Rather than stock price being set by the aforementioned underwriters (how IPOs work), the share price will be determined based on supply and demand. If no one wants the stock, it'll be cheap; if everyone wants it, the opposite will happen. WSJ's sources say that Spotify is hoping for a $10 billion public valuation.

Now, none of this could happen until September, but the current thinking is that going direct will save on the underwriting fees and dilution of existing shares (ensuring existing stakeholders won't lose money when new stock is issued). Thus, Spotify saves money that could otherwise be used to shore up additional licensing agreements. On the other hand, going the IPO route might give Spotify more money to keep licensing deals in place.

By going public this way, it could keep outsiders from regulating and controlling the company (something similar to what Snapchat did earlier this year) as well. However it shakes out, it sounds like we'll have a few months before it takes place.