Streaming music service Deezer was planning a major funding announcement later this week, but French newspaper Le Figaro jumped the gun on Saturday and broke the news.
That news being a €100m ($130m) funding round from the parent company of Warner Music Group, Access Industries. €25m of the investment will be used to acquire shares from existing shareholders, according to the report.
The funding was due to be announced at a press conference in London on Wednesday this week (10-Oct), although there will still be news to break judging by the invite: a “new product interface”, details of new features in “global scope, local editorial and music discovery”, and some figures on Deezer’s growth in 2012.
In the meantime, the funding news gives plenty of food for thought. Labels owning stakes in streaming services is hardly a new trend, but such a sizeable investment from the owner of a single major presents several questions, including what it will mean for Deezer’s future licensing negotiations with WMG, but also with the other majors.
Take a wider view, though, based on $130m heading into Deezer, and ongoing rumours that Spotify may be closing an even larger funding round. These companies can’t continue losing money forever. The solution either comes through organic growth of their businesses – global growth, more free users converting to subscribers – or through a wholesale rethink of their royalties commitments.
Hundreds of millions of dollars pumped into these services either buys the necessary time to achieve the former, or dangerously delays the crunch point for initiating the latter. Expect both points of view to be tubthumped in the coming days.