Deezer raises $110M to keep pace in music streaming wars with Apple and Spotify

Three months after Deezer’s scrapped IPO raised questions about its future, the Paris-based music streaming company announced it had raised $110 million in a critical vote of confidence from its partners.

“We can see that we are still at the beginning of a very fast-growing market,” said Deezer CEO Hans-Holger Albrecht. “We want to capture that growth and momentum.”

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Albrecht joined the company in early 2015, coming aboard just in time to experience a transformative year for music streaming.

A few months after his arrival, Apple finally announced its entrance into the streaming music market with Apple Music. The one-time pioneer of digital downloads had watched that market shrink as consumers shifted to streaming. Apple’s entrance was the final confirmation that streaming and subscription plans would be the future of music consumption.

While some observers wondered whether Apple’s long-expected entrance would crush pioneers like Spotify and Deezer, those two latter companies both emphasized that the overall streaming market was young and small. Leaders of both companies expressed hope that Apple Music would validate streaming and introduce it to a broader audience.

“The awareness of streaming has gone up quite a bit,” Albrecht said this week of Apple Music’s launch. “That’s still the biggest hurdle, to help people understand what streaming is and what they get for their money.”

Still, Apple Music’s launch cast a cloud over many competitors, which didn’t help Deezer as it publicly unveiled its plan for an IPO in September 2015. By the end of October, with overall stock market performances soft and online music rivals like Pandora seeing their stock get hit, Deezer pulled its IPO from the French stock exchange.

“We didn’t see the valuation we wanted going through,” Albrecht said. “Weak markets and uncertainty is never a good combination.”

Without the money from a public offering, Deezer turned back to its investors to raise money to fuel marketing and product development. The latest round was led by Orange, the French telecom company and a Deezer partner.

Deezer has a direct consumer product, but a big part of its strategy is to offer its service via partners like Orange or Sonos or BMW. In the U.S., Deezer is hard to find and is mainly available through a partnership with Cricket Wireless.

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The company counts 16 million monthly active users, including 6 million paid subscribers. Spotify says it has 20 million paid subscribers and 75 million MAU. A recent report claims that Apple Music already has 10 million paid subscribers after just six months (Apple doesn’t offer a free tier, unlike Spotify and Deezer.)

Albrecht said Deezer’s growth continued at the same pace following the launch of Apple Music, with no increase in turnover or signs that users were defecting. Spotify has said it saw its fastest growth in the past six months.

Of course, Deezer doesn’t go head-to-head with Apple or Spotify in the U.S. The company is still looking for opportunities in the U.S. to hook up with mobile telecom partners who would offer music streaming data plans that include Deezer’s service.

But for now, Deezer is going to continue its focus on countries outside the U.S., Albrecht said.

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