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.”
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