lucrative business.

“We are transforming the music industry by allowing Users to move from a 'transaction-based' experience of buying and owning music to an 'access-based' model which allows Users to stream music on demand,” the filing said.

Some 159 million people actively use the service each month, the filing said, and 71 million people had signed up for its premium subscription service.

According to its filing, the company holds a 41 per cent global market share, a number that rises to 59 per cent in the UK.

The company has seen its revenue grow steadily year-over-year, from $2.3bn (£1.7bn) in 2015 to around $5bn (£3.6nm) in 2017.

In the months leading up to the announcement, Spotify negotiated licensing deals with major music labels like Warner Music, Universal Music Group and Sony Music.

The Swedish streaming service was founded in 2006.