In a 4/6 story headlined “Spotify Finally Readies an IPO...That’s Not an IPO,” The Wall Street Journal breaks down the implications of a direct listing, which the streaming service is reportedly considering.

In this scenario, Spotify would simply register its shares on a public exchange and let them trade freely, people familiar with the matter told WSJ reporters Maureen Farrell and Telis Demos. The company wouldn’t raise any new money or use underwriters to place new blocks of stock.

In a typical IPO, new investors buy shares from the company or its early investors, or both, the night before they start trading. The initial price is set by underwriters following extensive meetings with potential new investors.

In a direct listing, by contrast, investors purchase shares in the open market after they’re listed. The price is set organically based on supply and demand. Additionally, the company could save on hefty underwriting fees, avoid dilution that comes with issuing new shares and avoid the first-day trading pop that characterizes many IPOs.

One of the risks with a direct listing is that, with market forces determining the share price from the outset, Spotify’s public debut could be more volatile and unpredictable.

Spotify, which has raised more than $1 billion in equity, was last valued privately at $8.5b in June 2015, and is targeting a valuation of $10b+, according to the sources. If it lists directly, Spotify would likely need to renegotiate the terms of the debt.

Spotify had agreed that the investors could convert the debt into equity at a 20% discount to the share price if an IPO takes place one year hence, the previous report said. If it takes place later, the discount would increase. Spotify may then need to negotiate with the investors a price at which they’d receive equity.

The IPO is expected before year's end.

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