The popular online music streaming service out of Sweden appears to be getting ready for a possible IPO. A Reuters report states Spotify is looking for a U.S. financial reporting specialist.

In order for a company to go public, they will have to meet SEC standards for filing financial disclosures. The type of specialist mentioned above would help meet these standards.

“It looks like they are preparing themselves for an IPO,” one lawyer told Reuters.

Spotify has seen massive amounts of growth since first launching in 2008. The music streaming service uses a Freemium model to earn revenue. Basic features are free while additional features cost money.

Basically, if you don’t want ads – you pay a premium. You also pay if you want to use the full Spotify feature set on your mobile device. For free members, ads play every couple of songs on the Web-based Spotify platform. For free mobile users, ads also play every couple of songs and you can only shuffle play your playlists.

Spotify already has deep pockets. An IPO, though, would allow the streaming service to expand even further. Last November, the music streaming service raised $250 million in a funding round. It’s current valuation sits at over $4 billion.

The big question investors will have about a potential IPO for Spotify, is can they be profitable? In 2012, Spotify generated $577 million in revenue. I can’t find figures on 2013, but revenue growth should have continued. What we do know is that Spotify paid $500 million in royalties in 2013. That’s up from more than $250 million paid in 2012.

The recruitment of a U.S. financial reporting specialist is a first step towards a potential IPO. We’ll keep you updated on any further news of a potential Spotify IPO.


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