UPDATE 2-Spotify set for debut, could see volatile trade later

(Adds comments on timing of open)

LONDON/NEW YORK, April 3 (Reuters) - Streaming music leader Spotify Technology SA may face a rough ride in its trading debut on Tuesday, with the company's unusual direct listing coming the day after a steep technology selloff on Wall Street.

Spotify Chief Executive Daniel Ek wrote in a letter on Monday that the listing will put it on a "bigger stage," but that his focus remained on building the company for the long term.

The New York Stock Exchange set Spotify's reference price at $132 per share late on Monday, giving an early estimate of the level at which supply and demand could be balanced.

That was in line with informal trading on Monday, with shares changing hands at about $132, which would value the company at more than $23 billion.

They are assuming based on where it is trading in the grey market and what it appears right now as supply and demand, around $132 should be a fair price, an equity trader said on Tuesday.

In February, the shares were valued at about $20 billion based on private stock transactions among existing investors.

Since launching its streaming music service a decade ago, the Stockholm-founded company has overcome heavy resistance from big record labels and some major music artists to transform how the industry makes money.

Spotify offers access to vast libraries of music rather than making users pay for CDs or downloads of individual albums or tracks.

The company has structured the stock market listing to allow existing investors to sell directly to the public while offering no new shares of its own, in a test case being watched by other well-funded multibillion-dollar tech firms with no immediate cash-raising needs.

Forgoing hiring investment banks as underwriters or holding traditional promotional events with institutional investors could lead to extreme volatility when formal trading begins, analysts say.

Still, the market steadied in early trading after Monday's technology-driven selloff pushed the Dow and the S&P 500 below important technical levels amid renewed global trade concerns.

The Dow, Nasdaq and S&P 500 indexes were higher in morning trade.

Thomas Farley, NYSE president, told CNBC on Tuesday that the exchange was "in no rush" to price Spotify's offering. He added that Spotify may not open for trading until after midday.

Spotify's opening public price will be determined by buy and sell orders collected by the NYSE from broker-dealers, the exchange said.

Based on those orders, the opening price will be set based on a designated market maker's determination of where buy orders can be matched with sell orders at a single price.

While Ek is skipping New York Stock Exchange rituals such as opening bell-ringing and trading floor interviews to tout the stock, the front of the 115-year-old Greek Revival exchange building has been draped in a vast green-and-black Spotify banner.

Global recorded music industry revenue in 2014 had fallen by 40 percent to $14.3 billion from $23.8 billion in 1999, when the rise of music file-sharing service Napster ravaged sales of CDs.

The industry has returned to growth since 2015 driven by streaming service revenue, which now accounts for 60 percent of recorded music sales, according to market estimates.

(Additional reporting by Helena Soderpalm in Stockholm, Joshua Franklin in New York and Stephen Nellis and Salvador Rodriguez in San Francisco; Editing by Meredith Mazzilli)