Midem: 5 Questions with Deezer CEO Axel Dauchez



Moments after appearing on stage as part of the Saturday (Feb. 1) panel “Streaming: A Sustainable Platform for Artists?” Billboard.biz caught up with Deezer CEO Axel Dauchez for an exclusive one-to-one chat. Happy to discuss Deezer’s future plans and wider questions regarding the streaming subscription business, a relaxed and jovial Dauchez spoke openly about re-numeration, international expansion and when Deezer would make its U.S. bow. "Tomorrow!" he joked before delving deeper into his plans for the "virgin" U.S. market.

1. What is the value for you in attending MIDEM?

For platforms [such as Deezer] it’s not really a marketplace. It’s really a relational place and it’s still a place where you get the key people. There are less people coming, but the ones who come are all important.

2. To date, the streaming subscription model has largely centred on a $10/€10 price point. Can you foresee that changing in the near future?

No question $10/€10 is a good price in regards to value for money. It could even be higher, in fact. Of course it has to be adapted to the cost of living in different countries. However, we drastically need to break the only €10 subscription model. Now is not the time for raising [the price]. There will be some up-sale in the future regarding quality, but at the moment I’m interested in creating different ways of raising the entry levels [by lowering the cost]. Maybe by [having] €1, € 5, €10 [subscription price points]. Not only having a €10 subscription. The initial step is too big.

3. In the past three years Deezer has launched in more than 180 countries, but hasn't yet launched in the U.S. or Japan -- the world’s two biggest music markets.

We had the vision very quickly that one of the biggest shifts in the music industry will be the geographical. Not because of the big emerging markets, like Brazil, but because the consumption of music is becoming global and what will drive the charts will be the similarity of tastes between people all around the world. (Psy's) "Gangnam Style" is a great example of that. When we decided to launch Deezer outside of France it was a huge bet for us to say that we want to be global -- technically speaking, organizationally speaking and also with the labels. Most of the labels were not able to deliver worldwide rights, so we took a not easy route.

4. How close are you to launching Deezer in the U.S.?

We are in discussion with many players and our ambition is to be in the U.S. this year. What’s the time frame? Between Q1 and Q4 [laughs]. The [U.S] market is still virgin. Nothing has really been done. The only ones who has really cracked the music subscription business is Sirius. Mass penetration is very low compared to all the money that has been invested, so the game is very open in the U.S.

5. How do you respond to criticism from the likes of Thom Yorke and David Byrne about the small returns that streaming services generate for artists and composers?

First of all, the streaming distribution channel is the channel which gets the most value from the users. An iTunes ARPU is $40. Deezer's ARPU is €120. Secondly, it is a channel which is giving back to the industry the largest share of its revenue -- more than piracy for sure, but also more than physical and downloads. The real debate is always in respect of money between artists. If we are only a jukebox where people listen to what they already know then all the growth value that we are building will be concentrated on known artists. If we succeed in cracking the discovery process then we become a sustainable model. Not only for the [already established artists], but also the all the newcomers and new albums from existing artists. At Deezer getting people to discover new music is an obsession. We have 50 curators worldwide and when we like an artist we invest in them around the launch of a new release. And so the real discussion about the state of value is not the vertical one. It is a horizontal one between artists.