Spotify settles lawsuits, adds board members as it gets ready to go public
Spotify made a few moves this week that could put them in a better position to join the stock market.
On Thursday, it was revealed that the company added four people to its board of directors. The music streaming startup has brought on former Disney COO Tom Staggs; Padmasree Warrior, a Cisco vet who runs an electric car business; Shishir Mehrotra, YouTube’s former head of product; and Cristina Stenbeck, a Swedish investor.
On Friday, the company settled a class action lawsuit with a group of songwriters who were alleging copyright infringement. The proposed agreement will cost Spotify $43.4 million.
Both of these moves could help Spotify be in a better position before a possible public debut.
Spotify was supposed to do an IPO earlier this year to avoid complicated debt terms. As we reported, the company faced some challenges in shaping up its business model and couldn’t get the IPO done in time.
Now there have been reports that the company is considering going public without an IPO, a highly unusual occurrence. They would list on the stock market without the offering, a fundraising event. Employees and early Spotify backers would sell shares to investors directly. It sounds like they are thinking about doing something like this later this year or early next.
Spotify earns revenue from its subscriptions, a fee of $9.99 per month. But the company also has significant costs and has to devote resources to negotiating royalty payments with the record labels.
There’s also a lot of competition. Apple Music launched a similar service and Pandora recently unveiled a premium version, which allows users to create their own playlists.
But there’s no question that Spotify is a hit brand with consumers. They’re growing quickly and have amassed 100 million active users, including 50 million premium subscribers. Once they go public, they’ll have to convince investors that this momentum will continue.
Featured Image: Thomas Trutschel/Photothek/Getty Images