“The launch date is not final yet. But 2014 will be an American year for us,” co-founder and CTO Daniel Marhely told the news agency AFP.
Yet, the company has voluntarily avoided entering the U.S. market, stating that there is too much competition — other countries, such as Brazil or Germany, present bigger opportunities for Deezer. But it’s all about to change.
The U.S. remains by far the largest music market in the world, and it’s an unavoidable step for most music startups. For example, one year after its American launch, Spotify reported one million paid subscribers in the country alone. Recently, Spotify and Deezer respectively announced 6 and 5 million paid subscribers.
As the Rdio layoffs have told us, the music industry is a tough industry with razor-thin margins. It’s hard to make people pay — revenue opportunities are limited.
That’s why Deezer is looking for a partner for its U.S. expansion. In order to become widely available and to make a dent in this new competitive market, the company could reproduce its existing strategy.
For example, as Orange is a shareholder, the telecom company provides a premium subscription with many smartphone plans in France. It’s a great way to boost Deezer’s revenue. At the same time, Orange communicates on this competitive advantage to attract new subscribers. If AT&T, Verizon and others are not interested, Deezer is willing to partner with other companies outside of the telecom industry as well.
Last year, the company raised a $130 million Series D round to fuel its international growth.
It took Spotify multiple years to sign the content deals before launching in the U.S. in 2011. Initially, the company expected to have the deals in place in a much shorter time, often saying that the deals and the launch were just a few weeks away. Labels were particularly reluctant to allow free ad-supported accounts.
Things have changed since then, and many companies now offer all-you-can-eat streaming services, including Google and Microsoft. Let’s hope that Deezer wasn’t too optimistic with its launch and will have a smoother ride with the music labels.
(Image credit: pasukaru76)