This week Swedish music streaming service Spotify went public. The significance is less in that it realised a value of over $26.5 billion after first day of trading, but that it did not opt for an IPO but directly listed.

First off though is the question of why Spotify decided to list now – companies list for strange reasons, Netscape (for those with long memories) was rumoured to have listed because the main shareholder wanted a yacht. Who knows? But the streaming sector is maturing, and Spotify currently holds a position that is slowly being attacked by Amazon, Apple and many others. If it is to thrive it needs to improve its service (quality options, interface) as well as broaden its offerings (it may effectively become a record company for example, cutting fees and owning content) – so there are reasons.

Why list the way it did? In 2016 challenger bank Metro Bank floated directly, and perhaps that has been an influence. Because Spotify doesn’t need any more money a direct listing was possible, effectively cutting out investment banker fees. This model might raise concern amongst the great and good of the investment banking community if other technology companies follow suit.

In part the loss of fees would hurt the investment banks, but there is another potential reason for worry in that such direct listings make buying of large parcels of share impossible, and make it difficult for individuals or single companies to create large holdings. Takeovers, mergers or boardroom coup become a lot harder. In any case Spotify has a dual-class of share, meaning that the founders have effective control over the company, so in this case it might be belt and braces.

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