Deezer rides a doozy of a storm as CEO is ousted by investors

Comment

[France] Music search and discovering service Deezer is currently caught up in a storm of controversy: its co-founder and CEO Jonathan Benassaya has effectively been forced out by his investors. After Deezer faced mounting competition from services like Spotify, it’s emerged that investors ousted the founder in order to put in place a more experienced business manager to both reorganize and perhaps prepare some kind of exit. They’ve been disappointed with Deezer’s performance towards a premium service and low advertising revenues.

The rumour that this was about to happen began last week grew a head of steam over the weekend, as reported by music expert Philippe Astor on French site Electronlibre (Google translation). Midem, the annual conference for the music industry, is currently taking place in Cannes, France and the departure of Jonathan Bessaya from Deezer was one of the buzzing topics during the weekend. One of the things that confirmed this rumour was that the CEO was due to participate on a panel on Saturday during Midemnet (the part of Midem focused on the online music industry) but he conspicuously did not show up. His name was even up on screen during the panel he was supposed to attend. On this panel was also Paul Brown, SVP of Spotify, that is widely regarded as a Deezer killer.

Deezer had tried to make changes to its model over the last months, from a free service to a premium based one (€9.99 for unlimited streaming a month). Announced in November 2009, this premium model probably (according to Electronlibre) attracted only 10,000 people in about three months. The 100,000 target before the end of 2010 seemed impossible to reach. Of course, Deezer still has 10 million users in Europe, 6m of them in France, but if it cannot monetize these users, or make them switch to the premium model, it’ll be hard going for the company.

Deezer raised €6.5 million in October 2009 in a series B round, bringing the total amount invested to approx €12.2 million, but a big part of this money was used to pay royalties to majors (one of the strengths of Deezer were these agreements, but it seems they had weakened the company). That’s certainly a reason why, as explained by Philippe Astor in his article, Deezer could not invest in the development of a new rich desktop client (such as Spotify, or iTunes) since desktop clients are clearly seen by music experts or even by consumers as the winning format, the “digital jukebox”.

Mike Butcher adds:

There are two ways to take this news. Either it’s part of a worrying pattern in the French tech scene where founders are ruthlessly replaced by investors who are hungry for the business to be run by a more career professional manager. To a greater or lesser extent, this effectively happened to Benjamin Bejbaum of DailyMotion. And similar happened to Tariq Krim, founder of Netvibes.

The other way to take this is that the controversy has arisen because, in French tech culture, being the CEO is considered to be everything. This is not the case in the U.S., where startup founders are usually quite happy to be kicked upstairs to a Chairman role or somesuch, because founders are still considered the rockstars. Not so in mainstream French business culture, where, to be the rockstar, you have to be the CEO. This is the reverse of the UK or US scene, where founders get the respect, and the CEO is generally seen as just a business person brought in to make things run smoothly. In France, once a tech founder is not the CEO, it’s like Samson losing his hair. I wrote about this at length a while ago.

Thus you get a scenario where the CEO is dragged kicking a screaming out of the building, or just starts not turning up to big events (see above) rather than making a more dignified transition to a chairman role and saving the investors the problem of having to mount a coup d’état.

More TechCrunch

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

20 hours ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

22 hours ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities

For Mark Zuckerberg’s 40th birthday, his wife got him a photoshoot. Zuckerberg gives the camera a sly smile as he sits amid a carefully crafted re-creation of his childhood bedroom.…

Mark Zuckerberg’s makeover: Midlife crisis or carefully crafted rebrand?

Strava announced a slew of features, including AI to weed out leaderboard cheats, a new ‘family’ subscription plan, dark mode and more.

Strava taps AI to weed out leaderboard cheats, unveils ‘family’ plan, dark mode and more

We all fall down sometimes. Astronauts are no exception. You need to be in peak physical condition for space travel, but bulky space suits and lower gravity levels can be…

Astronauts fall over. Robotic limbs can help them back up.

Microsoft will launch its custom Cobalt 100 chips to customers as a public preview at its Build conference next week, TechCrunch has learned. In an analyst briefing ahead of Build,…

Microsoft’s custom Cobalt chips will come to Azure next week

What a wild week for transportation news! It was a smorgasbord of news that seemed to touch every sector and theme in transportation.

Tesla keeps cutting jobs and the feds probe Waymo

Sony Music Group has sent letters to more than 700 tech companies and music streaming services to warn them not to use its music to train AI without explicit permission.…

Sony Music warns tech companies over ‘unauthorized’ use of its content to train AI

Winston Chi, Butter’s founder and CEO, told TechCrunch that “most parties, including our investors and us, are making money” from the exit.

GrubMarket buys Butter to give its food distribution tech an AI boost

The investor lawsuit is related to Bolt securing a $30 million personal loan to Ryan Breslow, which was later defaulted on.

Bolt founder Ryan Breslow wants to settle an investor lawsuit by returning $37 million worth of shares

Meta, the parent company of Facebook, launched an enterprise version of the prominent social network in 2015. It always seemed like a stretch for a company built on a consumer…

With the end of Workplace, it’s fair to wonder if Meta was ever serious about the enterprise

X, formerly Twitter, turned TweetDeck into X Pro and pushed it behind a paywall. But there is a new column-based social media tool in town, and it’s from Instagram Threads.…

Meta Threads is testing pinned columns on the web, similar to the old TweetDeck

As part of 2024’s Accessibility Awareness Day, Google is showing off some updates to Android that should be useful to folks with mobility or vision impairments. Project Gameface allows gamers…

Google expands hands-free and eyes-free interfaces on Android