Perhaps the most surefire indication that a technological start-up firm has grown dramatically in its years of operation (or believes it has) would be when it starts planning to offer itself up to public trading. One needs to look no further than Snap Inc., the parent company of social media network Snapchat. It had its initial public offering (IPO) last March, and its time in the stock market has been rather up and down from time to time. Snapchat will not be the last tech outfit to brave the transition from privately held to a public company.

Swedish-based media podcast and streaming service Spotify is about to take the same step as Snap Inc. before it, as its latest dealings indicate.

‘Big Three’ license deals

Spotify has already made statements about its intent to do an IPO later this year or early next year. And in preparation for that, they have been striking licensing deals with major record companies in the past months. April had them renewing a licensing deal with Universal Music Group, a contract which stipulates that they have the right to hold back newly-released music from UMG artists from appearing on Spotify’s free music library, along with a royalty payout break from the streaming service to the major music label.

On Thursday, August 24, Spotify also renewed a licensing deal with the Warner Music Group similarly, with similar conditions to that with UMG and also with Sony Music last July.

The deal with Warner is the last piece of the “Big Three” music label puzzle that the Swedish company has to put together before they can move on to preparations for the expected IPO. They can now check in advance how the licensed music on their platform will change prices over the next several years.

IPO shortcut

The plan to go public by Spotify eschews some traditional procedures in an initial public offering.

Rather than starting off with a traditional share sale to institutional investors, they intend to go straight to being listed on the New York Stock Exchange. Such a bold move has gotten the attention of the Securities and Exchange Commission, though the SEC has done nothing more than making starting inquiries with Spotify. This is the first time the NYSE will have a company head straight to their listing during its IPO, and Spotify is noted to be the largest company to perform this unorthodox going public.

It was Warner Music that first broke the news of their arrangement with Spotify. On an Instagram post, WMG chief digital officer Ole Obermann described their renewed licensing deal as being worth the long while they spent in discussion. “Together with Spotify, we've found inventive ways to reinforce the value of music, create additional benefits for artists, and excite their fans all over the world,” Obermann said.

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