Germany’s ProSiebenSat.1 Takes Stake In Deezer And Merges In Its Music Effort

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Deezer, one of a band of startups that hopes to rival Spotify in the streaming music business, is bulking up a bit more today in Europe: it is tying up with German media conglomerate ProSiebenSat.1, which is taking a stake in the French company, and as part of it is also merging its own music streaming effort, AMPYA, into Deezer.

The size of the investment and stake in Deezer is not being disclosed but German newspaper Die Welt is reporting it as under 50%. Deezer has raised nearly $150 million with investors including a $130 million injection last year from Access Industries.

The move is a sign of how the music streaming business, with its royalty payouts and thin margins, is one that needs scale to work.

And, beyond that, perhaps it simply needs more laser focus to fly: ProSiebenSat.1 is a huge conglomerate with TV, radio and print interests, meaning a fledgling and potentially costly music operation is just the kind of thing to get muted in terms of investment and operational attention.

AMPYA had first opened for business in June 2013, as a collaboration with Hamburg-based Mondia Media. It featured 20 million songs (to Deezer’s 30 million), 100,000 radio stations, news and other content. It also ponied up big time for exclusive events. Among them, it hosted the world premier of Lady Gaga’s ARTPOP album in Berlin.

The news comes on the heels of several other signs of growth and consolidation in the music streaming industry. Spotify is now reporting 10 million paid users and 40 million users overall in what many believe is a lead up to an IPO. Google is reportedly looking to buy Songza (an acquisition that we understand sounds like it’s still being worked out) and Apple has acquired Beats Music as part of its purchase of Beats Electronics for some $3 billion. And over in Europe, 7Digital has merged with UPC Music Group, listed on London’s AIM exchange and inked deals with Lenovo (where it will power the music service Guvera pre-loaded on Lenovo handsets) and hi-fi maker Onkyo.

As a point of comparison on size, Deezer’s latest figures give the company 5 million paid users, half of the number at Spotify. Deezer has a total of 16 million active users monthly across 180 countries (versus 40 million at Spotify), giving it a better ratio of paid users, if a smaller number in real terms.

“Deezer and ProSiebenSat.1 are moving forward together. With Deezer we are offering the most intuitive personalised music service on the market,” said Gerrit Schumann, Vice President of Deezer Europe in a statement. “With the reach of the ProSiebenSat.1 Group we will be allowing an even larger audience unlimited access to our music catalogue.”

Under the terms of this deal, AMPYA’s operational business will be merged with Deezer, although for now the AMPYA portal — a mixture of music and editorial content include material from Songtexte.com, will stay intact and operate under the “MyVideo” brand. AMPYA featured online events such as premiers of new acts and those will continue to run, now on the Deezer platform. Deezer will also take over AMPYA’s existing deal to provide music and music content to mobile carrier Vodafone in Germany.

Mobile is already a big area for Deezer, with some 75% of all Deezer tracks consumed today on mobile devices.

As part of the deal, Michael Krause, the MD of AMPYA, will become the MD of Deezer for Germany, Austria and Switzerland.

Image: Berlin Wall, Flickr