Deputy CEO of Deezer has said users are more likely to cut video streaming subscriptions than they are music as consumers are forced to tighten their belts on subscriptions.
Speaking with City A.M., Stéphane Rougeot, who is also CFO of the newly Paris-listed firm, said the audio streamer hadn’t seen any “material impact” to its subscriber base, with churn actually down in recent months.
He called the music streaming sphere “very different” to video, stating that users were likely to subscribe to just one provider, and therefore not be forced to decide between cutting one streamer over another: something that stands in stark contrast to the streaming wars that has raged between Netflix, Disney+ and Amazon Prime Video.
Earlier this year, a Kantar report found that 16.9m UK households had at least one subscription service at the end of the first quarter. It also found that 1.5m accounts were cancelled during this time too.
“Some people may not have a choice, but we think it is more unlikely that people will cut this [music],” Rougeot told City A.M, adding that music was the “most engaging” as it had universal appeal: Deezer reckons subscribers listen to 33 hours of music a month, with user patterns wide and varied.
Despite being in direct competition with the likes of Apple Music and Spotify, Deezer took the leap of faith earlier this year and went back public via a SPAC listing.
Rougeot told City A.M. that the Euronext listing, which valued the firm at $1.1bn, was both the “finish line and in many ways the starting line” for Deezer.
“As a proud French tech Unicorn, going public in Paris for us was really important,” Deezer CEO Jeronimo Folgueira said at the bell-ringing ceremony in July.
However, the road to listing has been long and winding for Deezer, having backtracked in 2015 from original IPO plans, and facing mounting competition from the four other major global players ever since: Apple Music, Google Music, Amazon Music and Spotify.
Rougeot said the key differentiator for Deezer was that it is “focused on music and just on music”, pushing back against rivals’ attempts to push into podcasts and other exclusive offerings.
The vision is therefore quite idealistic. “We want more than just access to catalogues. We want to allow users to enjoy ‘true music experiences’ and to strengthen the connection between artists and fans,” Rougeot said, dismissing any plans that it would dabble in podcasts.
Instead, Deezer is focusing on building undeniably vague “true music experiences”, for its 9.6m strong subscriber base.
Unlike its rivals, advertising also represents a tiny part of the firm’s strategy, making up less than two per cent of revenue in 2021.
“The goal is to grow music subscription revenue – not trying to expand user base or ad revenue. We want to grow in new markets and acquire subscribers into those markets,” he said, adding that partnerships with telecom and media firms would be crucial to this.
This has been its strategy in France (it’s largest market) with Orange, as well as with its new deal with RTL in Germany.
He said this strategy for growth is the same in the UK too, where Deezer is “having discussions” about what this looks like.
Although shares have plunged over 25 per cent since Deezer first listed, Rougeot backed the company’s ambitions to become cash profitable in the coming years, citing market penetration across the world and new partnerships as the driver of this.
The firm has already set out a top line revenue goal of €1bn by 2025, almost double 2021’s figures.