A European music streamer, Deezer is going public via a SPAC deal, valuing the Spotify competitor at $1.1 billion. Deezer will merge with the "blank-check" company I2PO, which is headed by former WarnerMedia executive Iris Knobloch.
Founded in 2007, the company previously tried to IPO in 2015, only to reverse course and raise Series E and Series F rounds in 2016 and 2018. Around the time of its first attempt at an IPO, investors were worried about the profitability of music streaming, since Pandora had just lost nearly $86 million in one quarter.
Since then, highly resourced streamers like Spotify, Amazon and Apple have only continued to grow, renewing market interest in music. But Deezer has also struggled to compete with these behemoths -- as of Q2 2021, Deezer only held 2% of the global streaming music subscription market, though it's more popular abroad than in the U.S. In France and Brazil, the company holds 29% and 17% of the market share respectively.
Image Credits: MIDiA
According to the Wall Street Journal, Deezer isn't making money yet, but per this deal, it hopes to be profitable by 2025. Deezer currently has 9.6 million subscribers, offers 90 million streaming songs plus podcasts and audiobooks, and generated €400 million in revenue last year. Spotify, for comparison, has 180 million paid subscribers and a total of 406 million monthly active users including its free tier. But Deezer offers HiFi audio, while Spotify still hasn't made that leap. Deezer has also expressed interest in a more musician-friendly payment model, while Spotify has been criticized by artists for offering low streaming payouts.
“Today marks an important milestone in Deezer’s history as we embark on a journey to become a publicly traded company on Euronext Paris," said Jeronimo Folgueira, Deezer's CEO, in a statement. "We are uniquely positioned on the growing music streaming industry, with a very competitive product, a clear strategy and an experienced and renewed management team to seize this opportunity and create substantial shareholder value.”