Streaming is the fastest-growing sector of the music industry, expected to account for almost half of retail music revenues by the end of the decade, according to Enders Analysis, a research firm.
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Yet such services are so far unprofitable, since they have high costs for licensing music and face challenges persuading people to pay, and have been criticized by artists such as pop star Taylor Swift for not paying them enough.
Deezer is rapidly positioning itself to compete against rivals Spotify and Apple Music. Compare this to Spotify’s more than 20 million paying subscribers, 30 million tracks, and €1.08 billion in revenue for 2014, but the Swedish company has yet to actually turn a profit, relying heavily on investment; Spotify’s last round of funding it was valued at over $8 billion.
Deezer is also focused on different countries than Spotify, targeting emerging markets in Asia and Africa where users are more accustomed to bundling additional services with their wireless offering.
Analysts have floating a possible valuation in the range of €1 billion ($1.12 billion) for Deezer, but Chief Executive Hans-Holger Albrecht has been mum on how much money or what type pf valuation the streaming service is seeking according to the Wall Street Journal. It aims for positive monthly core earnings (EBITDA) and cash flow by the end of 2018, as well as sales of 750 million.
But Albrecht is convinced Deezer can stay ahead of the competition. It’s beating it to the public markets.
Deezer said that its current owners would not sell stock in the IPO.
Deezer’s largest shareholder with 27 percent is tycoon Len Blavatnik’s Access Industries. Three music labels, Warner Music, Sony Music and Universal Music, part of Vivendi, together own about 15% of the shares.
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BNP Paribas SA and Bank of America Merrill Lynch are managing the IPO with Citigroup Inc. and Societe Generale SA.
