France-headquartered music streaming service Deezer has reported 11% revenue growth for calendar Q3 2024, even as the company’s paying subscriber base remained unchanged from the numbers it reported a year earlier.
The company’s latest earnings report was released a day after it announced it had signed on to Ed Newton-Rex’s Statement on the Training of AI, making it the first music streaming service to back the document signed by nearly 30,000 people, primarily creators.
Deezer reported 9.9 million paying subscribers in the quarter ended September 30. However, the company removed nearly 0.4 million inactive Family subscriptions from its count, which reduced the year-ago subscriber count to 9.5 million. The current number of subscribers represents 4.1% YoY growth from that level.
Deezer noted that the removal of the inactive accounts didn’t affect revenue but did improve margins somewhat.
The company reported 5.2 million direct subscribers, down 1.4% YoY, and 4.7 million subscribers through partnerships, up 11.0% YoY.
Deezer recently signed new partnerships with French ad-supported video streaming service TF1+, sports streaming service DAZN, and smart TV platform Titan OS, among others.
The number of direct subscribers in Deezer’s key market of France grew 3.2% YoY to 3.4 million, while direct subscriptions in the rest of the world fell 9.2% to 1.8 million.
The company’s consolidated revenue amounted to EUR Є134.0 million (USD $147.3 million at the average exchange rate for Q3), an 11.0% YoY increase, or 13.0% YoY at constant currency.
Deezer said the revenue growth was driven by the new partnerships and its most recent subscription price hike.
Revenue from partnerships soared 21.3% YoY (or 26.7% at constant currency) to Є41.5 million ($45.6 million), driven by the continued ramp-up of partnerships with Latin American e-commerce giant Mercado Libre, and German broadcaster RTL. This segment was somewhat negatively affected by weaker exchange rates of LatAm currencies against the euro.
Revenue from direct subscriptions rose 4.1% YoY (or 4.7% at constant currency) to Є85.8 million ($94.3 million), which Deezer attributed to a 3.2% increase in direct subscribers in its key market of France, along with price hikes and a reduction in the use of trials and promotions in driving new subscriptions.
For the full year, the company expects to meet its 10% revenue growth target, and says it’s on course for negative EBITDA of –Є10 million, a notable improvement over -Є29 million in 2023.
“I’m proud of what the team achieved in Q3 2024 with another quarter of double-digit growth,” CEO Alexis Lanternier said in a statement to investors.
Lanternier, who took the helm of Deezer on September 2, succeeding Jeronimo Folgueira, added that Deezer “continues to deliver value and innovation for the entire music ecosystem and I am looking forward to continuing to build on the unrivaled strength of Deezer, enriching fans’ lives through music experiences and working with strategic partners to expand the scope of music lovers.”
Deezer signs on to AI training statement
A day before the earnings release, Deezer announced that it had become the first music streaming service to sign on the Statement on the Training of AI, which declares: “The unlicensed use of creative works for training generative AI is a major, unjust threat to the livelihoods of the people behind those works, and must not be permitted.”
“The work of artists and songwriters is the foundation of the music industry, and for Deezer it’s essential that creators are paid fairly, and that their works are protected from any misuse,” Lanternier said.
“We’re proud to be part of the tens of thousands of creators and organizations that oppose unlicensed use of creative works with AI. We will continue to do our part to safeguard the rights of artists and songwriters, including developing our new model for streaming remuneration, AI detection and fighting fraud.”
Deezer has taken aggressive steps to fight streaming fraud and the proliferation of low-quality content on streaming platforms. For example, it has removed 26 million “useless” tracks from its library since launching an artist-centric payment system last year in partnership with Universal Music Group.
“The work of artists and songwriters is the foundation of the music industry, and for Deezer it’s essential that creators are paid fairly, and that their works are protected from any misuse.”
Alexis Lanternier, Deezer
The AI statement, organized by Ed Newton-Rex, the former head of audio at Stability AI and the founder of the non-profit licensing org Fairly Trained, comes amid the music industry’s push to prevent copyrighted music from being used to train AI music generators without authorization.
Record companies belonging to the three major music companies – Sony Music Group, Universal Music Group, and Warner Music Group – recently sued AI music platforms Suno and Udio over the platforms’ alleged use of copyrighted music to train their AI.
In accordance with the European Union’s recently passed AI Act, Sony Music and Warner Music sent letters to AI companies notifying them they are “opting out” of having their music used in AI training unless they grant specific permission.
Deezer said it’s working on an AI detection tool, and it plans to launch the first generation of its “AI detector” before the end of 2024.Music Business Worldwide
