Paris-based music streaming service Deezer announced Friday it has acquired Stitcher, an app that streams, organizes and recommends podcasts. The acquisition will allow Deezer to offer 35,000 radio shows and podcasts along with its catalog of over 35 million music tracks to its 16 million users and 5 million subscribers.
Stitcher is something like a Deezer for news and other spoken-word programming. It offers top programming from over 12,000 content providers, including NPR, BBC, Fox News, Wall Street Journal, Adam Carolla, MSNBC, Glenn Beck and This American Life. The app is especially good at offering new and popular content, creating playlists and recommending content based on a user's listening history.
Tyler Goldman, CEO of Deezer North America, tells Billboard the Stitcher integration into the Deezer platform will likely be available to users "in first part of 2015." The Stitcher app, which Goldman calls "a best-of-breed product," will continue to be made available for download to iOS and Android users.
Why mix music with podcasts? One reason is the need to increase the value of the offering. Consumers have shown a willingness to pay for access to content -- Netflix and Sirius XM are good examples -- but music subscription services have thus far failed to attract large numbers of subscribers. Adding podcasts to Deezer "increases overall value of the bundle" without requiring a price increase, explains Goldman.
Increasing the value of its service could help Deezer gain on Spotify, the world's leading music subscription service with 10 million subscribers and 40 million users, and differentiate itself from Apple's Beats Music, Rdio, Rhapsody and other such services. Subscription services have an easier time adding features, and thus creating value, than lowering prices that are effectively set by licensing terms with record labels. That said, Apple is reportedly urging labels to reduce Beats Music's licensing rates so it can set a monthly fee under $10.
The automobile is another reason. Stitcher has previously said over 40 percent of its listeners use the service in their automobiles. Following the acquisition, Deezer will expand its distribution into automobiles by taking advantage of Stitcher's integration with over 50 models, including Ford, General Motors and BMW.
Although few music-streaming services offer news or talk-based podcasts, the numbers show Deezer isn't targeting a fringe group of listeners. Forty percent of the U.S. online population aged 12 and over have listened to a podcast, and 39 million people have listened to an audio podcast in the last month, according to Edison Research and Triton Digital.
But Deezer wasn't the first to take this route. Apple acquired Swell, an app similar to Stitcher, in July, although the service was immediately shut down and no resulting technology has been unveiled to date. Internet radio service Slacker has for years offered news programming from ESPN Radio, ABC and American Public Media, producer of the business show "Marketplace."
One issue facing Stitcher's integration with Deezer is Stitcher's U.S.-centric content. Goldman says Stitcher gets 85 percent of its traffic from the U.S., a market Deezer entered just last month. While that figure suggests Stitcher could help Deezer build an audience in the U.S. market, it also suggests Stitcher will need to broaden its content to better reflect the tastes and interests of potential users in the 180 territories in which Deezer operates.