Deezer is On Song with £81m Boost from Warner Music Owner

on Oct 9, 2012
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Music streaming subscription service Deezer has secured $130 million (£81 million) in funding from Russian billionaire Len Blavatnik, whose Access Industries group bought the world’s third-largest music company Warner Music last year, The Times reported on 8 October 2012.

While details in regards to the deal and the use of the funds are set to be announced at a press conference on Wednesday, Deezer revealed that Blavatnik’s investment will support its worldwide rollout plans. The Paris-based company, which is Spotify’s main competitor, is in the middle of an aggressive expansion into 200 countries. Last year, the company launched in the UK and other European as well as South American countries, where it has established a significant user base. After the relative success of this expansion, Deezer’s chief executive Axel Dauchez has laid out plans to offer the service in every country apart from Japan and the United States.

Described by Blavatnik as a “state-of-the-art music service with enormous potential”, Deezer has been profitable since 2010 thanks to “long and patient work with both the record labels and the artists themselves”. The company’s success stems from partnerships with Facebook as well as network operators like Deutsche Telekom and Orange who push the service to their mobile customers, boosting subscriptions significantly. The French music service’s strategy also includes focusing on markets outside the US where user acquisition costs are lower as competition is less intense.

!m[Russian Billionaire Len Blavatnik Sees “Enormous Potential” in French Music Streaming Service ](/uploads/story/548/thumbs/pic1_inline.png)Recently, Deezer has announced that the number of its paying subscribers has reached two million while active monthly users account for seven million. Discussing the paid subscribers’ milestone and Blavatnik’s investment, CEO Dauchez said: “One year ago, we launched Deezer worldwide. We now operate across every continent and have two million paid subscribers. To use a rugby analogy, we’ve done all the hard yards in the space of a year; with this $130 million investment we are converting the try.” He added: “With such a partner, our proven growth and our track record in profitability, Deezer is on the right track to becoming the leading digital music service worldwide and representing five per cent of the music market by 2016.”

The deal for Deezer is France’s biggest start-up funding round and also means an important tie-up to Warner Music, one of the now three remaining major labels with Universal and Sony BMG. According to market watchers, the connection with Warner Music could help the French online music business push into the US music streaming industry.
Dauchez, however, said that Access Industries was an important investor but did not hold a majority stake which can make the company dependant on Warner Music deals with the music industry: “We are separate from Warner Music. Access has a minority stake in our company. I disclose this to other major record labels and explained why we are keeping 100 per cent independence. There is no industrial link between us and Warner Music.”

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