Deezer, the Paris-based music streaming service that competes against the likes of Spotify and Rdio, is switching up its game in the battle for more differentiation, more users and a higher profile in the U.S. It has acquired Stitcher, the San Francisco-based aggregator of podcasts and talk radio programming.
Stitcher has amassed a catalog of 35,000 radio shows and podcasts, including eight of the top 10 U.S. radio shows. Its content comes from 12,000 providers, including NPR, BBC, Fox News, Wall Street Journal, This American Life, Marc Maron and CBS Radio News.
Tyler Goldman, Deezer’s U.S. CEO, said in an interview that users will can continue to access these through Stitcher’s standalone iOS and Android apps and website, and through embedded links, like this one:
The bigger plan is to integrate Stitcher’s audio content into Deezer’s existing platform with 35 million music tracks, initially as a free service called Talk.
“We were working on Talk already for some time and so Stitcher will help accelerate those efforts,” he said.
There is another interesting aspect to Stitcher’s service that Deezer also hopes to leverage: in-car audio services. Stitcher is integrated already into some 50 car models from BMW, Ford, General Motors, Jaguar and Mazda, and it was a launch partner both for Apple CarPlay and Android Auto.
Goldman and Deezer hope that this will help Deezer get its foot in the door with those carmakers and drivers by offering an all-in-one solution. “Deezer’s already with a number of auto players, but Stitcher has even more,” he said. “We believe that car manufacturers are looking for a complete solution, more content and global reach.”
The acquisition also comes at a key time for Deezer. After closing a $130 million round of funding in 2012 from Warner Music controller Access industries, Deezer has been working hard to scale up its business globally and develop its product to capitalise on the growing interest in streaming and digital music services as a legit replacement for physical media.
But the economics of streaming services continues to fox players in the space, and at the moment it seems that the one (still) to beat is Spotify in terms of streaming music popularity and mindshare.
On top of that, Deezer also had some significant management upheaval. Axel Dauchez left his role as CEO of the company in April of this year, and he has yet to be replaced, even though Deezer had said a successor would be in place by September. Goldman joined in February 2014 as part of the company’s efforts to grow in the U.S.
This is Deezer’s first acquisition of a non-music service, and its first involving people. As part of the it, 22 employees from Stitcher will join Deezer, including co-founder & CTO Peter deVroede, who becomes VP of Engineering for Talk; and Todd Pringle, who becomes GM and VP of product for Talk. Noah Shanok, Stitcher’s other co-founder and CEO, will become a consultant to Stitcher and Deezer.
(In 2010, Deezer acquired a French streaming service called Wormee, and in 2014 a company called MIM which operates a streaming service called Ampya in Germany, both to acquire customers in the respective regions.)
The terms of the deal have not been disclosed, although we are still trying to find out.
Stitcher had raised just under $19 million since opening for business 2008. But of late it had been somewhat quiet on the funding front: its most recent investment was a $10-million Series C round more than three years ago, from New Enterprise Associates, Benchmark, New Atlantic Ventures and Ron Conway. Other investors in the company include Great Oaks Venture Capital and Conway’s SV Angel.
Goldman would not comment on whether the sale was related to Stitcher reaching a crossroads, where it either needed to raise more money or exit.
It seems in any case that desipite the size of its catalog, Stitcher had a modest user base — 1 million monthly active users, with about 85% of them in the U.S., Goldman told me. Deezer, meanwhile, has 16 million total users across 180 countries, 5 million of them paying for premium services.
But the opportunity to tap into a wider group of people who are listening to talk radio and other non-music-based audio programming is big. In the past month, some 39 million people in the U.S. have listened to an audio podcast, according to figures from Edison Research cited by Deezer.
Yet a lot of that is very fragmented listening across a number of different platforms, or via other third-party aggregating services like Apple’s own iTunes. Right now Stitcher is the number-two app in the iOS store for podcasts, while iTunes is number one; it claims the number-one spot for Android. Deezer believes that by coupling Stitcher’s talk programming with its music offering, it could introduce the music platform to more of the talk-show crowd, and also recommend talk programming alongside music to extend the engagement of Deezer’s music user-base.