Spotify May Now Be Looking For A Buyer

It looked like Spotify’s strategy was to go public this year, but recent announcements have pretty much put that aside. The IPO (Initial Public Offering) market has changed recently, and tech companies can no longer be assured of the big paydays of just a few years ago. As a result it looks like the company’s new plan is to look for a buyer instead.

Now to be sure, Spotify has over $3 billion in revenue, but it also has been losing money as well. It currently has a lot of investors that want to cash out, and if an IPO is risky, then those investors are going to push for another way to get their money, which is through an acquisition.

Industry consultant Mark Mulligan thinks that a buyer probably won’t be Western. All the deep pocket companies like Amazon, Apple and Google already have their own services. Facebook is a possibility, but still not a good fit. Mulligan thinks that the only reason why Apple might be interested is to use up some of its off-shore cash reserves before it gets repatriated by the Trump administration, but that’s still a long shot. European companies don’t seem to be interested either.

That leaves Eastern companies and there are a number of them that could be potential suitors. China’s Tencent is already the streaming leader in the Asian market and the company has the money and the will for an acquisition. It would give the company an entrance into the West and immediately make it the 800 pound gorilla of music streaming.

There are a number of other Chinese companies also on Spotify’s radar. Alibaba, Dalian Wanda, and Baidu all have pockets deep enough to pull off an acquisition. Mulligan also suggests that a couple of telecommunications giants could also be in the running with SoftBank and India’s Reliance Communications being the most likely, although 21st Century Fox and Liberty Global may also see some synergy with Spotify in the fold.

One way or the other, it looks like Spotify is going to be going through some changes soon. How will that change its service? Probably not much actually. Until the license agreements with the major labels are renegotiated so the company can offer lower prices, things should still remain the same for some time to come.