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Facebook IPO Not Quite What Expected

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In response to Facebook’s recent public offering, Digital Music News (DMN) posted this article: “Facebook: They Burned the Investor, Burned the Startup, Burned Spotify…”.

Probably the most auspicious claim DMN makes is that Facebook has effectively burned future startup tech companies by going public; Facebook stock dropped dramatically in value only a short while later.

DMN suggests that some fear Facebook’s going public has increased investor suspicion and cautiousness to a point where it could hurt future tech sector IPOs. This “… is incredibly bad news for music business startups like Spotify, which are Facebook-dependent and courting hundreds of millions of dollars based partly on a possible public offering. And all the while, skewing their model disproportionately towards big labels, big investors, and gigantic liquidity moments.”

Check out this short video interview with Stanford Law fellow and longtime tech entrepreneur Vivek Wadhwa from a Bloomberg TV who believes Facebook’s IPO was a bad idea.

Though I don’t agree with everything Digital Music News says, they typically have their fingers on the pulse of the music industry, and I believe their characterization of what’s going on here is accurate.

What effect do you believe this has on the future of the music business?



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