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Deezer: Coming to America In January, 2014…

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Deezer is now preparing a grande entrance into the United States in January, 2014, according to sources inside the company and those with knowledge of the plans.  Here’s what we know so far:

I. ‘Spotify Is Vulnerable’.

The timing comes at a potentially vulnerable moment for Spotify, whose expansion into the United States has been a very costly endeavor.  Spotify has well past one million paying Americans at this point, but the company is getting dangerously close to burning through its available funding.  At present, Spotify is rumored to be securing a large funding round of roughly $200 million; earlier reports pointed to a high balance bank loan.

Hovering in the background is the dabbling billionaire Len Blavatnik, whose massive fortune has given Deezer a $120 million-plus runway.  Blavatnik, who also owns Warner Music Group and wildly overpaid for Parlophone, is likely to offer even more economic firepower ahead.

II. The Race for Global Supremacy.

Either way, Spotify’s lane is about to get even more crowded.  Over the past few years, Deezer and Spotify have been carefully dancing around one another, with Deezer CEO Axel Dauchez pursuing a strategy that involves smaller and more far-flung countries.  As a result, Deezer now has a presence in 180 countries, though the US is arguably the most important missing piece.

Meanwhile, Spotify is rumored to be considering a global expansion similar to that of Deezer, with far-flung, ‘smaller fish’ countries that had previously been ignored.  And part of the motivation for this goes beyond Deezer, with YouTube Music an increasingly important consideration in this picture (see below).

III. Deezer’s ‘Sketchy Subscriber Numbers’.

Meanwhile, executives at Spotify are crying foul on a recent subscriber claim by Deezer.  Earlier this month, Deezer proclaimed 5 million worldwide subscribers (compared to Spotify’s nearly 7 million), though Spotify complained that most of those ‘paying’ subscribers are actually bundled into existing, broader mobile contracts.

Spotify’s subscribers, on the other hand, are almost all direct-paying clients.

Which means, Spotify is potentially 6 or even 7 times as large as Deezer, at least on the yardstick of direct-paying subscribers.

Not to be discounted in this discussion is Muve Music, whose nearly-two million paying subscribers are all part of bundled mobile relationships (ie, packages that includes texting, browsing, email, music, etc.)

IV. Deezer + Mobile Carriers

So how will Deezer make its entrance?  According to sources to Digital Music News, Deezer is entertaining the possibility of entering the American market with a major mobile carrier, though it was underscored that this is only a possibility.  Verizon Wireless stuck out as one possible partner, though in all likelihood, Deezer will enter the market on its own.  ‘It doesn’t look like there will be a carrier partner as of now,” one source told DMN.

“But they will definitely be here in January.”

V. Deezer + Microsoft

Want to sprinkle some more spice onto this discussion?  Enter Microsoft, rumored to be in early-stage discussions with Deezer that could result in an acquisition.  Microsoft, a repeatedly epic failure in the digital music space, could be eyeing Deezer as a way to finally achieve traction.  “They aren’t in deep negotiations at this point, but it’s definitely on the table,” a source relayed.

VI. The YouTube Music ‘Problem’.

And, weighing very, very heavily on this discussion is YouTube Music, whose music streaming service is expected to arrive by Christmas.  That has the potential to create another very serious problem for Spotify, and, according to one source, could be motivating accelerated expansion plans into “the ROW,” corporate-speak for “rest of the world.”

Either way, Spotify now has two heavily-funded, extremely aggressive competitors to deal with: Deezer (with Blavatnik’s support), and YouTube Music (with the nearly-bottomless support of Google). That could grow the pie overall, but make life extremely difficult for the competitors involved.

Smaller players like Rhapsody, who are already losing money (and possibly subscribers), may have difficulty surviving 2014.

More as it develops.

 

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Comments (17)
  1. TuneHunter

    All of them are in the race to a zombie zone.
    in 2020 all investments and affords to streaming wonderland will reach saturation.
    The net result will be the music industry with 500 million subs and 30 billion dollars in global revenues.

    We have 100 billion dollars around us – lets grab it!


    Reply
  2. Grumplestiltskin

    And don’t forget about Beats, who have been oddly quiet recently… weren’t they supposed to launch around now?


    Reply
  3. Prophet Q

    I estimate that by the year 2020 there will be no major record labels.

    All music streaming/download services will shut down.

    All listeners around the world will enjoy free music on Google’s Websites (including YouTube) and on Artists’ Official Websites.

    Popular artists that will not make their music available for free on Google’s websites or on their own official websites will be forgotten by the people. Unknown artists that will not make their music available for free on Google’s websites or on their own official websites will never become famous.

    Music (along many other things) will be a free service to humanity.


    Reply
    1. Yves Villeneuve

      Keep dreaming. You obviously don’t understand economics and that there is no such thing as one size fits all.


      Reply
    2. DAmatt

      A free service to humanity? What do the music makers do for a living then? Surely you aren’t suggesting that humanity will have moved past the need for money.


      Reply
      1. TuneHunter

        it will be humanity in the state of nirvana or pure communism – lets move to N. Korea now!


        Reply
    3. TheBigOne

      At that point most people won’t have jobs to pay for the music to begin with or the government will *Tell* them what their job is. All pure innocence and peace. The government telling us how to live. Badges? We don’t need no stinkin badges!


      Reply
  4. jw

    Haven’t we gone through this enough times? Bundled or native services tend to be perceived as “just good enough to ship,” & usually never even get tried by most consumers (see: Xbox music). Users also generally don’t want to be locked into a certain platform or provider beyond the life of the hardware. Deezer bundling with Verizon would be a coup for Deezer, but bundled services are likely to go undiscovered and if artists aren’t getting played, they aren’t getting paid. Verizon no longer offers an unlimited bandwidth mobile plan, anyhow, which limits it’s usefulness to wi-fi.

    I have a feeling that the thing that will break streaming into the mainstream will be hardware endorsements. Hard formats like floppy disks, cassette tapes, compact discs, etc. can be phased out by hardware manufacturers, and the current gen format just shows up on Best Buy’s shelves. CDs will be phased out, but mp3s are so simple to support, & since DRM has gone the way of the buffalo, they will remain supported across the board indefinitely. But if, for instance, Spotify could buy endorsement stickers (“Supports Spotify!” or “Spotify enabled!”) on gaming consoles, tvs, receivers, smartphones, etc, all of the sudden it becomes the next big thing in the eye of the average consumer. No one is going to check out Rdio based on a billboard in time square. Very few people are going to check out Spotify based on some cryptic tv commercial. Even word of mouth doesn’t do it for all that many people. But eye catching placements in Best Buy would get folks talking. Or an extended free trial with purchases at lifestyle shops like Bass Pro Shops or REI. The bottom line is that the service has to transcend the hardware. You want to be Netflix. You want to be HBO. You want to be portable. You don’t want to be Sony Connect or Xbox Music or Muve Music.

    Anecdotally, I’ve been an Amazon Prime subscriber for years, & I knew they had a free video service bundled with the service, but it wasn’t until I found the app browsing the playstation store that I ever thought to use it, now I use it semi-regularly. If the app had just come pre-installed on my ps3, I would’ve taken advantage a long time ago. Spotify needs to just be there, pre-installed, however much that costs.

    The service that makes the bold play & buys endorsements & pre-installed spots on the major devices for the duration of a hardware generation is going to position itself as the future of the recorded music industry. All of this other stuff is just gossip.

    To that end, Beats may have the marketplace advantage being a hardware company & having pre-existing relationships with retailers. I guess we’ll see.

    But breaking into the U.S. market is COMPLETELY different than anything Deezer has done so far, I wouldn’t just assume that they’ll be a threat to Spotify’s marketshare.


    Reply
    1. jw

      The other key element to purchased hardware endorsements is that it creates a perceived demand, which is essentially how you sell a product. Convince a consumer that other consumers want it.


      Reply
    2. Casey

      Spotify could come preinstalled. Rhapsody did for years, but I imagine Spotify hasn’t given it much of a thought.


      Reply
      1. Anonymous

        They preinstalled in Facebook….


        Reply
  5. Jonas357

    Once again : the figures claimed by Deezer are wrong.
    @Paul : Ask a record label to show you its reporting.
    Il will make you one more good article !


    Reply
  6. Angel ArtStyle

    First of all, Deezer has always been my decent pick because Spotify nor Rdio doesn’t support in my country,although I can use a proxy but that’s not an option because it has to do with streaming’s speed . Rdio has never been my choice because doesnt support offline mode,although it has better GUI than both of them (it sucks). How about the sound quality? I couldn’t easily tell which service sounded better,both of deezer and spotify claim up to 320kbps bitrate


    Reply
  7. TheBigOne

    Rhapsody sucks. They used to let you listen to a certain number of songs for free each month several years ago and during an update without telling anybody they dropped the feature.

    I am actually surprised nobody noticed the feature dropped or did they not notice the feature existing to begin with? I only found one complaint thread searching hard.

    No trolling or bashing please!! *Puts hard hat on*


    Reply
  8. TheBigOne

    Also is Spotify going to go that same route where they get rid of the *free* section like Deezer did? For some reason I used to be able to listen to Deezer several years ago and sometime last year it suddenly started saying “This country is no longer supported* even though it was years ago which I listened to countless tracks of oldies.


    Reply
  9. M. OConnor

    It is now June 20th, 2014. Deezer is still not available in America. Has anyone noticed? They have an American CEO and everything yet we are still unable to use Deezer.

    F for tardiness.


    Reply

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