State Champ Radio earnings
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SiriusXM CEO Jennifer Witz‘s predictions last year that the first two quarters of 2023 would be “softer” proved right, as the audio entertainment company reported that revenues and subscribers edged lower in Q1.
SiriusXM reported revenues of $2.14 billion for the quarter ending March 31, marking a 2% drop, as revenue from subscribers and advertisers both fell between 1% and 2% compared with a year ago.
Still, those modest moves downward were better than the company had predicted for the start of the year, and executives raised their full-year guidance for adjusted earnings before interest, taxes, debt and appreciation (EBITDA) to $2.75 billion from $2.7 billion. They also raised their free cash flow guidance to $1.1 billion from $1.05 billion for the year.
“We outperformed our initial financial expectations, putting us in a strong position to increase our full-year guidance,” Witz said on a call discussing earnings. “We intend to make prudent decisions to remain a very profitable business that continues to serve as a primary audio subscription service to certain audio segments while being complimentary to others.”
The company’s cost-cutting campaign — which has impacted its real estate footprint, workforce and marketing spend — helped allow for continued investment in tech improvements Witz says will improve future growth. Costs related to the new product launches, expected later this year, reached $68 million in the quarter, up 15% from a year ago.
However, the 17% reduction in sales and marketing spend, combined with lower numbers of customers starting trial subscriptions late last year, contributed to 347,000 fewer SiriusXM self-pay subscribers for the quarter. The company ended the quarter with 7.2 million trial users, compared to 6.9 million a year ago.
Self-pay subscribers of Pandora Plus and Premium tiers increased by 7,000 from the previous quarter, but the total number of subscribers edged 2% lower, to 6.2 million in the first quarter from a year ago.
“We are still expecting modestly negative [subscriber growth] for the year,” Witz said. “I would expect the second half to be positive, and that nets us out to the modestly negative.”
The company is in the process of updating the back-end technology and its SiriusXM app, tools Witz says will make it easier to find specific genres, make purchases in the car and elsewhere, and further personalize the experience. The hope is that this will enable the company to introduce new products to the app faster, a key part of its growth strategy.
“We are really focused on investing in this new platform and making sure that positions us for growth going forward,” Witz said on the earnings call.
Key SiriusXM Financial Highlights:
Overall
The company forecast it will generate approximately $9 billion in total revenue for 2023, along with $2.75 billion in adjusted EBITDA and $1.1 billion in free cash flow.
The company reported $2.14 billion in revenue, down 2% from the prior year.
Adjusted EBITDA was down 9% from the year-ago quarter at $625 million.
SiriusXM Segment
SiriusXM reported segment revenues of $1.7 billion, down 2% from the prior-year period, due to lower ad revenue and vehicle paid promotional revenue.
Average revenue per user (ARPU) fell $0.24 to $15.29.
Self-pay subscribers decreased by 347,000.
SiriusXM’s total cost of services rose 2% to $664 million in the quarter on higher programming and royalty costs.
SiriusXM’s gross margin of 61% slipped one percentage point from the prior year.
Pandora and Off-Platform Segment
The Pandora and off-platform segment generated $462 million in revenue, down a slight 1% from the year-ago quarter’s $467 million.
Advertising revenue in the segment held roughly flat from a year ago.
The segment’s gross margin was 24%, down 5 percentage points from the prior-year period.
Universal Music Group’s revenues rose 11.5% to 2.45 billion euros ($2.71 billion) last quarter, as sales generated by Morgan Wallen, Taylor Swift, TOMORROW X TOGETHER bolstered results in both recorded music and music publishing.
The world’s biggest music company reported revenue from its recorded music division rose 11.7% to 1.92 billion euros ($2.1 billion) in the quarter ending March 31 compared to the same period a year ago. Revenue from subscriptions and streaming rose by nearly 10% to 1.33 billion euros ($1.47 billion) and physical revenue rose a whopping 32% to 313 million euros ($346 million), while revenue from downloads and other digital revenue — the smallest line item in the division — fell by 19.1% to 55 million euros ($60 million).
The publishing division’s overall revenues rose 13.3% to 425 million euros ($469 million), with digital revenue contributing the most, increasing by nearly 21% from a year ago to 231 million euros ($255 million). Synchronization revenue rose around 11% to 69 million euros ($76 million), while performance revenue slipped 1% to 90 million euros ($99 million).
“Our strong start to the year demonstrates our consistency in developing great artists and introducing their music to fans around the world,” UMG chairman and chief executive Lucian Grainge said in a statement. “We look forward to building on this momentum and furthering our track record of transforming disruptive technologies into opportunities to accelerate our business for our artists, fans and shareholders.”
Overall earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter fell by nearly 43% to 261 million euros ($288 million), driven primarily by equity-based compensation expenses UMG began rolling out in the fourth quarter of 2022. Stripping out those compensation expenses, UMG reported adjusted EBITDA rose 14.7% to 522 million euros ($576 million) compared to the year-ago quarter, and adjusted EBITDA margin grew 0.6 percentage points to 21.3%.
UMG’s Earnings Highlights:
Revenue rose 11.5%, or 9.3% in constant currency, to 2.45 billion euros ($2.71 billion) versus the year ago quarter.
EBIDTA fell 42.5% to to 261 million euros ($288 million)
Adjusted EBITDA rose 14.7% to 522 million euros ($576 million)
Adjusted EBITDA margin grew 0.6 percentage points to 21.3%
Recorded Music Division Highlights:
Recorded music revenue overall rose 11.7% to 1.92 billion euros ($2.1 billion)
Subscriptions and streaming revenue rose by nearly 10% to 1.33 billion euros ($1.47 billion)
Physical revenues rose 32% to 313 million euros ($346 million)
License and other revenue rose 9.2% to 226 million euros ($250 million)
Downloads and other digital revenue fell by 19.1% to 55 million euros ($60 million)
Music Publishing Highlights:
Music publishing revenues overall rose 13.3% to 425 million euros ($469 million)
Digital revenues rose by nearly 21% from a year ago to 231 million euros ($255 million)
Performance revenues slipped 1% to 90 million euros ($99 million)
Synchronization revenues rose around 11% to 69 million euros ($76 million)
YouTube brought in $6.69 billion in advertising revenue to start the year, continuing a downward trend for the video giant after past quarters of explosive growth during the earlier years of the pandemic.
The first-quarter revenue figure, reported as part of parent company Alphabet‘s quarterly earnings on Tuesday, is roughly a 2.6 percent decline compared to the $6.87 billion in revenue reported during the first quarter of 2022. The video platform previously reported $7.96 billion in ad revenue during the holiday season, falling short of Wall Street expectations and representing an 8 percent year-over-year decline.
In a call with investors, Alphabet CFO Ruth Porat said the company was “encouraged by progress” in monetization for YouTube Shorts, which rolled out its revenue-sharing program with creators in February. The executive also said there was “significant ongoing subscriber growth” in YouTube Music Premium and YouTube TV, though the company has not disclosed subscriber numbers.
YouTube is now led by Neal Mohan, the former chief product officer who assumed the CEO role in February after longtime executive Susan Wojcicki said she was stepping down to focus on her family and “personal projects.”
In his first public message released on March 1, Mohan said his top priorities included supporting YouTube’s creators by improving monetization tools, increasing accessibility on the platform and focusing on growth in areas like gaming and podcasting. Included in those areas were YouTube’s short-form offering, Shorts, and its streaming products like YouTube TV and Primetime Channels.
The executive also noted YouTube will continue to contend with an advertising downturn that notably impacted the company’s revenue growth last year. “This is a pivotal moment for our industry. We face challenging economic headwinds and uncertain geopolitical conditions. AI presents incredible creative opportunities, but must be balanced by responsible stewardship. Creators, viewers, and advertisers have more choices about where to spend their time than ever before and platforms like YouTube need to deliver across a range of formats while investing in the policies that protect platforms from real-world harm,” Mohan said in his letter at the time. “As I look ahead to what’s next for YouTube, I’m confident we’ll put our full energy into what matters most for creators and viewers.”
Parent company Alphabet saw modest growth during the first quarter, with total revenue increasing 3 percent year over year to hit $69.79 billion. The company said it took $2.6 billion in charges related to the January layoffs that resulted in 12,000 employees — or around 6 percent of Alphabet’s workforce — losing their jobs.
This article was originally published by The Hollywood Reporter.
Annual revenue for Round Hill Music Royalty Fund grew 32% to $32.4 million in 2022, driven by strong performances of the Guernsey-based company’s rights management and synchronization business, coupled with underlying growth in the global recorded music industry, according to year-end financial results published Tuesday (Apr. 25).
Income from music publishing rights grew 12% year-on-year to $17 million, a rise of 12% on 2021, accounting for 69% of Round Hill’s annual revenue. Master rights revenues, derived from music streaming, CD and vinyl sales and downloads, grew by 70% to $10.9 million.
The fair market value of Round Hill’s portfolio — which includes the rights to over 120,000 songs across 51 catalogs, including tracks by Celine Dion, Bush, The Offspring, Carrie Underwood, The Supremes, Wilson Pickett and Whitesnake — was up 13% year-on-year to $602.6 million.
Economic net asset value also increased 13% to $519.6 million. The valuations are based on a report by the company’s independent valuer, Citrin Cooperman, and a second independent valuation by FTI Consulting, says Round Hill.
Almost half (44%) of the company’s publishing revenue came from performance rights royalties generated by music being played on radio and television, live concerts or in public spaces such as shops, bars and restaurants, Round Hill said.
Breaking down the company’s publishing revenue, more than a quarter (27%) was generated by synch deals, including the placement of “All by Myself,” by singer-songwriter Eric Carmen, in advertisements for Adobe Photoshop; Spacehog‘s “In the Meantime” featuring in the trailer for Marvel Studios’ Guardians of the Galaxy Volume 3; and Alice In Chains‘ “Rooster” being spotlighted in the Netflix series Super Pumped.
Speaking of Alice in Chains, Round Hill — which is listed on the main market of the London Stock Exchange — acquired a majority share of the band’s publishing catalog, neighboring rights and master recording rights from remaining living members Jerry Cantrell, Sean Kinney, Mike Inez and William Duvall in February. The estates of the late singer Layne Staley and late bassist Mike Starr sold their rights and income streams to Primary Wave at the same time.
The start of last year also saw Round Hill acquire master and publishing rights to the catalog of David Coverdale, the Whitesnake frontman and former lead singer of Deep Purple. In its financial results, Round Hill says the two acquisitions marked “the full deployment” of the $85 million the company raised through a share placement in July 2021.
In total, Round Hill said it successfully placed 560 songs across a range of high-profile films, television series and brand campaigns last year, fueling 33% year-on-year growth in synch revenues.
New two-year license agreements with TikTok and Meta on more favorable terms in 2022 also contributed to the strong financial results, generating higher digital revenues in the second half of last year, the company said.
Josh Gruss, CEO of Round Hill Music, tells Billboard the company’s strong financial results are attributable to its “very in-demand repertoire” and an experienced team of 70 employees in the U.S. and Europe, including London, Los Angeles, New York and Nashville, “sweating that repertoire really hard.”
Going forward, he says, the focus is on narrowing the gap between Round Hill’s economic net asset value of $519.6 million and its current stock price, which was trading at between $0.64 and $0.66 on Tuesday. In terms of new catalog acquisitions, Gruss says Round Hill will have to raise more equity before it can make “meaningful” additions to its portfolio and adds that the company will remain focused on songs recorded and released in the early 2010s and before.
“We like to be really conservative in how we approach acquisitions and the problem we have with younger music is that it’s just really hard to forecast how those songs pan out over the next 10 years,” says Gruss. “Good music is timeless and it’s really important that we have timeless music. We don’t want to have the flavor of the [month] — a song that’s going to be popular today, but gone tomorrow. You can make a big mistake in those type of investments.”
PRS for Music, the U.K. collecting society that represents composers and publishers, announced Monday (April 24) that it collected a record-high 964 million pounds ($1.20 billion) in 2022, a 22.9% increase over the previous year and an 18.9% increase over the previous high of 964 million pounds reached in 2019. The organization also distributed a record 836.2 million pounds ($1.04 billion) in 2022, an increase of 23.5% over 2021, while reducing its cost ratio to 9.3%.
“Live revenue came back,” says PRS for Music CEO Andrea Czapary Martin — up 683% from 2021 as the concert business rallied after the worst of the pandemic, and 16.1% compared to 2019. “At the same time, we saw a huge increase in music streaming — 25% — that exceeds market growth.”
PRS for Music is not the only collecting society that’s doing well as live music returns and streaming continues to thrive: In early March, ASCAP announced a 14% increase in collections to $1.52 billion and three weeks ago the German rights body GEMA posted 13% growth to 1.178 billion pounds ($1.25 billion).
Even by those standards, PRS’ results are impressive, although currency fluctuations and differences in accounting make exact comparisons between international collecting societies difficult. And it is rare to see a cost ratio below 10% for a society that collects for publishers and songwriters. PRS says it hit its goal to get its cost ratio below 10% four years ahead of its five-year plan.
“I run this like a commercial company, except we’re owned by the members and profits are distributed to our members,” says Martin, who joined PRS in mid-2019. Martin, a newcomer to the music business, worked for a variety of data- and subscription-focused businesses, including Reader’s Digest Association and the U.K. Royal Mail. “My background,” she says, “is in tech and data.”
Other highlights of 2022 include new and renewed licenses — “better agreements and new agreements,” Martin says. Revenue from video-on-demand services rose 16.5%, while that of linear television declined 2.4% and commercial radio, driven by advertising, grew 2.6%. “A TikTok agreement paid out last year,” Martin says, “and we doubled video game royalties.”
ICE, the Berlin-based music licensing hub that PRS owns as a joint venture with GEMA and Sweden’s STIM, is also “helping PRS immensely,” Martin says. “ICE is the biggest growth opportunity for PRS.” Expansion elsewhere is also a priority, Martin says, including in Africa.
PRS, like most of its sister societies, has a monopoly over U.K. collections — at concert venues, bars and restaurants, for example. Starting a few years ago, though, it also competes to represent composers and publishers online, to streaming services. ICE gives PRS the reach and resources to compete with SACEM. And PRS’ push toward efficiency gives it a solid competitive position.
“I’m very optimistic for the future,” Martin says. “But that doesn’t mean there aren’t challenges.”
China’s leading music streaming company Tencent Music Entertainment Group (TME) reported on Tuesday a 9.3% decline in the company’s annual revenues last year, as falling earnings from its social entertainment services business compounded a decline in monthly active users on its music platform.
TME’s total revenues fell to RMB 28.34 billion (USD $4.11 billion) in 2022 from RMB 31.24 billion 2021, with revenues for the fourth quarter ending Dec. 31 having fallen by 2.4% to RMB 7.43 billion ($1.08 billion) compared to the fourth quarter in 2021.
TME, which owns streaming platforms QQ Music, Kugou and Kuwo, plus karaoke app WeSing, said revenues from its social entertainment services and others fell 19.8% in 2022 to RMB 15.86 billion ($2.30 billion). The number of paying users fell 24.3% due to the macroeconomic environment, competition from other platforms and COVID-19, the company said.
Revenues from music subscriptions rose 18.6% to RMB 8.70 billion ($1.26 billion) helping TME’s online music services revenues to increase overall by 8.9% to RMB 12.48 billion ($1.81 billion) for 2022. The number of paying subscribers grew by 22.7%. However, average revenue per user was slightly lower — RMB 8.6 in 2022 compared to RMB 8.9 in 2021 — due to higher marketing costs, and the number of mobile monthly active users (MAU) of its online music division fell 7.8% to 567 million in the fourth quarter.
“During the fourth quarter, as a result of macro headwinds, increased competition from other platforms and the surge in COVID cases social entertainment services MAUs and paying users declined year over year,” said Tony Yip, TME chief strategy officer, on a call discussing the company’s earnings on Tuesday.
China’s late-year increase in COVID cases as it loosened pandemic restrictions and increased competition also led to the year-over-year decline in online music mobile MAUs, Yip said.
Declining social entertainment services revenues held one benefit for TME: lower revenue sharing fees in 2022. That contributed to a savings of more than RMB 2.27 billion, as its cost of revenues for the year fell 10.4% year-over-year to RMB 19.57 billion ($2.84 billion).
This helped TME achieve an operating profit up nearly 17% to RMB 4.44 billion ($644 million) in 2022. Operating income is the income that remains after accounting for nearly all costs of doing business.
TME expects 2023 total revenues and profitability to be up from last year, and for the share of quarterly revenues coming from online music services will exceed those coming social entertainment services at some point this year as they continue to achieve “high quality growth in both subscription and non-subscription revenue,” Yip said.
Tencent Music Entertainment Group’s 2022 Highlights:
Mobile monthly active users (MAU) for its online music division fell 7.8% to 567 million in the fourth quarter 2022 from 615 million in the fourth quarter 2021
Mobile MAU for social entertainment fell 16.6% to 146 million in the fourth quarter of 2022 from 175 million in the fourth quarter 2021
Paying users of TME’s online music platform rose 16.1% to 88.5 million in the fourth quarter 2022 from 76.2 million in the fourth quarte 2021
Paying users of TME’s social entertainment platform fells 15.6% to 7.6 million in the fourth quarter 2022 from 9 million in the fourth quarter
Annual revenues for French music company Believe grew 31.8% to 760.8 million euros ($723.5 million) in 2022 as the company capitalized on investments and expansion in Europe, India and China. Digital sales accounted for 92% of Believe’s revenue while non-digital sources represented just 8%.
The company’s premium solutions segment grew 31.6% to 712.6 million euros ($677.7 million). Automated solutions, which includes the TuneCore distribution platform, improved 34.5% to 48.2 million euros ($45.8 million). TuneCore’s launch of an “unlimited pricing” plan in 2022, which allows artists to distribute an unlimited amount of music for a fixed annual fee, was “extremely successful and translated into an acceleration of growth,” CEO Denis Ladegaillerie said during Wednesday’s earnings call.
“We ended 2022 strongly delivering above our IPO commitments both operationally and financially for the second year in a row,” Ladegaillerie said in a statement. “In 2022, as we have done each year since 2005, we did what we said we would do … or better. We grew our market share; we improved profitability; we generated significant cash flow from our operations.” Free cash flow was 52 million euros ($49.5 million), an improvement from negative 30.7 million euros in 2021.
Believe also revealed that it invested in French pop label Structure, which it called “a new French pop label partnering with two successful producers, behind the recent success of several multi-platinum French pop artists.” It additionally noted an investment in Madizin Music, “a German well-known brand managed by two renowned producers, composers, and entrepreneurs,” as well as an exclusive partnership with Panorama Music, a new Indian label founded by a Bollywood film producer.
Digital revenues improved 34.7% organically as Believe served an additional 200,000 artists, to 1.3 million, either directly or through record labels. In France, Believe was the second-largest music company in digital local repertoire in 2022. Believe was the third-largest recorded music company in Germany “on local repertoire in the streaming market,” and the market’s second-largest company in hip-hop. The company pointed to the chart success of TuneCore artist Theo Junior and Milky Chance, who amassed 1.2 billion streams in 2022 on the strength of the track “Stolen Dance.”
In Asia, Believe has invested in India and Southeast Asia and now has about 80 people spread throughout five offices in China. “The level of activity remained sustained throughout the year as the digital monetization increased in Greater China, which led to the signings in Premium Solutions of more than 300 labels and above 250 artists directly,” the company said.
Looking forward to 2023, Believe expects to post organic revenue growth of 18%, improve its adjusted EBITDA margin to between 5% and 7% and again be cash flow positive. “In 2023, we will continue our profitable growth strategy: invest in our teams to grow market share, innovate in audience development products for our artists and labels, and further drive operational efficiencies through technology and scale to increase profitability,” said Ladegaillerie.
Abu Dhabi-based music streaming company Anghami says its revenues grew by more than 35% to $48 million in 2022, driven by strong growth in paid subscribers, according to a statement the company released sharing its preliminary unaudited results for last year.
The company says its total number of paying subscribers grew 21% year-over-year to 1.52 million, while the overall number of music streams rose by 20% amid growing demand for Anghami’s music content, roughly 60% of which was Arabic-language in 2022.
“Our ability to provide an exceptional user experience and to deliver the best music and entertainment content in the (Middle East and North Africa) region and beyond is reflected in our strong financial performance in 2022,” Anghami CEO Eddy Maroun said in a statement.
As the most popular streaming platform in one of the fastest-growing streaming markets in the world, Anghami says it will achieve profitability later this year. But the company has faced its first public growing pains in recent months in the form of a lawsuit and regulatory reprimand.
In December, U.S.-based publishing company Reservoir Media and its Middle East partner PopArabia sued Anghami for alleged copyright infringement related to a dozen Western and Arabic songs by artists including Lil Jon and 50 Cent. Anghami has defended its payments to rights holders and called the lawsuit baseless and defamatory.
In January, the Nasdaq market exchange, where Anghami is publicly traded, notified the company that it was in violation of a filing rule requiring Anghami to submit a balance sheet and income statement to support its interim results for the second quarter ending June 30, 2022. The company had only submitted a press release with financial results for the period.
The regulatory flag did not affect Anghami’s listing or ability to trade on the exchange, and Anghami apparently remedied the issue this month by filing unaudited condensed financial statements for the first half of 2022 and 2021.
However, in a Feb. 27 filing, Anghami noted that its independent auditor, Ernst & Young Middle East, resigned this year and has been replaced by Grant Thornton. Ernst & Young audited Anghami’s financials for 2021 and 2022 without issue, but did include paragraphs in each of the year’s reports “regarding substantial doubt about Anghami’s ability to continue as a going concern,” Anghami said in the filing.
Grant Thornton is expected to release an audited version of the company’s full-year 2022 results by mid-April.
Even as the U.S. advertising market’s slowdown stunted iHeartMedia’s post-pandemic recovery, the company posted record revenue of $3.9 billion in 2022, up 9.9% from 2021, the company announced on Tuesday (Feb. 28).
“The macro economic conditions are certainly impacting the entire advertising marketplace,” CEO Bob Pittman said during Tuesday’s earnings call. “Even the podcasting industry is not immune to some effects of the advertising slowdown.”
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $950.3 million, up 17.2% year over year. That’s the second-best adjusted EBITDA in the company’s history following 2019 when the company hit $1 billion. Annual free cash flow of $259 million was also the second-best in history after reaching $400 million in 2019.
Podcasts, the company’s fast-growing segment, generated revenue of $358.4 million in 2022, up 41.9% from the prior year. The high-growth podcasting business could benefit from what Pittman called “a transition toward more rational behaviors” in spending. Pittman didn’t point to any specific company, but an era of big spending on podcast content deals appears to be over at Spotify, where chief content officer Dawn Ostroff recently left the company and the head of audio talk shows and partnerships, Max Cutler, also departed. “I think there were people who thought they were buying [market] share, but were really buying losses,” he said.
Digital revenue other than podcasts improved 14% to $663.4 million. Broadcast radio, by far iHeartMedia’s biggest revenue source, grew 4.1% to $1.89 billion. Network revenue was flat at $503.2 million. Revenue from sponsorships and events climbed 17.9% to $189 million. Revenue from the audio and media services group jumped 22.7% to $304.3 million.
In the fourth quarter, iHeartMedia’s revenue grew 6% year over year to $1.13 billion, the high end of guidance of 2% to 6%. Adjusted EBITDA was $316 million, in the middle of its guidance range of $305 million to $325 million. Both revenue and adjusted EBITDA hit record highs for any quarter in the company’s history.
Although the company started 2022 strong, “increased volatility and uncertainty” moderated annual results, Pittman said. Some of that slowdown was “self-inflicted,” he admitted. During the fourth quarter, iHeartMedia put greater emphasis on “sales initiatives and commission structures on targeting certain incremental revenue streams,” he explained. “In retrospect, we believe those decisions had a negative impact on our revenue growth and margin for the quarter.”
As a result, iHeartMedia has “initiated steps to realign” its focus on “higher-margin digital revenue opportunities,” said Pittman. “We believe we’ll start seeing the positive impact of those adjustments in both revenue growth and margins as early as Q2.”
French music streaming company Deezer reported on Tuesday that its 2022 revenues rose 13% to 451 million euros ($478 million), as the company reduced its losses by 18 million euros ($19.1 million) through a combination of growth through partnerships and eliminating marketing spend.
The company reported its adjusted gross profit rose 16% to 98 million ($104 million) euros in 2022 versus 2021 on greater margin improvement. The 18 million euros ($19.1 million) the company reported in savings came partly from growth — Deezer grew its top line by 51 million euros ($54 million) and improved gross margins by 30 million euros ($32 million) — and partly from reducing its marketing spends in certain emerging markets.
For years since its 2007 launch, the Paris-based company angled to gain customers by partnering with telecommunications companies. But under new chief executive Jeronimo Folgueira, Deezer has focused on a business-to-business (B2B) approach, aiming to gain more streaming users in major markets through partnerships with companies that already have established customer bases.
That piggy back approach — which is already in place with Sonos in the United States, RTL in Germany and DAZN in Italy — allows Deezer to reach prospective customers in major markets without investing to build a brand first. Folgueira, who joined Deezer in June 2021, says 2022’s earnings show the strategy has legs, and he expects his company to generate revenue growth of more than 10% in 2023 as they work toward achieving profitability by 2025.
“All of the ground work on B2B that we’ve been doing is starting to pay off,” Folgueira tells Billboard. “Those deals are just the beginning. We want to enter markets through partners, and we are targeting the United Kingdom and other major European markets like Spain.”
Last year, Deezer partnered with German broadcast giant RTL Deutschland to deliver music and video content over the app RTL+ Musik, putting Deezer in a position to compete in the crowded streaming space in the world’s fourth-biggest recorded-music market, and it teamed up with the Italian sport subscription streaming platform DZAN.
This year, Deezer struck a long-term agreement with the U.S. speaker and hardware company Sonos to power its Sonos Radio and subscription service Sonos Radio HD, a deal that will extend Deezer’s reach to 16 countries, including the United States, Canada, the United Kingdom, France and Germany.
Deezer remains strongest in France, where it is bundled with telecom company Orange and has 4.4 million subscribers, and in Brazil, where it partnered with TIM Celular in 2016 and has 2.7 million subscribers, according to company filings. Worldwide, Deezer has 9.4 million subscribers compared with Spotify’s 195 million subscribers and 273 million free (ad-supported) users, while TME has 82.7 million paying subscribers, according to the companies’ latest earnings reports.
The company was among the first DSPs to raise prices last year when it upped the price for an individual plan to 10.99 euros ($11.66) per month from 9.99 euros ($10.60) and family plans to 17.99 euros ($19.09) per month from 14.99 ($15.91).
Those hikes helped deliver a 14.3% increase in the company’s average revenue per user (ARPU) in 2022. Deezer had 9.4 million subscribers as of Dec. 31, 2022, down 2.2% from a year earlier.
“On the year as a whole, there was basically no impact on churn despite a roughly 10% price increase,” Folgueira says. “People are willing to pay more for proper quality music.”
