Deezer Sees 11% Revenue Boost in Q3 2024 Amid France Growth and Partnerships
Deezer has reported an impressive 11% year-over-year revenue increase for Q3 2024, reaching nearly $146 million (€134 million). This growth stems from the company's direct streaming success and expanding partnerships, with France leading as a major revenue contributor. The Paris-based streaming service, now under the leadership of CEO Alexis Lanternier, attributes $93.40 million (€85.8 million) of its revenue to direct streaming (up 4.1% YoY), $45.18 million (€41.5 million) to partnerships (up 21.3% YoY), and $7.29 million (€6.7 million) to other revenue sources, which saw a notable 63.8% growth.
Revenue Breakdown and Market Impact
France remains a vital market for Deezer, contributing over half of the platform’s revenue at $85.44 million (€78.5 million), an increase of 9.4% from the previous year. Revenue from Deezer's global markets rose by 13.5%, signaling the company’s intention to maintain a solid foothold in multiple regions. This geographic diversification allows Deezer to balance growth across regions, giving it more resilience against localized economic fluctuations.
Subscriber Growth and Partnership Impact
Subscriber count is a key metric for Deezer, which now approaches the milestone of 10 million paid users. Despite a 1.4% dip in direct subscriptions, partnerships have offset this with an 11% growth YoY. Partnerships with companies like DAZN have boosted subscriber numbers but present a challenge: revenue per user (ARPU) in partnerships is $3.05 (€2.8), significantly lower than the $5.49 (€5.4) for direct subscriptions.
Deezer’s CFO Carl de Place pointed out a refinement in subscriber numbers following the removal of approximately 400,000 inactive Family accounts. This clean-up aligns with their strategy of focusing on engaged users, as inactivity in long-term subscribers can incur penalties under some contracts.
Festival Sponsorships and Pricing Strategies
Deezer’s recent push in festival sponsorships across France showcases a unique engagement tactic. With Spotify reducing festival participation in France amid debates over a new "streaming tax," Deezer capitalized on the opportunity, increasing its visibility among music fans. This engagement with live music events might position Deezer as a more artist-centric platform, potentially appealing to fans seeking more localized music experiences.
Like Spotify, Deezer has also raised prices in France, a trend it may continue to maintain profitability in light of rising operational costs. This pricing strategy mirrors a larger industry shift as streaming services adjust to inflation and other economic pressures.
Revenue Goals and Music Industry Impact
Deezer has set a target of 10% revenue growth for 2024, driven by a strategy of increasing partnership subscriptions, expanding in key markets, and optimizing user engagement. While DEEZR shares dipped by 7.42% today, the company’s commitment to growth remains clear.
Impact on the Music Industry
Deezer’s strategic adjustments highlight key trends likely to influence the music industry broadly. Partnerships with companies like DAZN represent a shift where streaming platforms collaborate across sectors, blending music with sports and entertainment, which can lead to cross-platform music promotion and increased discoverability for artists.
The recent focus on ARPU raises questions about how artists might be compensated when earnings from lower ARPU partnerships dilute the overall revenue pool. As streaming services increase engagement tactics like festival sponsorships, artists might see more opportunities for exposure but potentially face competition with brand-sponsored music experiences that could overshadow independent artist initiatives.
Additionally, Deezer’s commitment to France during a turbulent regulatory time, including the “streaming tax” implementation, underscores how local policies can shape international strategies for streaming companies. Music platforms that adapt to local regulations and cultural trends could play a more prominent role in connecting global artists to specific audiences. With Spotify stepping back from certain markets, Deezer’s assertive stance may set a precedent for region-focused growth, emphasizing the importance of tailored strategies in the evolving global music landscape.