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Deezer reports an increase of 500,000 subscribers in Q3, despite aggressive price hikes in key markets. The uptick hardly settles the matter on whether music fans are willing to absorb heady price increases, however.
On Thursday (October 26), music streaming company Deezer announced the addition of 500,000 subscribers in its third quarter, a 4.8% increase in revenues to $131.4 million.
Direct subscriptions maintained at 5.6 million, but subscribers from partnerships increased from 3.8 million to 4.3 million. Deezer reports “very strong initial subscriber growth” in Brazil and Mexico, thanks to its partnership with Uruguay-based Mercado Libre. That breakdown raises questions over whether consumers will absorb a string of Deezer price increases, though so far, a mass exodus is not emerging.
Revenue from direct subscribers grew to $78 million, 3.3% increase, while revenue from partnerships increased 11.9% to $37.2 million. Advertising and other revenue decreased 16% to $4.5 million.
“We are back to meaningful subscriber growth and secured top-line acceleration starting in Q4 thanks to the implementation of a new wave of price increases, as well as the ongoing growth of new partnerships,” said CEO Jeronimo Folgueira in a statement to Billboard.
Though a smaller music streaming platform compared to juggernauts like Spotify, the France-based Deezer has seized the opportunity of its position of influence awarded by its partnership with Universal Music Group to restructure the way artist royalties are calculated.
The so-called “artist-centric” model that was announced in September will see implementation in France this quarter with additional markets to follow. The company reports that approximately half of Deezer’sstreams already run using the new model.
France accounted for 59% of Deezer’s revenue in the third quarter, compared to 60% the previous year. Direct subscribers in France increased by 200,000, while subscribers elsewhere decreased by a similar amount.
On a per-subscriber basis, direct subscribers are more lucrative than partnerships; direct subscriber average revenue per user (ARPU) increased by 3.4% to $5.33, while partnerships ARPU rose by 10.6% to $3.16. The price increase instituted at the end of September for all subscribers in France, the UK, Spain, and the Netherlands will further boost direct subscriber ARPU. That change will roll out progressively beginning this week.
Deezer’s projections of 7% to 10% revenue growth for the full year still hold strong, with a “significant reduction” in adjusted earnings before interest, taxes, depreciation, and amortization in the second half of the year.
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