Daniel Ek, CEO of Swedish music streaming service Spotify, says a stock market listing "doesn't change who we are"
Spotify on Tuesday debuts as a publicly traded company, hoping that its streaming music model will be a hit with investors and a boon to artists.
In an unusual move, Spotify will list existing shares directly on the New York Stock Exchange rather than issuing new stock, allowing its founders and investors to maintain control and avoiding the cost of hiring Wall Street underwriters.
"Spotify is not raising capital, and our shareholders and employees have been free to buy and sell our stock for years," 35-year-old chief executive and co-founder Daniel Ek said in a blog post Monday ahead of the listing of "SPOT" shares.
Ek said the move "puts us on a bigger stage," but "doesn't change who we are, what we are about, or how we operate."
The Swedish platform which has helped make streaming the most popular way to listen to music in parts of the world estimated the company's value to be as much as $23.4 billion.
Spotify said in a regulatory filing that it had 159 million monthly users including 71 million paying subscribers -- twice that of closest rival Apple Music, which the iPhone maker launched in 2015 to win a slice of the growing streaming market.
Spotify warned last week that its sales growth was likely to slow this year, but that it still expected to post a narrower annual loss.
Spotify, which has not posted a profit since the service launched in 2008, said unfavorable exchange rates were the main reason for the growth slowdown.
The company also said it aimed to boost its subscriber numbers by 30 to 36 percent this year.
- Cool and sticky -
"Spotify is a 'cool' brand," said eMarketer principal analyst Paul Verna.
"Teenagers especially love Spotify. This bodes well for continued brand loyalty, which is a big factor in the stickiness of music services."
Users of streaming music services don't like to rebuild playlists or profiles, making it likely they will stick with Spotify if given good value, according to the analyst.
While pressure is on to pay higher royalties to music creators, Spotify has made inroads with artists. Taylor Swift released a new "Delicate" music video on Spotify last month. The singer caused a stir in 2014 by pulling her music from the service over fees, but returned to the platform three years later.
Music sales soared anew last year in the United States backed by the rise of streaming, bringing revenue to a level last seen a decade ago.
"Spotify has been the driving force in nothing less than a turnaround in the US recorded music industry," Verna said.
Spotify's model of letting people stream songs on demand is proving more popular than paid downloads, curated playlists, or internet radio broadcasting, according to the analyst.
The Recording Industry Association of America said that revenue grew a robust 16.5 percent in 2017, marking the first time since 1999 at the dawn of online music that the business has expanded for two years in a row.
The growth was almost entirely attributable to the public's embrace of streaming, with subscriptions to paid platforms such as Spotify, Apple Music, Tidal and the new service of retail giant Amazon growing 56 percent to 35.3 million users.
Streaming has been transforming the music business in much of the world, although artists frequently complain that they see little of the industry's newfound bounty.
- Timing trouble? -
In 2006, Ek and co-founder Martin Lorentzon, who rode the internet boom to riches, came up with the idea of creating a legal platform to distribute music online, which at the time was dominated by illegal file sharing sites.
They experimented with sharing music files between the hard drives on their computers.
In October 2008 Spotify was finally ready to go live after Ek pleaded with music labels to open their catalogs.
Wall Street could go far in securing the Swedish startup's status as a success story if the listing goes well.
But, the timing could hurt Spotify since tech stocks overall are being dragged down by worries about \privacy and Facebook's handling of people's data.
"Spotify will be lumped in with other tech stocks, which have been battered lately because of Facebook's data privacy issues," Verna said.
"One could argue that this is unfair to Spotify, but they're going to have to get used to market volatility and getting dragged down (or pushed up) by other companies in their general space."
In perhaps a poetic turn, Facebook has been credited with playing into Spotify's success.
In 2009, Spotify won the public backing of Facebook co-founder and chief Mark Zuckerberg, who posted: "Spotify is so good."
In 2011, when Spotify launched service started in the United States, it allied with Facebook, quickly garnering one million paying users.