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BMG signed a Senegalese rapper from Paris that Universal Music Group had dropped because of Holocaust-denying and antisemitic lyrics — but executives in Berlin ultimately pulled the plug on releasing his music at the last minute, according to a report in The New York Times published Friday (Feb. 3).
In internal documents obtained by The Times, in 2021 BMG’s French division weighed the financial benefits of signing the rapper, Freeze Corleone, against his history of hate speech, and decided to sign him so long as his connection to the German label would remain secret. In previous songs, the rapper had questioned the Holocaust and compared himself to Adolf Hitler. In one 2018 song featuring Corleone, “KKK,” he raps about “Nazi vehicles” and says he’s “determined with lotta ambitions nigga, like the young Adolf.”
In 2020, Universal Music France released Corleone’s La Menace Fantôme (The Phantom Menace), which went double platinum in France and included lyrics in songs like “Tarkov” that mention a “fraternity like Aryans” (though with no explicit mention of Jews). Despite the album’s success, a week after it began distributing LMF, in September 2020 the label said it was cutting all ties with him because the album had “revealed and amplified unacceptable racist statements.”
After UMG dropped him, the 30-year-old rapper, whose real name is Issa Lorenzo Diakhate, Tweeted “finally free.”
Then in 2021, BMG’s French team proposed signing Freeze Corleone, who was becoming increasingly popular in the Parisian hip-hop scene. In internal emails and memos reviewed by The Times, French label executives at BMG noted the artist was “France’s fastest growing artist in the last 2 years” and would thus “really help us meet our revenue target.” But the executives, Sylvain Gazaignes, the French operation’s managing director, and Ronan Fiacre, the head of A&R, also noted the controversy around the 2020 UMG release.
“In order to mitigate the risk of possible controversy,” BMG executives wrote in an internal memo reviewed by The Times, their contract would ensure the label had the right to approve his lyrics. The memo also said the contract should keep BMG’s involvement with the rapper’s career hidden. There should be “no BMG logo anywhere on the release,” Dominique Casimir, BMG’s chief content officer, said in an email she sent to a BMG lawyer and other executives, according to The Times.
BMG signed a one-album deal with Freeze Corleone worth about $1 million in October 2021, according to The Times. About three weeks after signing the deal, Casimir decided to cancel the contract the day before the release of “Scellé part. 4,” Corleone’s first single from the album, titled Riyad Sadio. The decision came after Casimir’s German team had completed a review of Freeze Corleone’s past lyrics and told the French team they needed to end the relationship with the artist, a person familiar with the matter confirms to Billboard. (An undisclosed settlement was paid to Freeze, the source says.)
Freeze Corleone has two entries on the Billboard Global Excl. U.S. chart — “Freeze Rael,” which spent one week on the chart in September of 2020 at No. 176, and “Mannschaft,” billed as SCH featuring Freeze Corleone, which landed at No. 167 in April of 2021.
In a statement sent to Billboard, BMG says “today’s New York Times story confirms that as soon as senior BMG executives became aware of the historic allegations against the artist, it ended their relationship. No record was released. BMG stands firm against anti-Semitism and hate.”
For Berlin-based BMG, the incident is the second such situation in the past five years involving an artist known to have music containing antisemitic lyrics. In 2018, a controversy exploded over an album BMG released by two German rappers, Kollegah and Farid Bang. The album, Jung Brutal Gutaussehend 3 (Young Brutal Good-Looking 3), contained lyrics like “make another Holocaust, show up with a Molotov,” but nevertheless became a hit.
Antisemitism is a particularly sensitive issue for the label’s parent company, media giant Bertelsmann, which in 2002 apologized for its past ties to the Nazi regime after an independent commission of academics the company hired found it had thrived during World War II by producing antisemitic material and Nazi propaganda. Bertelsmann previously had claimed to have played an active role in the Nazi resistance.
Casimir, who was promoted in May to the CCO post and given a seat on BMG’s board (and was recently named to Billboard’s 2023 Power 100 list), also oversaw the signing of the controversial German rappers as managing director for Germany at that time.
After BMG decided to drop him, Freeze Corleone released his album independently. Two employees in France involved in the Freeze Corleone signing — who “believed in the artist” – have since left the company but were not fired, the source familiar tells Billboard. Gazaignes remains a top executive in the French division.
More than 1 billion music streams in France — or between 1% and 3% of all streams in the country — were detected to be fraudulent in 2021, according to a report released this week by a French government organization that analyzed data from Spotify, Deezer and Qobuz.
If the report’s number were to hold true for the worldwide music market — which the IFPI valued at $16.9 billion in 2021 — that would mean approximately $170 million to $510 million of streaming royalties are being misallocated globally. This is roughly in line with a 2019 estimate of $300 million lost to streaming fraud cited during Indie Week.
The Centre national de la musique (CNM), an organization created by the French government in 2020 that operates under the Ministry of Culture, found that fraud is widespread in France, the fifth-largest music market, to a sobering degree: “Irregularities are spotted” on both major-label and independent releases, national and international albums, old catalog and fresh new singles alike, the CMN says in its 56-page study. “The methods used by fraudsters are constantly evolving and improving,” it notes, “and fraud seems to be getting easier and easier to commit.”
The genres which had the highest percentage of fraudulent streams detected in the CNM’s report were background music (4.8% on Deezer) and non-musical titles (3.5%). While the raw number of fraudulent streams detected was highest in rap — the most popular genre in France — that represented just 0.4% of overall plays in the genre on Spotify and 0.7% on Deezer.
CNM’s report appears to be the first country-wide investigation of streaming fraud. “We’re happy with the effort by the CNM and the French government as a whole to look into this and take it seriously,” says Morgan Hayduk, founder and co-CEO of Beatdapp, a Canadian company that provides fraud detection software to streaming services, labels, and distributors. “This issue deserves the weight and attention that they gave to it.”
CNM’s report comes with several caveats, however. The organization’s data does not include information from Apple Music, YouTube and Amazon, who declined to share information about fraud on their platforms. According to a recent estimate from MIDiA Research, those three services account for slightly more than 35% of global streaming subscriptions. (MIDiA did not share country-level figures.)
In addition, Hayduk says, the report only looks at country-level data. This means it does not account for VPN usage that allows fraudsters to mask their country of origin.
Bad actors committing streaming fraud often “rotate through multiple countries redirecting traffic constantly,” says Andrew Batey, Beatdapp’s other co-CEO. “It’s not uncommon when we find fraud cases to see 15 devices spreading plays across 30 countries.” To catch that, he says, “you need a global view.”
Fraudulent streams, once defined by former Napster executive Angel Gambino as “anything which isn’t fans listening to music they love,” have become a major topic of music industry concern in Germany, France and Brazil. That’s because undetected fraudulent streams can impact market share calculations and divert money from honest artists.
The countries have taken different approaches to combat this fraud. The IFPI led a legal effort to shut down German websites that offered streams for cash starting in 2020. The organization made the case that manipulating play counts allows artists to create a false impression of popularity, ultimately misleading consumers and violating Germany’s Unfair Competition act.
In Brazil, law enforcement worked in conjunction with Pro-Música, IFPI’s Brazilian affiliate, to shut down 84 stream-boosting sites in the country in 2021. Prosecutors there argued that sites that offered fraudulent streams were violating Brazil’s Consumer Defense Code and treated the activity as a criminal act.
Brazil’s coordinated effort — dubbed Operation Anti-Doping — determined that the fraudulent streams were actually being generated outside of Brazil, illustrating the limitations of a single-country approach to fraud reduction. “No company in Brazil has the technology to make these fake streams,” Paulo Rosa, Pro-Música’s president, told Billboard in 2021. “This technology comes from websites hosted in Russia.”
The U.S. industry has historically appeared less bothered by streaming fraud — or at least less willing to acknowledge its existence publicly, with executives and streaming services reluctant to discuss the subject. This may be starting to shift, however. At a Music Biz panel in May, SoundCloud vp of strategy Michael Pelczynski noted that the current streaming ecosystem is rife with “very prevalent fraud and abuse,” and that this activity has “cultural ramifications.” When undetected fraudulent streams “start influencing the way we measure the success of music, we are literally supporting inauthenticity,” Pelczynski said.
The CNM appeared heartened by the fact that, since the summer of 2021, it has seen “the growing mobilization of platforms, distributors and producers” worried about fraud, resulting in the creation of “dedicated teams” and the outlay of increased resources to battle “manipulation.”
But there remain several key challenges when attempting to tackle fraud. The lack of transparency from some streaming platforms, and the inability to push toward assembling a comprehensive global data set, means that the scale of the problem is still unknown.
What’s more, as the CNM points out, it’s nearly impossible to punish those engaged in fraud because they are rarely identified. The penultimate section of the report lays out potential legal remedies that could be used to fight fake streams in France — if authorities were able to prove that bad actors violated laws related to illegal hacking or unfair business practices. They include fines of up to 300,000 euros ($324,000) and prison sentences of up to five years for perpetrators.
The CNM pledged to release a follow-up report in 2024.
The mayor of the northern French town of Amiens is appealing to pop star Madonna to loan them what they believe is a missing 200-year-old Neoclassical painting that disappeared from their museum during World War I.
But is Madonna’s version the genuine article, or a copy?
Brigitte Fouré, the mayor, says in a video that the oil painting the singer reportedly owns, called Diana and Endymion, was “probably a work that was lent to the Amiens museum by the Louvre before the first world war after which we lost trace of it,” according to a report in The Guardian.
Now Fouré wants the “Material Girl” singer to provide the artwork as a loaner to help Amiens’ bid to become the European capital of culture in 2028.
The painting, which depicts the Roman goddess Diana falling in love with Endymion, is thought to have been painted by Jérôme-Martin Langlois, and dates to 1822. After being commissioned by Louis XVIII to hang in the Palace of Versailles, it was acquired by the French republic in 1873, and was exhibited in Amiens at the Musée des Beaux-Arts – now the Musée de Picardie – beginning in 1878.
The Langlois went missing after the Germans pounded Amiens with bombs and artillery fire for 28 days in March 1917, destroying much of the city including part of the museum. The paintings were taken to safety, but after the war the Langlois was listed as “untraceable” and later deemed to have been “destroyed by the falling of a bomb on the museum,” the Guardian reports.
The painting — or one nearly identical to it — reappeared in 1989 at a New York auction where Madonna paid $1.3 million for it, more than three times its estimated price, says French newspaper Le Figaro.
Madonna is an avid art collector known to have a collection worth an estimated $100 million, People magazine has reported. It includes Frida Kahlo’s My Birth (1932), one of only five painting she created while in Detroit; an extensive collection by Polish Art Deco painter Tamar de Lempicka; and Pablo Picasso’s Buste de Femme à la Frange (1938), which she paid almost $5 million for at Christie’s in 2000.
In 2015, a sharp-eyed curator from Amiens spotted the Langlois painting in the background of a photograph of Madonna at her home that was published in Paris Match magazine.
The painting Madonna bought is reportedly one inch (three centimeters) smaller than the artwork that disappeared from Amiens and was unsigned and undated, leading experts to wonder if it is the original — or a copy.
The museum has lodged legal action against “persons unknown” for the theft of the painting, the Guardian reports. But Fouré, the mayor, says the town doesn’t dispute that Madonna acquired the work in a “perfectly legal auction.”
The singer “bought it and she owns it,” the mayor says. “I’m not asking her to give it to us but to allow us to borrow it for just a few weeks so people here can see it.”
Fouré would welcome a visit by Madonna to Amiens, a town best known for textiles and its gothic cathedral, and as the birthplace of French President Emmanuel Macron.
“It would be amazing to have her come here but I can’t imagine it happening,” she says. “Still, now everyone is talking about Amiens!”
Billboard reached out to Madonna’s team, which had no comment.
Daniel Vangarde has lived a fascinating life. He’s lived at least three of them, in fact.
His first act was as a producer, A&R and all-around catalyst for some of the most popular European disco and funk acts of the 1970s and ’80s, shifting millions of copies. Since the late 2000s he’s been residing and working in a Brazilian village of 750 people, teaching English, computer literacy, vocational skills and a range of artistic expression.
Somewhere in the middle he gave birth to a son, Thomas Bangalter, who also made some decent records himself.
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Vangarde (born Bangalter) helped guide the early movements of Daft Punk, at a time when the pre-Homework duo had magic in their fingertips but hadn’t yet mastered the close control of image and narrative which forged their mystique. Vangarde doled out critical advice to Thomas, Guy-Manuel and a coterie of close friends in the ’90s Parisian scene, instilling in them the requisite knowledge to play the industry game on their own terms and better enabling them to sculpt their consequential destiny.
Then followed a high-profile battle with France’s publishing and rights society, SACEM, over both restrictive practices for modern artists and historical aberrations for post-World War II remuneration to Jewish musicians. Sufficiently content with both his own success and the imprint he left on the next generation, Vangarde retreated into silence, only fleetingly emerging when required (including a trip to the 2014 Grammy Awards, where he watched his son clean up). There were no plans to issue communiqués with the music ecosystem — until now.
Following a deal with powerhouse French label Because Music, the vaults of Vangarde’s Zagora Records have been busted open. The resultant compilation, Daniel Vanguarde: The Vaults of Zagora Records Mastermind (1971-1984), out Nov. 25 on Because Music, should re-situate him in a lineage of discotheque-pleasers with a taste for suave, symphonic and Star Wars-influenced material that bristles with joie de vivre. The comp is surprisingly tight for an era which left no excess untested; it’s not a stretch to say, from the colorway of his suit down to his perm, the Daniel Vangarde peering out from the cover might just have been the model for Disco Stu.
Having undertaken the grand sum of zero English-language interviews for 75 years, Vangarde made himself available to Billboard from the deep Bahian forests for an extremely rare and rather charming conversation about it all.
One thing that’s clear across your life is a fascination with culture and society outside of your own. You produced artists from the French Antilles and the West Indies, kickstarted a cossack dance craze in the late ’60s, and latterly founded an NGO. Where does this curiosity stem from?
I always liked traveling: I spent 10 summers of my adolescence in Costa Brava [Spain], visited Swinging London, and in 1966 hitchhiked from New York down to Mexico in order to visit the Tarahumara. Life felt like an adventure.
In 1971, I happened upon Guadeloupe and loved it — the people, the place, and the local rhythmic music, biguine, which I took back to work on in Paris. Throughout trips to Kathmandu, Bali and Malaysia in the ’70s, my love for African, Arabian, South American and other music outside the French or Anglo-Saxon tradition kept growing.
What were your dreams for the world back then?
Ah, that is easy. I was curious about the globe and completely against war. I was politically active from a young age. I was arrested during the student revolution in ’68 and spent three nights in a jail cell without light. That was very frightening. They say there were no deaths but I am certain this is untrue, there was great violence. For years afterward I had to cross the street whenever I saw a policeman, you know?
You had post-traumatic stress?
Yes, yes, it was this: it was post-traumatic stress. But I stayed against nuclear factories, against the Algerian War and successfully avoided my own military service. I did not change my point of view that mass consumption is a dead-end of civilization. In 1968, we had spiritual belief in a more open future. Today we have realism about our present moment, and that is what it is.
When you were 25, you and longtime collaborator Jean Kluger came up with Yamasuki, a faux-Japanese project whose only release is still pored over by record collectors and DJs like Four Tet. Why did you decide to jump into the deep end with such a specific concept?
After the success of “Casatschok,” I was mostly considered a choreographer. Shows about kung fu were beginning to sweep through television, so Kluger and I thought about creating a Japanese dance, which we called Yamasuki, but the great sound of the music caught on more. We really got into a Japanese mindset: I bought an English-to-Japanese phrasebook, we learned phonetic pronunciation and taught a children’s choir lyrics in Japanese. We even hired a karate master to deliver a shout of death [kiai] — except he had no sense of rhythm, so I would stand in the studio, cueing him when to shout… and trembling on the other side of the mic.
As disco became popular globally, and you had French artists like Cerrone winning Grammy Awards for Best New Artist, was there any competition or jealousy? Or did you regard them as your peers?
Peers, totally. There was no competition at all. If there was any competition, in fact, it was with American and English production. I never used a mastering studio; I would be there at the Phillips factory, watching the acetate get pressed, making sure the sound was impeccable. Cerrone, he was not a friend, but we would see each other at the discotheques when taking our new records to the DJ for promotion. The same applies for Jacques Morali {the disco producer responsible for the Village People] — at this time, for the French to have success away from home was a great feeling.
Some of the records you worked on were massive. “D.I.S.C.O.” was the third biggest-seller of 1980 in Germany and the fifth in the UK; the Gibson Brothers sold millions of copies; you’ve been sampled and covered by Erykah Badu, Bananarama, Roger Sanchez — it’s a legacy of success by any other name. Did that come as a surprise to you?
I will say that when I started to make songs, I wanted to write to The Beatles and tell them that there should be five members. [Laughs] I was this certain that I could bring something to them. I imagine that maybe everybody that records hopes that his music will be understood and appreciated by the public. But even if I was expecting success, I recognize it’s a great privilege to live your life off of music.
Daniel Vangarde With The Gibson Brothers
Courtesy of Daniel Vangarde
What was your relationship to fame throughout all this?
I only did one LP as a frontman, which had the privilege of being banned on radio and television. The lyrics concerned how France is the third biggest producer of bombs and mines. Of course, that’s a state secret, so the record was buried, and I was never a frontman again. But that’s alright: I was an author, composer and producer; an artisan. I sought no fame, no show business. A reporter asked me recently: “So you live your life in the shadows?” And I said, “No! I live in the light, normally, like you do.”
Interest in the Zagora reissue is however fun to me, because I was not fashionable at all. I produced La Compagnie Créole, a very big band in the ’80s, and we could sell out three nights at L’Olympia but I could never once get a journalist to come see the show. That’s just how it was then. If it’s not chanson, it’s not serious. In France, popular music is suspicious.
By the time your career wound down around 1990, was the love for music still present? Was it a creative rupture or a decision to be with your family?
Truthfully, I was not producing music that excited me, and I thought it unwise to carry on. When making a hit my hands would become wet while mixing, and a physical sensation would overtake my belly. So if I was not feeling anything, why would anyone else? Also, there was a new generation doing dance music, and of course this was very close for me.
Yes, on that note… perhaps no one in the last 10 years has done more to kickstart the revival of disco and analog production than your son, Thomas. Why do you think that era has swept back into the public consciousness?
I can see why. Nothing replaces rhythm. Songs that you can dance to, with a melody you can sing — not rap, not techno, not even Daft Punk can compete with this human response to a good feeling. There are different chapels today: you have country radio, rap radio, rock radio, but the old repertoire has maintained.
What aggregates the masses are famous hits, and disco was the last of this kind of music. When they decided that disco was over and they started to burn the records [1979’s infamous bonfire of hate, Disco Demolition], I thought it was a joke, because I never thought happy, dancing music could possibly fade. And when disco came back, I realized it hadn’t faded after all.
Your know-how helped ground not only a young Daft Punk, but also their peers Phoenix and Air, all of whom credit your advice with allowing them to navigate the music biz and retain creative freedom.
I think all artists should have this freedom. I helped Thomas, Guy-Man and their friends as much as I could to allow them to release without barriers. They were only 20 years old and the industry could have squeezed them — a normal contract generates interference between your work and the time it’s released. I made an introduction to my English lawyer, who is still [Daft Punk’s] lawyer today, and advised them not to let the author’s rights society in France authorize their music for film or publicity. My input was to help create a good environment that allowed them to produce freely.
Daniel Vangarde
Courtesy of Daniel Vangarde
Do you think the industry is a better place for young artists now than it was in the ’90s, or the ’70s? Or is it contingent on who you are?
That’s difficult to say. I think the music industry is in a terrible situation, not because of the internet, but because record companies and publishers didn’t know how to use the internet. When I helped Thomas set up Daft Club [a groundbreaking hub for digital downloads and fan service, released in tandem with 2001’s Discovery] even then, many considered the internet science fiction for geeks. And what was the result?
They should have contracted the hackers! The best guy from Napster should have been contracted by record companies to organize a new paid system. At a time when people paid $10-20 for an LP, of course they would have accepted paying $1 instead. But the industry did nothing, music became like free air, and once the value collapsed to zero for many years, it was hard to come back from this.
In the ’70s, the artistic directors of a record company or programmers of a radio station held all the control. So I didn’t think it was good then. But I can’t say it’s better today either. It’s difficult for true talent to break through or generate wealth in the same fashion as before.
As you’ve never given interviews, your working practice from that era is lost. I mean — Bangalter now rings with a uniqueness and star quality, so why did you use Vangarde as your professional surname?
I wanted to allow future Thomas to use Bangalter! No, I chose a pen name in case I had success; I did not wish to book a hotel or restaurant and be recognized. Why Vangarde? Originally I had prepared Morane, the name of a small French plane in the early 1900s. But on the day of registration with SACEM, this was already taken, so I was given one minute to change. I quickly thought of another plane called the Vanguard, and this stuck by complete accident.
You’ve been distant from your own catalog for so long. Why now?
I’m afraid it’s not very romantic. I have known Emmanuel [de Buretel, kingpin of French electronic music] since he was 25. When Because Music showed interest in buying Zagora Records and releasing some old tracks, I trusted them, and said, “You’ll be the owner of the catalog, so if you want to, yes.” As I have never done photos or interviews, I did not expect interest at all. I could even not remember some of their choices, so I had to go on YouTube and listen back as I was certain these were not my songs! To see any reaction has been a huge shock. Because made a very good decision.
So you never considered what you’d like your legacy to be?
I think I will not die. I have songs that I did 50 years ago that are still popular. If people are happy when they hear the songs and go to dance, or go to see the bands still touring, they do not die. This is the answer of my legacy.
And are you satisfied?
Yes, I’m very happy. I have the privilege to do what I want, and a good personal life… in the shadows. [Laughs] I have a good relationship with Thomas and now I have two grandchildren. One is 20 years old and the other is 14 — I love them. I go on being free and having my health. What more can I ask for?
LONDON — Deezer has always been the streaming service that charted its own path. After launching in 2007 — a year before Spotify debuted — the Paris-based company rapidly opened its service in over 180 countries; but, unlike Spotify, which focused on one or two markets at a time, Deezer avoided the biggest markets, like the United States and Japan, for many years. But now that the number of on-demand music subscription services has boomed, Deezer has struggled to keep up with its rivals.
New CEO Jeronimo Folgueira, who took over in June 2021, hopes to change that. Deezer is shifting from targeting small and emerging territories to renewing its focus on large and established music markets, where consumers are more willing to pay for subscriptions. In August, Folgueira forged a partnership with German broadcast giant RTL Deutschland to deliver music and video content in a single app — RTL+ Musik — putting Deezer in a stronger position to compete with Spotify, Apple Music, Amazon Music, China’s Tencent Music Entertainment (TME) and YouTube Music.
Folgueira calls the RTL tie-up a “transformative” deal that gives Deezer the scale it needs to break into Germany, the world’s fourth-biggest recorded-music market, with revenue of $1.6 billion in 2021, up 12.6% from 2020, according to IFPI. “In those markets where we have the right partner and the right distribution strategy, our product is second to none,” says Folgueira.
But in the increasingly crowded streaming business, Deezer, which counts Warner Music Group owner Access Industries among its biggest shareholders, is fighting an uphill battle to unseat Spotify. Deezer’s strategy seems more about becoming a “second-tier player that is strong where first-tier players are not,” says Mark Mulligan, analyst at MIDiA Research. While it was “once incumbent,” along with Rhapsody, “it is now challenger, and it has honed its strategy accordingly.”
Deezer is strongest in France, where it is partnered on bundle deals 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.
While Apple Music, Amazon Music and YouTube Music don’t regularly announce user numbers, last year Lyor Cohen, YouTube’s global head of music, said the service had surpassed 50 million paying subscribers worldwide. The last time Apple issued any data for its service was in 2019, when it said it had over 60 million subscribers worldwide; Amazon Music said it had more than 55 million subscribers globally in January 2020 but has not updated that figure since.
Rapidly growing TikTok dwarfs them all, with the social media app boasting over 1 billion active monthly users, many of whom use music in their videos. Streaming executives will watch closely what ByteDance, TikTok’s parent, does next. The Beijing-headquartered company is understood to be in talks with labels about expanding its subscription-based music streaming service Resso — currently available in India, Indonesia and Brazil — to more than a dozen new markets ahead of a global rollout. (Verified profiles with the username “TikTok Music” have appeared on social media platforms in recent months advertising “a new way to experience music.”)
For Deezer, strategic partners like RTL Deutschland, which says it reaches 99% of the German population through its 15 TV channels and numerous radio, print and digital outlets, are the key going forward, says Folgueira. “RTL has to compete with Netflix, Apple and Amazon,” he says. “We compete against Spotify, Apple and Amazon. Together, we can compete much better and have a proposition that is equal or better.” Deezer is seeking strategic partners in other big markets, he says, including the United States (where it launched in 2016), the United Kingdom, Spain and Italy.
Engineers at Deezer and RTL spent a year developing the RTL+ Musik app, which combines music streaming with film, TV and news content and costs 9.99 euros ($9.84) for the first six months, then rises to 12.99 euros ($12.80) per month. RTL, which is owned by BMG parent company Bertelsmann, says it has 3.4 million paying subscribers for its lower-priced, video-only RTL+ streaming service but believes it can quickly grow its premium subscriptions through music.
This year’s merger with I2PO, a special purpose acquisition corporation that raised 275 million euros ($282 million) in a 2021 initial public offering, gives Deezer the funding it needs to execute the plan, says Folgueira. Still, as it tries to make its strategic pivot, Deezer faces strong market headwinds and an uncertain investment environment for music streaming.
Since its rocky debut on the Euronext Paris exchange in July 2021, Deezer’s share price has plummeted almost 60% and now hovers around 3.5 euros (it closed at 3.42 euros on Nov. 8). Spotify shares have tumbled 74% over the past year, to $73.44 on Nov. 7, as investors soured on streaming following a pandemic-related boom. (Spotify’s all-time high closing share price was $364.59, set on set on Feb. 19, 2021.)
“There is a growing acceptance among investors that the boom period for streaming investments is drawing to a close,” says Mulligan. He predicts streaming services will continue to represent long-term value but “will be less interesting to certain kinds of investors, which may weaken overall demand and thus push down share prices.”
Folgueira points to Deezer’s midyear financial results — revenue grew 12.1% (up 9.9% at constant currency) from the prior-year period to 219 million euros ($218 million) — as evidence that the company is well positioned to survive and grow within the fast-changing music streaming market. (Since the interview, Deezer released its third quarter earnings on Oct. 27, showing revenue up 13.8% and 11.4% at constant currency.) “For the last 10 years, streaming companies have prioritized growth over profitability,” says Folgueira. “That will start shifting now, and we will all focus more on profitability going forward.”