Spotify set to be challenged on home turf
Published: 30 Mar 2014 15:02 GMT+02:00
Updated: 30 Mar 2014 15:02 GMT+02:00
- Spotify may be preparing for IPO: report (18 Feb 14)
- Swedish music sales up as Spotify tightens grip (26 Jan 14)
Deezer, which claims to have five million paying users, recently announced a deal with 3 Sweden to challenge Spotify and boost its company profile in the country.
The deal with 3 Sweden allows customers, who use their phone network, to get a free month of the streaming service. Deezer are hoping to capture a slice of the Swedish market where Spotify has long been dominant.
"The party has scarcely begun," Mathieu Molinero, Deezer boss for northern Europe, told the TT news agency.
After the initial success of free download sites like Napster at the start of the millennium the number of people listening to music online has rocketed.
Indeed, the amount of paying customers for music streaming services has increased by 250 percent since 2010. It's estimated that 28 million users are now accessing their favourite tracks via their computer, smartphone or tablet and paying for the privilege.
Last year Spotify announced that they had six million paying users. In total, the Swedish firm has 24 million active users who can access a database of 20 million songs.
By contrast, Deezer has 12 million active users but does have a larger song selection of over 30 million tracks.
Despite the impressive numbers both market leader Spotify and challenger Deezer will likely need far greater numbers of paying users in order to thrive in the long-term.
"Spotify CEO Daniel Ek has said they would need in the region of 40 million paying customers for the business model to hold in place for the long-term. It will probably be the US that is key for those that want to dominate the world market," Daniel Johansson, music industry researcher at Linné university, told TT.
Johansson cited the case of Google, which has made a low-key to the Swedish music streaming market, arguing it could be the long-term winner in the battle for music fans online.
"Google is also a company with substantial financial muscle than has the resources to bleed a few years if needed. There are also rumours that Apple is negotiating with record labels to make iTunes into a streaming service. That would change the gameplan properly," he said.