“The new players in online music must transform their popular success into economic success”

Lhe cultural industries are not ordinary professions. Including in their most commercial versions. They always have two sides. The IPO, this Tuesday, July 5, of Deezer, the French leader in online listening, is the most perfect illustration of this. On the tail side, it is the most widely used music listening service in France, with a third of the French market and more than 5 million subscribers. Its partnership with major telephone operators gives it exceptional visibility. The financial transaction, which values ​​the company at more than 1 billion euros, will enable it to raise 143 million euros to accelerate its international deployment.

On the face side, the French flagship of music on the Internet is still looking for a good economic model. Fifteen years after its creation, in 2007, the company is still not profitable. In 2021, it posted nearly 123 million euros in losses for 400 million in turnover. After a failed attempt in 2015, it returned to the stock market through a merger with a listed vehicle, created for the occasion, which has already raised funds. Fortunately for Deezer, because the rout that is raging on the technological stocks on the markets at the moment would not have allowed him to consider it by the traditional way.

Low chance of catching up with the front runners

The easy reproach would be to point out the lack of internationalization of the company. Created a year earlier, its European competitor, the Swedish Spotify, left much more quickly on the major world markets and in particular in the United States. As a result, it is now twenty times bigger in terms of turnover and market valuation. Its world market share reaches 30%, against 2% for the French. And as the other competitors are called Apple, Amazon or Tencent, its chances of re-joining the front runners are slim.

But the problem is deeper. No trader makes money on this market. Spotify recorded 600 million dollars (575 million euros) in losses in 2020 and 38 million in 2021. Nothing to do with the lavish profits of the major Universal (900 million dollars). As with video with Netflix, the new players in online music have yet to transform their considerable popular success into economic success. It’s not won yet.

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