Spotify’s direct listing (April 2018) pioneered a new way to go public—skipping traditional IPO underwriters and saving millions in fees.
The Direct Listing (April 3, 2018)
Not an IPO: No new shares sold, no underwriters, no roadshow
Opening price: $165.90/share Valuation: $26.5 billion First major tech direct listing
Why Direct Listing?
Save money: No 7% underwriter fees (saved ~$500M)
Existing liquidity: Employees/investors could sell immediately (no lockup period)
Fair price discovery: Market sets price, not bankers
Precedent: Showed tech companies don’t need Goldman Sachs to go public
The Business Reality
Dominant music streaming:
- 2018: 170M users (75M paid)
- 2023: 550M users (220M paid)
The problem: Still not consistently profitable
Spotify pays 70%+ of revenue to labels (Universal, Sony, Warner)
Margins crushed: Can’t raise prices without user churn, can’t cut costs because labels demand royalties
The Podcast Bet (2019-2023)
$1B+ spent acquiring:
- Gimlet Media
- Anchor
- Parcast
- The Ringer
- Megaphone
- Exclusive deals (Joe Rogan $200M, Call Her Daddy)
Goal: Own content, escape label stranglehold
Reality: Podcasts less profitable than hoped, Rogan controversy, laid off 25% of podcast staff (2023)
Stock Performance
Peak: $364 (Feb 2021) during pandemic boom
2022-2023: $80-150 range (down 60%+ from peak)
Layoffs: 6% (2023), 17% (Jan 2024)
Legacy
Direct listing model adopted:
- Slack (2019)
- Coinbase (2021)
- Roblox (2021)
Proved: Companies with existing liquidity don’t need traditional IPOs
Music industry reality: Streaming dominates, but labels still control economics
Sources: