Deezer Reaches 3 Million Subscribers, Launches Free Service, Adds Features

Deezer To Launch In 130 International Markets, U.S. No Time Soon

Deezer To Launch In 130 International Markets, U.S. No Time Soon

The subscription marketplace is looking more and more like a two-horse race.

French subscription service Deezer is launching a free, ad-supported version of its music service in more than 150 countries Thursday (Wednesday in the U.S.) and a host of features that suggest market-leading Spotify has serious competition. Deezer now has 3 million subscribers, 1 million more than it had in October and 2 million fewer than Spotify.

CEO Axel Dauchez tells the launch of the free service "one of the most important investments in the company" because of its ability to expand Deezer's reach. The company estimates it will have a potential audience of 600 million people who use Facebook, have 3G connection and own a smartphone. Users of the free service will be given a period of unlimited listening -- somewhere between one month and a year, depending on the country -- before being limited to two hours of free listening per month.

The free tier, new features and marketing push are the result of the $130 million Deezer raised in October from Access Industries and other investors. The funding has put Deezer, an on-demand music service Dauchez says was profitable, in a growth trajectory. The company now has offices in 15 countries and will start to market in other countries as well, says Dauchez. The Access-led investment also allowed Deezer to invest in the product.

Key in Thursday's launch is Deezer4Artists, a service that gives artists certified accounts, offer the ability to customize their presence on Deezer, analyze listening activity and upload additional content such as demos, samples, live songs and interviews. Dauchez says the artist will be able to choose who has access to this extra content -- listeners in a particular country, for example, or only paying subscribers. Artists will also be paid royalties on extra content.

Also part of the Deezer4Artists program is an open application initiative. Deezer will support artists to develop software that utilizes the service's open API and create new fan experiences.

Spotify also aims to bring artists and fans closer together. New features on Spotify, to be rolled out in early 2013, will allow listeners to follow an artist like they would on a social network. Spotify will also roll out new music discovery features.

The United States is still a notable exception to the 150-plus countries in which listeners can access Deezer. The problem isn't so much the cost of dealing with record labels, says Dauchez, it's the cost of dealing with the U.S. market.

"Finally the access to the rights to exist in the U.S. is not so expensive, but the ability to emerge in the U.S. is very expensive because of the competitiveness of the market." The problem for a new entrant isn't just Spotify, he says, it's also download services like iTunes and Amazon and popular Internet radio services like Pandora.

But Deezer could come to the U.S. someday. "We will do it when it's more sustainable and have the right partnerships," he says.