Seven years ago, the planned IPO was called off with reference to a difficult market environment, now Deezer has made the leap onto the trading floor.

Even the French Minister of Finance and Economy, Bruno Le Maire, was present for the obligatory ringing of the bell.

However, the first day of trading on the Paris Euronext was initially modest.

At the start, the share was listed at EUR 8.50, by midday it was around EUR 6.60 - a drop of a good 22 percent.

At times, the price had even collapsed by around 30 percent.

Benjamin Fisher

Editor in Business.

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The French service, founded in 2007, is number five among the global music streaming providers - behind the services of the US corporations, Apple, Amazon, YouTube and market leader Spotify.

With currently 9.6 million subscribers, Deezer is far removed from the four competitors.

Apple, Amazon and Google only publish figures sporadically, but all have more than 50 million paying users.

Spotify, listed on the stock exchange like Deezer, had 180 million subscribers at the end of the first quarter of this year.

One billion euros in sales in 2025?

Deezer organized the IPO via a merger with the special purpose vehicle I2PO.

This is a so-called Special Purpose Acquisition Company (SPAC), backed by prominent players from the banking and media sectors.

These include the French billionaire François-Henri Pinault, head of the luxury goods group Kering, known for brands such as Gucci and Bottega Veneta, or the German Iris Knobloch, former manager of the American media group Warner Media and recently president of the Cannes Film Festival.

The largest Deezer shareholder is the holding company of billionaire Len Blavatnik, Access Industries, with 38 percent of the shares.

Blavatnik also holds a majority stake in Warner Music Group, the world's third-largest music company, through Access Industries.

Deezer was valued at around one billion euros in April when the plans were announced.

Ambitious goals with a view to future sales development were also presented at this event.

Accordingly, this should increase from around 400 million euros a year to one billion euros in 2025.

From then on, Deezer should also be in the black.

it was said;

last year the operating loss was 120 million euros.

The core problem of streaming services

This scenario is typical for the music streaming market.

Spotify has also been growing strongly for years, but can only show a few quarters with a profit.

On the one hand, this is due to investments in the platform itself, further growth and, especially in the case of Spotify, acquisitions in the field of podcasts.

Above all, however, all services distribute around two-thirds of the total income to the rights holders of the music available on their platforms.

"It's not the services that make the big money," emphasized Deezer boss Jeronimo Folgueira, referring to the cash flows in the streaming world at the beginning of the year in an interview with the FAZ to cover our costs".

Against this background, Deezer was the first of the major services in Germany to move from the standard price of 9.99 euros per month.

After price increases in France and Great Britain, the individual subscription for new customers in Germany now costs EUR 10.99 and the family subscription with the usual six accesses costs EUR 16.99 instead of EUR 14.99.

Instead, HiFi sound quality is included from now on.

The separate hi-fi subscription for EUR 14.99 per user is no longer required.

The advertising-financed free offer with fewer functions and poorer sound, which only Spotify also offers in this form on the market, remains unchanged.

Price increases are a far more complicated task in music streaming than, for example, in video streaming.

Because the services have broadly the same catalog of music.

Netflix and Co are particularly attractive with their own productions.

This is also why Spotify has been spending a lot of money on exclusive podcast content for some time now, because the music giants are not involved in the expensive license payments for their catalogues.

Several hundred million euros have already flowed as part of this "Audio first" strategy.

However, the core business continues to dominate.

Podcasts only accounted for two percent of sales in 2021, Spotify explained at a capital market day in June.

Deezer boss Folgueira ruled out a similar strategy to the FAZ in February.

"We want to offer more original music content," said Folgueira.

"Recently, for example, we have reissued cover versions of hits from the 1980s with artists." In addition, Deezer - although active in more than 180 countries - wants to concentrate primarily on core markets.

"Globally, we have a market share of maybe 1 percent in many countries," said Folgueira.

“But in Brazil and France we are at 20 and 30 percent respectively.

The core of our strategy is therefore the focus on our core markets.

Germany should also be our second most important market by the end of the year thanks to the RTL cooperation.” In addition, Deezer subscribers are to receive exclusive offers for live streaming concerts on Dreamstage.

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