Published in The Music Network
In the fast-crowding space that is the streaming music market, Deezer has a few handy cards to play – experience and loads of cash. Len Blavatnik, chairman of Warner Music Group’s new owner Access Industries, seemingly pushed Deezer to the head of the pack when his firm recently pumped-in investment to the tune of $130 million.
Launched in France in 2007, the Web-based service boasts two million subscribers, and claims more than seven million active monthly users. Since 2010, Deezer says it has been running profitably and its catalogue of 20 million tracks is arguably the biggest among all the legal streaming models. Deezer embarked on an aggressive expansion in late 2011, and now boasts operations in 160 countries. And it’s targeting more. That international push included a business in Australia, which quietly launched here April 12 and is now helmed by Thomas Heymann. Heymann’s CV includes roles with Sony Music here and in Germany, and he has served as VP Strategic Marketing at Warner Music Australia. Prior to joining Deezer, Heymann was owner and Director of music label, management and consultancy business themusicconnection, and Program Director of Entertainment Management at the Australian Institute Of Music (AIM).
What does Deezer’s $130 million cash injection mean for labels and artists here?
We are using that money on a global level to grow the staff, and invest in the right partnerships and technology. Really, it’s for growing the business. It means we’re in a position to feed that investment into local, Australian artists and help develop them. And it’s about making our marketing and social media tools and our partnership deals available to them. We’re living in a global marketplace. Deezer’s position is to break down boundaries and to break down the old distribution model. For global citizens, for someone, say from Korea living in Sydney, they’ll have access to his local music in Australia as well. We believe music is global and should be available globally. (The investment) means we’re a serious player in this market. So we’re here to stay.
What’s the killer sales point of Deezer?
Editorial. Part of Deezer’s global rollout is that we have a local editor. We’re publishing a bi-weekly newsletter, which goes out to 50,000 subscribers. And we’re running a local Facebook page. At the moment we’re focusing very much on developing artists. That’s the spirit of the business we’re in right now. We’re getting feedback from the labels and artists. You can talk with us, meet with us, set up campaigns with us. We have some sophisticated marketing tools which you can share with artists and labels. And we have better sound quality than any other music streaming service. And we’re a real local operator. We’re already finding a lot of interest from Australian artists who operate globally on the potential to getting access to our two million subscribers worldwide.
There’s talk of a free service. Is that essential to compete?
Yes, we’ve announced we’re going to launch a free service. We don’t know when we’re going to do that. But it will certainly be different to our competitors. We come from a position as a business that’s actually making money and we’ve got two million people worldwide paying for our service. We’re going to use that free service as an acquisition tool to gain more subscribers. We’re all about building a sustainable long term business model. That’s very much our focus.
Do you get a sense that it’s now an overcrowded market?
I don’t feel so. At the moment, the only people talking about (saturation) are in the industry. I believe there will be a shakeout over time. And there may be three or four–or even less services–left over. To a degree, we’re all working together to educate the consumer about the benefit of music subscription as an alternative to piracy.
How powerful is that “free” market here in Australia?
Piracy, of course, is still a massive concern in Australia. All the labels we’ve met in Australia are incredibly supportive of our launch. Generally, music subscription is seen as a legal alternative to piracy. It’s basically taking the excuse away from people who are using pirated music.
Are digital downloads on the way out?
It’s hard to say. With Deezer worldwide, our users are listening on average two hours a day. If you’re part of music subscription, I believe you’ll use it more often because you’re not confined to certain devices where you have downloaded or stored those tracks.
You’re not operating yet in the US or Japan. Is that going to change anytime soon?
It will happen. At the moment, we are very much focusing on emerging markets and fast-growing markets. Australia has been identified by Deezer as one of the most attractive, fastest growing markets around the world.