Islands in the Stream: Deezer

Launched in his bedroom in France in 2007 by then 23-year-old Daniel Marhely, streaming service Deezer now has over 12 million users across 180 countries, and boasts a catalog of over 43 million tracks.  Deezer is also a friend to Podcast, with over 40,000 available to users.

Clearly a force to be reckoned with, Deezer is bound to make waves with scuttlebutt of their plans to switch to “artist centric” licensing, vs. “service” or “user” centric.  As it stands now, the standard is service based – for the streaming peeps to divide up the revenue by way of the total tracks streamed, taking that number and multiplying that per stream rate by number of songs streamed for each artist. The user-centric form sees royalties are paid out based on each individual user’s listening habits, rather than the entire pool of monthly listening.

MIDiA Research’s Mark Mulligan helps us understand. “So if a subscriber listens 100% to Metallica, Metallica gets 100% of the royalty revenue generated by that subscriber.”  This is counter to the existing sitch where “if Katy Perry accounted for 10% of all streams in a month, the 10% of that metal fan’s subscription fee effectively goes towards Katy Perry and her label and publisher”.

My brain hurts. Mulligan characterized label reaction overall as “cautious optimism“ in response to the rumored ponderings. “If Deezer is able to persuade the labels to put user- centric licensing in place, it will be another sign of increasingly maturity for the streaming market,” he shared. “User centric licensing could, and should, be just one part of getting streaming ready for another 5 years of growth.”  It’s a complicated re-think, for sure, and brings to mind “long tail” marketing principles. MIDiA Research is a boutique media and technology analysis company focused “solely on the intersection of content and technology, working with both the biggest global companies and early stage startups.” MIDiA’s bevy of clients includes young upstarts like Viacom, Samsung, BBC Worldwide, Samsung and more.

Just as rumors are afoot re: this shift, Deezer has amped up promotion of Flow, the magic behind its programming. Flow is the name given to the playlists and suggestions resulting from users’ listening habits once compared with other network profiles. Expect to see campaigns reinforcing the Flow brand across the UK, Germany, France, and South Africa. Clearly always looking forward, Deezer’s chief commercial officer Golan Shaked shared “Flow is a product feature, but it really focuses on the fact that music streaming services have to evolve.” While available in more countries than Spotify, there’s no word yet as to when Deezer will be stateside. Stay tuned for developing news from Deezer’s developers!

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