Spotify, the Swedish-based digital music streaming company, might be heading towards an IPO. It has more than 6 million paying subscribers, and enables users to stream music on their laptops or phones. Users can also link their playlists to social networking apps like Facebook and Twitter. The free application comes with advertisements, but users can pay $9.99 a month to eliminate advertising.
Currently, Spotify is in talks with banks regarding the possibility of raising a credit facility. This move means that an IPO could be imminent, as various tech companies have obtained credit facilities right before going public. Last year, Twitter obtained a $1 billion credit facility a month before going public. Furthermore, Facebook also raised a credit facility before its IPO.
Spotify, backed by Hong Kong billionaire Li Ka-Shing, also purchased Echo Nest for an undisclosed fee. Echo Nest specializes in audio fingerprinting, which involves analyzing the playlists and songs of users to find specific characteristics or relations between the songs. This information is then used by music apps to make better recommendations to their users.
Intense competition in the music services industry has put pressure on Spotify to further improve its service. Echo Nest's services are currently being used by rivals such as Rhapsody, and will provide Spotify with a new stream of revenue and better user experience. The acquisition of Echo Nest will allow Spotify to improve its competitiveness and will fuel further speculation of an IPO.
- Mathew Roy