Deezer to raise €300m to chase Spotify and Apple
French music streaming service Deezer is aiming to raise €300 million (Australian $467.5 million) in a bid to grab market share and subscribers from Spotify and Apple.
It will sell up to 8.2 million new shares when it lists on the Paris stock exchange on October 30. It has set a price tag of between €36.40 ($56.72) and €49.24 ($76.73) for the initial public offering (IPO), with the price to be set on October 27.
The 35-million track Deezer, which was found in 2007, has around 6.3 million subscribers (down from 6.9 million last December) and 16 million users a month. Its main rival, Sweden’s Spotify, claims 75 million users, of which 20 million subscribe to its paid-for product.
The IPO would give Deezer a value of between €900 million ($1.4 billion) and €1.1 billion ($1.7 billion), its Operations Director Simon Baldeyrou said. Spotify is valued at more than US$8 billion (A$10.9 billion).
The French company is found in 180 countries, but most of its subscribers are in France. About 4.8 million of these get Deezer as part of a mobile phone bundle with French telcom Orange, which also has a 11% stake in Deezer. Altogether, 40 telecos sell Deezer subscriptions around the world. Deezer’s challenge is to turn these users to full subscribers.
The IPO will allow Deezer to expand its offering, improve its product and content, and "drive deeper distribution through our telecom and manufacturer partnerships," CEO Hans-Holger Albrecht said.
“The IPO is a landmark moment in the history of Deezer that will allow us to consolidate our position as a leading global, independent audio streaming service and bring our offering to music lovers around the world. The IPO will allow us to accelerate our growth and continue to play a leading role at the forefront of the music streaming revolution.”
Last year Deezer made a loss of €27 million ($42 million) from a turn-over of €142 million ($221.3 million). In the first six months of 2015, its revenue was €93.57 ($145.8 million), a 40.9% jump from the same period in 2014. Its projected revenue growth for this year is 35%.
Aside from Orange, stakeholders in Deezer include Russian/ American billionaire and Warner Music owner Len Blavatnik’s Access Industries (27%), while record companies Universal, Sony and Warner jointly have 15%. French telecoms entrepreneur Xavier Niel also has a stake.
In the past weeks, Deezer has struck deals in the UK and Europe. A tie-up with TalkSport offers Premier League and FA Cup matches on its service in the UK. A deal concuded with Sport1.fm provides match commentary from the Bundesliga on its service in Germany.
Its latest deal is with BandPage to help artists make more money. Artists of course don’t make much money from streaming services, But BandPage has learned, from an earlier team-up with Rhapsody, that millions of streamers can be turned into customers through correct marketing and right offers at the right time. 500,000 of BandPage’s artists have offers going at the moment.
The Deezer deal allows BandPage to expand from helping musicians increase merchandising and concert ticket sales to also help the artists keep their pages up to date.