Market Insight

Deezer and Sonos partner to bring music service to US

September 12, 2014  | Subscribers Only

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Deezer is launching its music service in the US through a partnership with wireless audio system vendor, Sonos. The offer, called Deezer Elite, will stream 80% of its 35million track catalogue in FLAC (Free Lossless Audio Codec) at resolution comparable to the CD (16bit, 44.1 kHz).

Deezer is offering a promotional price of $9.99/month for those who sign up for a full year. The standard rate for the service will be $19.99/month. There are no details on how long the promotion will last.

Our analysis

Deezer is currently available in 222 territories worldwide, but has adopted a ‘US last’ strategy as the France-based service has elected to focus  on more green field territories rather than fight for share in the most competitive on-demand music market in the world. This approach turned Deezer into the worldwide number two on-demand music service with five million paid subscribers in Q4 2013. By contrast Spotify was on 10m paying subscribers as of Q2 2014.

In the US Deezer has opted for a tightly focused offer that centers on a niche group of consumers who are both interested in lossless audio and have a Sonos system. The approach is markedly different to the approach it has deployed in other markets which centers on standard bitrates and often uses operator deals as a way to generate awareness. Instead, Deezer’s US service has a clear differentiator from the likes of Spotify, Beats and Rdio in ‘high quality’ audio and, thanks to the partnership with Sonos a potential target market that is both likely to be invested in quality and more likely to accept Deezer Elite’s higher average monthly fee (the common rate for a single-user subscription in the US is $9.99 per month).

However the strategy is not without risks as:

  1. The appeal of ‘high quality’ is uncertain. Deezer is not the first music service to offer ‘high quality’ audio. French music service Qobuz, which offers ‘high quality streaming’  in nine European markets as a similar price to Deezer Elite, recently filed for safeguard status in August 2014 as it has not seen significant uptake.
  2. Lack of a mobile offer. Deezer is currently only available on Sonos devices. Having a mobile component to a music offer has proven crucial for paid music service adoption ranging from the rise of the iTunes store on the back of the iPod to Spotify’s growth leveraging apps. This suggests that the lack of a mobile offer may well prove to be a significant barrier to adoption, particularly as subscribers would need to pay for a second service if they want to listen on the go.  However, as Deezer offers a mobile app in other markets it seems likely that this may only be temporary.

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