The unicorn, created fifteen years ago, has paved the way in many areas of music streaming. As it prepares to go public on Euronext, a look back at five often overlooked facts in its history.
01. A business angel called Xavier Niel
The Deezer adventure began fifteen years ago on rue Emile-Ménier, in the 16th arrondissement of Paris, in a modest apartment nestled under the roof and loaned to co-founders Daniel Marhely and Jonathan Benassaya by an early business angel named… Xavier Niel.
The founder of Free, who had made his fortune with the pink Minitel, invested 250,000 euros in Deezer in exchange for 20% of the capital, two months before the official start of this first legal streaming site, in August 2007. It is under its impetus that the launch was rushed to pull the rug out from under Universal Music, which was regarding to activate its own partnership with Nine.
02. Two founders barely twenty years old
In 2007, Deezer was co-founded by two French people who were barely over their twenties. On the one hand, Daniel Marhely, a born coder who left school without a diploma at 16 years old. The latter was already at the origin of the online dating site lovelee.com as well as the predecessor of Deezer, Blogmusik.net, a service which he had hacked in 2006 to identify all the files where music was disseminated on the Internet and listen to it without downloading. On the other, Jonathan Benassaya, a former Essec student who had created an online agency specializing in video games.
The two men met by chance in a start-up incubator and formed a complementary duo: the developer and the communicator. After strategic disagreements, their paths separated at the end of 2010 when Jonathan Benassaya emigrated to the United States. Daniel Marhely only left Deezer in 2015, but remains a shareholder and director.
03. A tense start with Universal
The young Deezer might not start without Universal’s must-have catalogue. But negotiations with the industry leader were tougher than with other players. Once an initial agreement has been reached with SACEM, talks with Sony BMG (the first to sign, given the very strong involvement of French boss Christophe Lameignère), Warner and the independents are concluded fairly quickly, making it possible to frame for the first time in the world the activity of a streaming platform offering « free, unlimited legal music accessible to all Internet users”.
However, it took more than 18 months to rally the market leader, Universal Music, which demanded at the time of renegotiation that Deezer prohibit its listeners from listening to a title more than five times within 30 days. It is partly under pressure from Universal that Deezer, initially launched on a freemium model, adopts the paid subscription.
04. An unprecedented agreement with Orange
In 2010, an unprecedented agreement with Orange enabled Deezer to become the default music service for 10 million internet subscribers. This is the first global agreement between a telecommunications operator and a streaming platform. Both parties win. Orange, which is a little behind SFR in terms of music, finds a French partner of choice in Deezer. Deezer boosts its user volumes without the latter massively using an offer that they do not pay for directly and can offload most of the marketing budget to its partner. This precedent will be emulated.
Orange has since duplicated the example in many subsidiaries, from Poland to Senegal, and Deezer has done it once more, particularly in Brazil (Tim), its second largest market following France. Compared to its competitors, Deezer remains significantly more dependent on B2B to this day.
05. A failed first IPO attempt
Deezer suffers from consistent undercapitalization compared to competitors c like Spotify or GAFAM subsidiaries : Amazon Music, Apple Music or YouTube. He had to wait until the end of 2012 for the Russian billionaire Len Blavatnik (majority shareholder of Warner Music) to come and invest 100 million euros via his Access Industries fund alongside Idinvest Partners.
In 2015, the platform decided to try the adventure of the Stock Exchange, on the basis of a valuation of 1.1 billion euros, in the hope of raising 300 million euros. In extremis, it had to give up its listing due to an unfavorable financial context, marked by the plummeting price of the American web radio station Pandora and the disappointing results of the leader in video streaming, Netflix. Will the second time be the right one despite the current market conditions, which are very unfavorable to technology stocks?