A French music streaming company hopes to take on Spotify and Apple in the battle for paying subscribers after it announced plans to list in Paris with a value of about €1.1 billion.
Deezer has been a bit-part player in Britain but has proved a bigger success in its home market and has gone into partnership with Sonos and Bose to get into the US. It had 6.3 million paying users at the end of June according to a company filing.
Spotify has more than 20 million paying subscribers and has also been thought to want to come to market, probably in the US. The company, which was originally Swedish, was valued at $8.5 billion at its most recent funding round.
Deezer’s float will test investors’ appetite for music streaming companies amid the uncertainty over the success of Apple Music, which was launched this year on the back of the iPhone maker’s Beats acquisition.
The French company wants to raise €300 million by selling 8.2 million new shares. It plans to use the funds to tackle Spotify and Apple head on with marketing campaigns.
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Deezer appointed Hans-Holger Albrecht, the former head of telecoms company Millicom, as chief executive in December, which marked a turning point for the company. “The music market is rebounding after some tough years, and the streaming segment should grow even faster,” he said. He dismissed the threat of Apple’s music service. “We’re used to tough competition,” he added.
Deezer’s largest investors include Orange, the telecoms company partly owned by the French government, with 12 per cent, and Len Blavatnik, the billionaire who controls Warner Music, which owns almost 30 per cent of the shares. Xavier Niel, the entrepreneur who made his millions in online pornography before launching the Free broadband network in France, has a 4 per cent stake. Universal, Sony, EMI and Warner Music also hold a large portion of the shares.
Deezer found itself in the spotlight at a telecoms conference held in Barcelona this year when Lohan Presencer, the chief executive of the Ministry of Sound label, attacked services that offer free music streaming. “You espouse the rhetoric of supporting the music industry when the reality is that you work for companies funded by investors who want to see an exit,” he said in a transcript published by Music Business Worldwide.
The Deezer executive said the company had between 10 million and 16 million free subscribers.
Deezer has 35 million songs in its database and also carries articles to attract users. British mobile phone users on the Orange network were offered free Deezer streaming as part of their contracts five years ago but few took to the service.