Bubble? Spotify Competitor Deezer Just Raised $130 Million

Updated, 8:30 am PCT (Monday): Deezer has now confirmed the round to Digital Music News.  More details ahead.  

This is either ‘the future,’ or the biggest bubble the music industry has ever witnessed.

You decide: Early Sunday morning, word started leaking that Deezer, an often-ignored Spotify competitor based in France, had secured a massive, $130 million round.  Even better, Warner Music Group owner Len Blavatnik is the massive financier on this one, a tricky stakeholder indeed.

In the very early hours of Monday morning (Pacific time), Deezer confirmed the round to Digital Music News (more details ahead).

Reports on the financing first emerged from French publications like Le Figaro.  The 100 euro (ie, $130.3 million) injection features a hefty contribution by Blavatnik’s Access Industries, as well as significant buyouts of existing, early stakeholders.  Which means early participants are cashing out, even though Deezer (and the streaming space) has yet to mature as an actual business.

Separately, TechCrunch pointed to the presence of financier Idinvest alongside Blavatnik, with original participants like Orange receding from the picture.

But… Deezer?  Who’s that again?  Americans (among others) have never heard the name, and that’s no accident: prior to this point, Deezer decided to strategically avoid the US market, based on hellacious licensing and insurmountable entry costs.  Instead, Deezer has been dotting the globe with more than a hundred installations, often in tiny countries with little-to-no dedicated music offerings (streaming or otherwise).

This will likely change all off that, especially if Warner Music offers comfier terms.  Which would not only position a carniverous competitor for Spotify in the US, but one with a ‘major’ licensing advantage.

And of course, this is all great news for the majors, regardless of how the cookie crumbles.  Ahead of the weekend, financial firm PrivCo broiled Spotify on a number of ‘alarming’ financial problems, while calling for urgent changes.  “Virtually every new dollar of revenue went directly to music companies as royalty payments, evidencing the fact that the more members Spotify adds, the more money the company loses,” PrivCo warned.

Spotify is now expected to collect another $200 million from Goldman Sachs, which means even more cash for the struggling ‘Big Three…’

13 Responses

  1. HansH

    You will love Deezer. Has some clear advantages over Spotify and it can pay a little more to artists because the Free version only plays 30 sec previews.

    About Privco. In 2011 they predicted “Facebook’s IPO won’t happen anytime soon”

    Privco must be laughing their pants of with all this free publicity for buying their $99 dollar reports.

    • Supers

      Just tried to sign up for Deezer, and it doesn’t give me any other option than using a Facebook account. They’re doing the same Facebook forcing crap that Spotify is doing.

      Now remember that Facebook loves Spotify a lot. It’s quite stupid of Deezer to require a Facebook account while Facebook itself is advertising their competitor whenever music sharing is brought up. “Spotify is so good” says Mark Zuckerberg. What a great partner for Deezer!

  2. Nice Guy Eddie

    The major labels are running the sweetest extortion racket right now.

  3. Paradox

    Spotify could be profitable tomorrow if it wants to simply by going the Rhapsody route (no more free users).

    And Spotify has much better scale compare to Rhapsody too.

    But getting rid of free users will slow its growth. Not a good idea. Spotify is rightly focusing on GROWTH GROWTH GROWTH.

  4. John

    Why not just buy one of the platforms the mobile carriers use, like Livewire Mobile.

  5. jw

    What exactly is “strategically avoiding” the US market? I can log in just fine, & play full songs from a US-based facebook account.

      • jw

        Am I an exception or can anyone in the U.S. (who isn’t afraid of facebook cooties) log in & listen to full songs?

        • Visitor

          No.

          I have facebook. When I go to their homepage it says not available in your country. I try to sign uo anyway and it starts to load facebook info then bumps me out.

          I am not so tech savvy, but maybe your facebook acct has EU named as your address and deezer accepts that before your IP address? Like I said I am not tech savvy

        • Visitor

          sorry missed the part where you said your fb acct was US so I have no idea why you can log in

  6. Casey

    Deezer is NOT new to the US. People seem to always forget Deezer’s past, where they did not operate completely legally and could be streamed anywhere.

  7. Visitor2

    It should be noted that Deezer has around 2 million subscribers to date, making it the #2 largest streaming service in the world just behind Spotify.