Spotify and Apple Music may suck up lots of the attention in the music-streaming world, but other services have their own global ambitions. Deezer, for example, which continues to grow and launch new features.
Its CEO Hans-Holger Albrecht had one of the keynote slots at Midem’s third day today, interviewed by Music Ally’s Stuart Dredge about his company’s strategy, as well as wider industry issues.
Where Deezer is in 2017
“This year we will have been in the business for 10 years so we have seen everything, more or less, in the streaming industry. I remember when I started here three years ago, there was still a big question about if streaming was the right model and if we would survive […] We are growing quite nicely and this year we will do over €300m in revenue.”
“We have developed a very strong direct customer business which is growing 40% year-on-year. We now have more than 12m active users. We have also adjusted the model a bit to focus more on direct customers and not only partnerships with telcos, for example. Those things we did over the past three years are starting to pay off. It is going well.”
“We are just at the beginning and there are new trends and new innovations coming on in terms of the product and in terms of new technologies. It has been very exciting so far and it will be very exciting going forward.”
“The market is still very young, which people tend to forget. We have less than 7% global penetration when it comes to music streaming. We talk sometimes that it is done in the West and we have to go beyond that. That is not true. We are just at the beginning. If you go to the emerging markets, it’s a very strong growth for us. Latin America is the fastest-growing market that we have for Deezer. Markets like Brazil, Mexico and Colombia are growing very fast. You see not only growth in the West you can conquer completely new markets in the emerging world.”
New billing models in emerging markets
“The vast majority of people there don’t have a credit card so you have to think about how you do payment solutions. The fact we work closely with telcos helps a lot. We have to consider that many people don’t even have email addresses […] In Africa we had to develop a registration process through a mobile phone number.”
Adapting to local tastes
“We believe very much in localisation and local content. You have to pick the genres you want to focus on. In Brazil, for example, it has been gospel. In Germany, it is audio books. Localisation is very important. People respect that and like it. Plus, it creates a point of differentiation from the other streaming services. There is not one solution that fits the world.”
The importance of lean-back listening
“Nowadays more than 50% of the usage of Deezer is lean-back. It’s users expecting the service to know what they want and to entertain them. That is why we developed a unique product – Flow. Every human has their own music DNA […] We try to cover this music DNA by offering this product. On Flow, you just a push a button and we know – based on data, algorithms, experiences and the connection of situations you are in – what kind of music you want to listen to.”
“It is very important to be very active on the lean-back experience. You have to be very clever in what you suggest to the consumer in terms of what old songs and what new songs you give them so that they feel perfectly entertained. That’s the art of creating a good streaming service. Flow is like being in a marriage. Sometimes it works brilliantly and sometimes you say, ‘Jesus Christ – this is really not what I like to do!’ But it is a vision and it’s an idea. It gets better and better.”
Artists and streaming services
“We do the traditional things of bringing the artists on board and promoting them – as well as giving them data and all the support they need. We have a programme called Deezer Next where we try to identify new artists and promote them, helping them to get their songs out and to be successful. We also do a lot on the local basis with local artists. Local content is one of the things we focus a lot on on the Deezer side.”
“We put a lot of effort into Deezer Originals and Deezer Sessions where we do special features together with artists. We do talk shows with artists and put them on our podcast services. It can also go beyond music. We have done things with football, we have audio books, we have political debates. We try to broaden the spectrum of everything a person can listen to.”
“I always said that I don’t believe in having certain songs as an exclusive on a platform. To have some artists exclusive [forever] or exclusive for 14 days doesn’t make the trick. I don’t believe in it. One of the reasons streaming has become so successful is that we made it – compared to the old days – very easy for the customer to find all the music they want to listen to on one place […] We would rather focus on non-music exclusive content like Deezer Originals.”
Payments and user-centric licensing
“We try to be innovative and creative […] Previously it was based on market share […] We always thought that wasn’t fair. It is not fair for some of the labels, but it is even less fair for some of the artists. And it is not fair to the people who pay the money either. If you just listen to Ed Sheeran and nothing else, your £10 per month should go to Ed Sheeran. That is what you paid for and that is what you want to listen to. Today only a small fraction of your money would go to Ed Sheeran.”
“We did a calculation and this is better for mid-sized artists, smaller artists and upcoming artists as it gives them a good chance. If you go deeper into jazz freaks or classical freaks who never listen to Katy Perry, they are still paying for her. It’s not fair.”
“We started the discussion with the labels and the artists. So far we have had pretty good feedback from most of them. We need consensus from all the big players in the field. But it is much more friendly to the customer and we feel it is much fairer to the artist. We have a lot of support already and if it works it could be done by the end of the year.”
Consolidation in the streaming market
“It has happened already. Some mid-size and smaller services have been leaving the business. If you can hold up with the big guys like Apple, Amazon and Spotify – and you grow like Deezer has – then you have a good chance to survive. We always believed there would be four or five big players in the world.”
“It is not as easy to make a streaming service as some people believe. It is not just putting up 40m tracks and off you go. The product is way more complex and it has taken us 10 years to develop this kind of understanding about offering the perfect product; and we still have to optimise it on a constant basis.”
“The speed of innovation in the products is quite aggressive from all of us – from Spotify, from Deezer and so on. You really have to be on your toes to keep up with all these new features coming out.”
On competition issues with Apple, Google and Amazon
“I think that’s a big concern but not only for us. I think this is for everything that happens in terms of the internet. You see a tendency – this is my view – that those big players try to control where is the consumer going? Where is the user going?
You can see they do it via hardware, obviously. They do it via software. They do it via the voice control nowadays, which we believe is a key idea to drive where the consumer is going via these control aspects. So if you go on Alexa for example, they don’t direct somebody who’s searching for Abba to Deezer for sure! They direct them to their own services.
So you see this kind of situation where you have those big giants, and they go into hardware, they go into software, they go into these functions that drive the consumer into the internet. And that’s a concern. And we have to discuss that openly with those players, and with Brussels as well, because that is the strength – or has been the strength – of the internet: it was a kind of free competition and fair competition.
And if we go nowadays and need an update on an app, for example on iOS, it takes weeks, and we need to wait for the approval from their side. Which is all fine: we don’t question this. As long as it’s fair in terms of how we compete with their respective services. That’s the only debate we have, and can be done very transparent… We just want to have a fair competition. That’s the only thing we are saying.”
Voice and machine learning
“We have a working partnership with Amazon. It is one of the big things for the future. Let’s make sure that Alexa is neutral. Voice control overall is a very big innovation […] The biggest bottleneck in our business is talent. Talent is short and we always need more talent. We can’t recruit at the pace we would like to. We are competing with Google and they probably have more people in their cafeteria than we have as employees! It’s a big difference.”