In 2010, the French telecommunications company Orange was looking for a way into the music market after it’s previous attempt, music site Wormee
, didn’t catch the same amount of fire. (It should be said the Wormee logo was a delightful orange worm with headphones!!) And instead of trying to compete in what was becoming a crowded music streaming market, Orange decided to invest in Deezer and put the platform into its phones. By the summer of 2011, Deezer had cracked over a million paying subscribers.
Deezer did receive early investment before Orange, but the spark that proved the company wasn’t just a money sinkhole didn’t arrive through innovation or new technology. Rather, a large multinational firm simply used its market position to drive consumers to use a product they may or may not have even desired. This allowed for Deezer to somewhat stay afloat even though the core issues of the company (not making money, paying out too much money to labels, and not sustaining real growth) remained.
In the fall 2012, Deezer raised $130 million
in preparation for an international launch that included the United States, and perhaps unsurprisingly, over $100 million of this funding came from Access Industries, the firm that owns Warner Music Group. Over the next few years, Deezer attempted to follow Pandora’s lead and IPO
, but backed out in late 2015. Music Business Worldwide laid out a number of reasons
for Deezer’s decisions that ranged from it losing subscribers, paying labels too much, not earning enough from its existing subscribers, and still being supported by its deal with Orange. All of these are perfectly valid reasons for the company not to make this move, but it raises the question: who exactly is benefitting from Deezer’s continued existence?
Just looking at the money raised over the last few years make it fairly clear. In January 2016, post-IPO collapse, the company raised another $109 million
from…Access Industries and Orange. Then, last August Deezer announced a new round of investment worth 160 million euro
from its old pals Access Industries and Orange, but also the Saudi Arabian companies the Rotana Group and Kingdom Holding Company. Rotana’s buy-in included an exclusive deal for Deezer to launch in the Middle East and North Africa for exclusive rights to Rotana Music, one of the biggest Middle Eastern music labels
. That neither Deezer or Spotify
are boasting about their success in these new markets a year post-launch does make me chuckle. So, I’ll be glib to state a company that mostly exists to print for record labels and to provide a music service for Orange users isn’t exactly too compelling.