If you’re asking yourself, “Wait, what’s Deezer,” you’re not alone. The French streaming service has emerged as a solid competitor to Spotify in Europe with over 40 million songs and 40,000 podcasts, but its entrance into the US market was met with marked apathy. In fact, when Deezer launched in the United States, Forbes contributor Bobby Owinski wrote, “Deezer Launches In The U.S., But Does Anybody Care?”
But the streamer is looking to make its mark one way or another in the US, even if that means acquiring Soundcloud. The main reason behind such a move would be to lower the percentage payout to labels by increasing its overall user base, something that a Soundcloud acquisition would accomplish and then some. Currently, it still gives close to 60% of its revenue to major labels. Apple Music reportedly pays around 55%. In long-term deals signed this year, Spotify pays 52%.
However, Deezer was already in talks to potentially acquire Soundcloud last month before the previous CEO was replaced following a emergency round of funding, and that fell through when Soundcloud refused a buyout. More recently, Deezer CEO Hans-Holger Albrecht shared his strategy with Reuters, essentially confirming that Deezer would purchase SoundCloud, but only “at the right price.” That price was not specified.
Leaked documents show that Soundcloud will not be profitable until 2020. An acquisition could certainly help to alleviate some of the platform’s financial problems, but will the execs allow it to happen? Right now, the internet’s most controversial streaming platform is still teetering on the edge.