A European Music Streamer Seeks the Spotlight with a SPAC Deal
In a significant move, Deezer, a prominent music streaming service in Europe, is set to go public through a Special Purpose Acquisition Company (SPAC) deal. This merger with I2PO, led by former WarnerMedia executive Iris Knobloch, values Deezer at $1.1 billion. Founded in 2007, the company has had its share of struggles and setbacks, including a failed attempt at an initial public offering (IPO) in 2015.
The Struggle to Compete with Industry Giants
Deezer’s journey to becoming a publicly traded entity is not without challenges. Despite being one of the earliest players in the music streaming market, Deezer has faced intense competition from major industry leaders such as Spotify, Amazon Music, and Apple Music. As of Q2 2021, Deezer held only 2% of the global streaming music subscription market share.
However, the company’s popularity abroad, particularly in France and Brazil, presents an interesting dynamic. In these regions, Deezer holds significant market shares of 29% and 17%, respectively. This contrast highlights the challenges faced by Deezer in penetrating the U.S. market effectively.
Unprofitable but Optimistic
According to recent reports, Deezer is not yet profitable. Nevertheless, the company’s deal with I2PO suggests a commitment to achieving profitability by 2025. With 9.6 million subscribers and an extensive music library comprising 90 million songs, podcasts, and audiobooks, Deezer generated €400 million in revenue last year.
A Competitive Advantage: HiFi Audio
One area where Deezer stands out is its offer of HiFi audio quality, a feature that Spotify has yet to adopt. This distinction could potentially attract users seeking high-quality listening experiences. Additionally, the company’s expressed interest in implementing a more musician-friendly payment model resonates with the concerns of artists regarding low streaming payouts.
A New Era for Deezer: Public Listing and Growth Prospects
With its planned public listing on Euronext Paris, Deezer is poised to tap into new sources of funding. CEO Jeronimo Folgueira’s statement emphasizes the company’s unique position in the growing music streaming industry. As it embarks on this journey, Deezer seeks to leverage its competitive product, clear strategy, and revitalized management team to create substantial shareholder value.
The Economics of Music Streaming: A Closer Look at Deezer’s SPAC
The music streaming landscape is marked by intense competition, varying business models, and shifting consumer preferences. The economics behind this industry are complex, with multiple players vying for market share. As companies like Spotify, Apple Music, and Amazon Music continue to dominate the market, smaller players like Deezer must innovate and adapt to remain competitive.
A SPAC Deal: What It Means for Deezer
Deezer’s decision to go public via a SPAC deal underscores its commitment to growth and expansion. This structure allows the company to leverage the resources of I2PO while maintaining control over its operations. The planned listing on Euronext Paris is expected to provide Deezer with increased visibility, access to capital markets, and opportunities for strategic partnerships.
Conclusion
Deezer’s path to becoming a publicly traded entity has been marked by challenges and setbacks. However, through its determination to innovate and adapt, the company seeks to carve out a distinct position in the competitive music streaming market. With its planned public listing, Deezer aims to tap into new sources of funding while leveraging its strengths in HiFi audio quality and musician-friendly payment models.