French music streaming company Deezer has raised €100 million in funding

Deezer CEO Hans-Holger Albrecht
Deezer CEO Hans-Holger Albrecht Deezer

Deezer, the French music streaming startup that announced and then cancelled an IPO last year, has raised €100 million (£76.9 million) in new funding from Access Industries and telecoms company Orange.

CEO Hans-Holger Albrecht told Business Insider that most of the money is going towards sales and marketing efforts in Europe, the company’s core territory.

The company was started in Paris in 2007, and has grown to become one of Europe’s biggest music streaming services.

Deezer said in 2015 that it had 6.34 million subscribers in total, and the press release for Deezer’s funding round says that the startup now includes over 40 million tracks on its service. It’s claiming to have a bigger catalogue than rival services like Spotify or Apple Music.

But Albrecht cautioned that having tens of millions of tracks available isn’t a winning formula for music streaming. “I always say that it’s like getting the ingredients to cook a nice meal in a restaurant,” he said. “If you have 40 million tracks you can create a very good experience.” He went on to mention that 40 million songs “can be kind of scary to people.”

Deezer Deezer

Deezer announced in September that it planned to take the company public and raise €300 million (£230 million). But that never happened. In October the company announced that it was scrapping its IPO due to “market conditions.”

Is this round of funding a stopgap measure that will tide Deezer over until it’s ready for an IPO? “I think what it gives us is full flexibility,” Albrecht said. “Which is good. In market conditions like this, you don’t want to be depending on an IPO process.” He does say, however, that Deezer will evaluate in 24 or 36 months whether to take the company public. “We can look, and if the markets are good then we may decide to do something again, or we wait.”

Sites like Music Business Worldwide dug through Deezer’s IPO filing and found that the company isn’t close to becoming profitable (just like Spotify.) But Albrecht doesn’t sound too concerned about Deezer’s balance sheet. “The underlying model is profitable,” he said. “If you look at our experience in France, where you have an older market, it’s profitable since 2012.”

Deezer’s financial section from its IPO filing. Music Business Worldwide

“You can see the company do profitability if you want, which would mean, of course, that there’s less money for marketing and sales and you don’t capture the growth. I don’t have a longterm concern about profitability. It’s obviously more about growth and capturing the market than profitability.”

In 2014 Deezer acquired podcast app Stitcher and added its library of radio shows and podcasts to its platform. We asked Albrecht whether the company is considering further acquisitions. But it doesn’t sound like that’s on the cards. Albrecht said that the Stitcher deal was a one-off.

Albrecht sees the future of music streaming as being shared between four and five major players. He’s not keen on services like Tidal that rely on exclusive content, though. “You get a very short-term window of exclusivity,” he said. “The reason why the streaming market is working so well and everyone is growing is that we keep the consumer proposition simple. The moment we start to go over to exclusivity, we kill the model.”

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