IPOs accomplish two concrete, positive things: 1. raise funds and 2. provide liquidity to investors. they also make a company seem more legit (at least in some cases, and in some circles). on the negative side, IPOs expose the company's financials and business plans, are expensive up front and on an ongoing basis to comply with SEC regulations (quarterly and annual reports, proxy statements, etc.), and also open the company up to major scrutiny and attack on the public market, with investors looking at the business performance quarter to quarter and activist investors looking for weak companies to push around (probably the nicest characterization, but you know what i mean).

On the positive side, direct listing basically provides only for liquidity to investors (though of course they can try and raise funds in the public market down the line if they want). In spotify's specific case, they are also probably being pushed by their later stage investors, who's deal specifically contemplates achieving liquidity in the relative short term (the investors did a convertible loan where investor terms improve the longer it takes spotify to go public). In any case, spotify has good brand awareness, so really the direct listing is all about liquidity. On the negative side, since Spotify is a european company, even as a private company it already exposes its annual financials publicly (though only on a delayed annual basis and without as much required discussion of the business), but a direct listing would still open the company up to major scrutiny and attack from activist investors.

in most cases, IPOs are considered motivated as much by fundraising as by liquidity (at least that's what the foudners / investors want you to think), and in fact big investors or founders selling big positions is generally taken as a negative signal (if they "really believed" in the long-term potential of the business, wouldn't they hold it? or so the theory goes). hence the lock-ups that most founders and pre-IPO investors agree to, which guarantee that at least for a set period of time, pre-IPO investors don't dump the stock en masse and introduce massive volatility into the market.

In spotify's case, I think the SEC and the markets will want to look closely at the lock-up periods or other restrictions on sale for various investors, founders and the employees (if any), and try to determine exactly why and on what terms and in what amounts the various pre-IPO shareholders want to achieve liquidity. off the top of my head, there are three main views:

1. viewed generously, you can say: "well, they've been doing this for a long time, built a great business and still believe in the long-term future of the company, but they all want to sell 5% because they are only human, will die someday at some point and can't wait forever to cash out of their business".

2. viewed less generously, you can say: "well, the management and main investors who know the business best are not certain about the long-term potential for the business and so want to cut and run before the downward trend realizes itself, and so we should read their push for liquidity as a negative signal for the business".

3. another very spotify specific case could be: "management believes long term and could give a shit about going public, but TPG and other late investors are demanding this and they have different objectives, and if we can satisfy those without diluting the business, I guess we'll just do that".

of course, it's probably a combo of those and other factors, but as an investor i'd be mostly trying to read and see if this is just earlier investors trying to dump shares because of lack of long-term faith - if so, be weary! on the compliance side, the SEC's main job is just to ensure proper disclosures are made (even if the business is less than ideal), but i'd probably want to see what I can do to minimize the potential impact of the less generous interpretation of motivations and any scenario where pre-IPO investors make a bunch of money by dumping their shares on the less-informed-about-the-business average investor.