>> Spotify, the world's most popular music streaming service, and perhaps the most controversial, is now poised to upend the financial markets. Reuters has learned the Stockholm based company is moving ahead with plans for a direct public listing, meaning it will not seek to raise new capital, but simply convert its current private investors into shareholders of stock that trades on public exchanges.
The move would make Spotify the first major company to shun the traditional IPO route, and all the fanfare the comes with it, namely, erasing the need for a big Wall Street bank or broker to underwrite the listing. Reuters correspondent Liana Baker.>> If it's successful with the direct listing, this could have a huge impact on how private companies go about IPOs.
It could cut out a lot of fees for Wall Street banks, which is definitely a concern with some of the sources I spoke to this week.>> But it doesn't mean Spotify is shunning new investors. Those wanting to buy in can, but buyer beware. Without a bank to set the IPO price, the cost of shares may swing wildly on the open market.
Another unknown, what effect recent lawsuits may have on the company's future. Spotify is being accused of copyright infringement by Wixen Music Publishing, which alleges Spotify streamed thousands of songs, including some from Tom Petty and Stevie Nicks without obtaining proper licenses. Wixen is seeking at least $1.6 billion in damages.
Spotify also settled a $43 million lawsuit with songwriters in May over back royalties. Spotify said in June it had more than 140 million active users, with 60 million of them paid subscribers, twice that of rival Apple Music. The company is currently valued at $19 billion.