Subscriber Growth Is Slowing Dramatically at Deezer…

The question is whether streaming services are adding enough paying customers quickly enough, at a financial rate that makes sense.  Enter Deezer, which is second only to Spotify in worldwide paying subscribers, and just announced its four millionth paying subscriber.

Which sound absolutely great, except that it took far longer for Deezer reach its four millionth, than it did its third.  This is what the company’s million milestones now look like.

deezersubscribergrowth

Increasingly, Spotify is looking like the lead horse in the crowded streaming subscription race.  In December of last year, Spotify announced its five millionth subscriber, only to careen past six million by SXSW in March.  Of that, more than one million are Americans, second only to Muve Music.

spotifysubscribergrowth3

But Deezer hasn’t even launched in America, despite recent investments of more than $130 million.  Instead, the company is purposely avoiding the United States, based on the idea that America is too expensive, and too hyper-competitive to make sense right now.

deezer_map

That often translates into lots of little launches in lots of little countries, an approach whose ultimate success remains speculative.  But despite stronger gains, Spotify’s model is just as sketchy: according to calculations shared by industry researcher Mark Mulligan, more than 70 percent of registered users – for both Spotify and Deezer – are inactive zombies that never return.

 

Of that, just a tiny sliver convert to longer-term, paying relationships, even with hundreds of millions in investment to attract and drive those conversions.

19 Responses

  1. Weak
    Weak

    Spotify: 6.5 million paying subs
    Deezer: 4 million paying subs
    Combined, these two only have 10.5 million paying subscribers. Between them, they would generate about $1,500,000,000 USD. This is very weak still.

    Reply
    • Patriq
      Patriq

      The results of hundreds of millions in investments are not huge, but your calculations are a little bit over-optimistic. You have to take into account that maybe half of paying subscribers just use the web version paying a fiver, instead of a tenner.
      That would give you just close to $1B (leaving out currency differences, just to make it easier) on an annual basis for 12 month subscriptions.
      And here in Europe we also have VAT, i.e. value added tax, which is everything from 10 to 25 % depending on the country. For the Nordic countries it’s between 23 and 25 %, resulting in even less money left on the table for the company. If the average VAT is around 20 %, it would leave around 800M on the table.
      But the results should be much higher, and the trend of slowing growth does not look good for streaming services.

      Reply
  2. Jenny
    Jenny

    Everything you write is so negative. Always glass is half-empty. Deezer is rad. Deezer is NOT algorithm-based and Spotify is. They’re more curatorial, giving more opportunity to younger bands. MORE DIVERSITY! They aren’t in the US yet, which also explains the numbers.
    Anyway. Put on a pair of positive pants, please!

    Reply
    • Paul Resnikoff
      Paul Resnikoff

      I think what you’re actually asking is, ‘please be a cheerleader.’
      Deezer may be ‘rad,’ sure, but not so sure if their business model or long-term prospects are deserving of that descriptor. It hasn’t been easy for this company.

      Reply
      • rad?
        rad?

        Oh, please – does anyone over 9 actually say “rad”? Totes amazeballs, gee. On the other hand, maybe that’s the market Deezer is after…

        Reply
  3. João
    João

    Or maybe the 3 million announcement was a little anticipated by Deezer PR and the 4th million a little late for internal reasons we ignore and then your article could read an exact opposite title…
    I think music experts and fans should celebrate the fact millions of new users are being convinced every quarter by the best anti piracy model…

    Reply
  4. TUNE HUNTER
    TUNE HUNTER

    The situation is tragic but not hopeless.
    If we assume that streamers succeed and save music industry they (Spotify, Deezer, Google & more) have to get at least 150 million paying subscribers. Good luck.
    If they do succeed and average monthly toll is $8.5 they will generate 15 billion dollars in annual sales.
    With this level of saturation all other sources of music revenue will have a big problem to generate additional 10 billions in sales.
    So global music sales of over 40 billions in 1999 will plateau at 25 billions in 2020 – which is less than McDonald hamburgers for last year, very sad

    Current music industry is a mega store with no walls, windows and goods for grabs for FREE at any place street, car, bar you name it.
    Better yet Shazam valet boy, also FREE of charge, will pack it to your shopping bag without getting a tip (ouch!) – of course he will survive from Brita filter advertisement on his T-shirt, very impressive.

    To put back walls and windows to music retailing Shazam, Soundhound, Gracenote and all lyrics ID guys can only sale, you like it – you got it, no other way.
    All of them must become gate keepers and cash registers of new Music Industry. Add to it limitations to RDS displays on the radio and 80% of piracy is gone – sources of info for theft will vanish. Those entities above have over billion users and provide billions of discovery-to-free services every month.
    Just price single tune at $.29 do some promotion and the business will double to 32 billions in 24 months.

    I hope Brian Zisk will notice this comment and will make out of it a wake-up poster for next week event.

    Reply
    • Casey
      Casey

      Soundhound and Shazam exist to assist people in music discovery. Requiring people to buy the music they discover would be a vast overreach and kill off the services instantly. People will never pay to discover a song they don’t even know if they like. That’s why they use the services in the first place, to discover what the song even is. And they probably do get a tip. Typically when you link to a song on the iTunes store or Amazon MP3 store, you get a small percentage of the sales.

      Adding limitations to RDS makes absolutely no sense. It’s already so limited on features that it can barely deliver the artist and song title. Pretty much the only limitation you could possibly make is to eliminate that information, which defeats the purpose of RDS.

      Reply
    • Tune Hunter
      Tune Hunter

      Again walls have to come back and there is nothing wrong for streamer to pay $.29 to add a tune to his play list.
      RIAA should wake up and before they add this issue to current legislative changes just use existing sampling laws to force ID guys to senity for their own sake.
      Shazam will go from red to billion dollars a year in 24 months.

      Reply
    • Visitor
      Visitor

      Streaming services are the Here and the Now and our Future. Get with it. Stop living in the past!

      Reply
      • Tune Hunter
        Tune Hunter

        It is not issue of past or future.
        Streaming at 5 cents a click with stream #7 converting to ownership or current free forever is OK and it is easy to implement with today technology.
        As far as discovery moment goes the walls have to come back or 100+ billion in annual goodwill will max at the best at 25 billion.
        What is going on is worse than prostitution.
        You do not see naked prostitutes in your town working for FREE and presented to you by nice pimp also working for FREE with Capital one Visa on his T-shirt.
        Let’s get seriuous and stop corporate golfing and politcal pussy games. I have seen it before.

        Reply
    • Mike Corcoran
      Mike Corcoran

      On the contrary, these numbers show streaming services are very sustainable. The real question is, are they right for artists?
      Deezer at 4mil paying customers at $120/yr is throwing off $400-500M per year. On $130mil investment, not too shabby. Spotify would generate upwards of $800M/year on their 6mil subscribers, regardless of the zombie accounts. If Spotify pays 70% of their revenue to artist royalties, they still clear $250M. Deezer would clear around $150M. And we haven’t even added in advertising $$ yet. So these businesses can definitely stay in business…
      …and it’s an extra 700M or so in royalties for artists and songwriters that they weren’t getting only a few years ago…

      Now, is this right for artists? Well, what would have artists & songwriters made in royalties if there were no streaming services? Impossible to say. Would everyone flock to ITunes and Best Buy, or would they hit up the pirate sites? Probably a bit of both.
      If streamers really were taking away from digital and CD sales, we would probably see sales declining. But digital and CD sales are actually inching up, not going down. So even though it might seem like streaming services are bad for sales, it’s a safe bet right now that streaming services are actually adding to artist royalties, not taking away from them.

      Reply
      • Tune Hunter
        Tune Hunter

        To generate 10 billion in sales they need to get 100 million folks at $9.99. This will be 25% of revenue made in 1999.
        It will never get to this level – Sirius /XM after 12 years mega promotion and preloading of all new cars is at 24 million subscribers. Good luck with this 100MM
        I have no issue with all of 9.99 or 5 cents a stream guys but they need to pay extra for discovery, including the similar tune sugestive discovery.
        Without locked up discovery we have all the goods in the open and personal advisors helping us at no charge to take the best chunks at any time. It is worse than prostitution.

        Reply
  5. Its a Game
    Its a Game

    I agree with Tune Hunter, I’d rather invest in McDonald’s than in a music streaming service.
    My take on the sustainability/profitability/morality is…
    Most of the things that Resnikoff and David Touve have discussed about how unprofitable the music streaming service is, rings true with reality and yet over the past few months some companies have surprisingly made claims about profitability and even more unverifiable claims about substantial increases in their subscriptions. Admittedly these are percentages so they don’t give you a true picture of real numbers which is what really counts.
    There has been no seismic change in user behaviour nor in anti-piracy laws and compared to Spotify, Pandora and Deezer whose numbers are available in public domain, the claims by these companies are questionable to say the least.
    But what most analyst are missing is the game that is being played out, especially in the recent times. You just have to notice that these companies have up the ante on their PR – it’s all about PR and not value creation. The unsuspecting investors are parting with their cash with a promise to the neverland, after all most of these companies have “survived” almost a decade in red! Ask yourself how do they do it honestly and ask yourself if this is a profitable or sustainable business? After eight or nine years or a decade of losses they must be desperate to exit the business and fighting hard to flog it to some vulnerable giant with deep pockets. So the move by Apple and Google must be music to their ears because google/apple will soon find it challenging and in desperation acquire one of these companies only to find that they have bought a white elephant and not a business.
    People have short memories. Take the case of HP, then a cash rich giant but in decline, buys Autonomy in desperation. Less than an year down the line, HP discovers that they have been had, so files a lawsuit! I wouldn’t be surprised if hp-autonomy is in the making in the music world too.
    Now that Daniel Loeb has set the motion to break up sony entertainment, these Apple wannabies will be knocking on Hirai’s door to promise him to regain the walkman days.
    So ladies and gentlemen, its just a game.

    Reply
  6. facts
    facts

    Um… Deezer doesnt have 4 million paying subs.
    Over 95% of its ‘subscribers’ get it for free with their mobile phone contract.
    Less than 20% of all of those people have ever even turned it on.
    Its sure as hell not making $10 per month per user from these people either…

    Reply

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