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Abu Dhabi, UAETuesday 18 December 2018

Exclusive: Alwaleed-backed Deezer scouts for Middle East partners

Music streaming service wants to rival Anghami and Spotify as it expands in the region

“We have a strong partnership DNA when it comes to distribution and infrastructure, so we want to work closely with artists and producers in the region and other partners who can help us build our operations here,” said Hans-Holger Albrecht.
“We have a strong partnership DNA when it comes to distribution and infrastructure, so we want to work closely with artists and producers in the region and other partners who can help us build our operations here,” said Hans-Holger Albrecht.

Deezer, the music streaming service in which Saudi billionaire Prince Alwaleed bin Talal has a minority stake, is eyeing partnerships with telcos and technology companies to scale up in the Middle East after launching in the region last month.

It also plans to open a regional headquarters in Dubai in 2019 and other offices across the Middle East and North Africa in the future, its chief executive said.

“We have a strong partnership DNA when it comes to distribution and infrastructure, so we want to work closely with artists and producers in the region and other partners who can help us build our operations here,” Hans-Holger Albrecht told The National.

The Paris-based firm is primarily targeting telcos, such Saudi Telecom Company, the region's biggest telco, and Vodafone. Through their data packages, customers could subscribe to the streaming service. Deezer already has 45 telecom partnerships worldwide.

It is also talking to payment solutions providers, hardware companies and content producers that could support Deezer’s planned growth. “We talk to everyone,” Mr Albrecht said. No regional deal had been signed at the time of the interview.

Deezer was set up in France in 2007 and also has offices in London, Berlin, Moscow, Miami and São Paulo. Its platform is available in 180 countries and gives users access to a library of 52 million tracks and other content on a range of mobile devices. It has more than 14 million monthly active users, according to the company.

In Mena, Deezer aims to grow its user base to rival that of homegrown streaming service Anghami (which has 55 million worldwide), Spotify, and others, as one of the biggest providers of Arabic music and content.

In August, it secured investment of one billion Saudi riyals ($266.7 million) from Prince Alwaleed’s Kingdom Holding Company and Rotana Group, in a private placement that valued Deezer at around €1bn, analysts said at the time. More than 100 Arabic artists are signed to Rotana, including Mohammed Abdo, Elissa and Asallah.

Alongside the deal, Rotana and Deezer signed an exclusive long-term agreement to distribute the music company’s Arabic digital audio and video content across the UAE, Saudi Arabia, Egypt, Turkey, Lebanon, Morocco and Algeria. “The partnership should give us a very strong position in Mena,” Mr Albrecht said.

He expects the Middle East to become one of the biggest drivers of Deezer’s global revenues in the years to come, owing to the region’s active music scene, untapped potential for streaming services and huge appetite for digital content, he said. Saudi Arabia, for example, has one of the highest YouTube penetration rates in the world.

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He declined to provide figures on regional revenues or its user base as it has only just launched. He expects both metrics to exceed the 25 per year year-on-year average growth rate for the global music streaming industry as the market gains momentum.

“The region is only just at the beginning so it will be very high double-digit growth per year and pick up should be quick because mobile penetration rates are high. All the ingredients are there,” he said.

For the first 12 months in Mena, Deezer’s focus will be on building brand awareness, attracting new users and forging partnerships to drive growth. The company is working to open a Dubai office next year and recruit staff, and hopes to expand its physical presence across the region to serve customers and artists.

The regional music streaming industry is young but competitive, with Spotify having launched in Mena this month and Anghami and Apple Music already established. The latter has a partnership with UAE telco Etisalat to offer six months’ free access to Apple’s library of 40 million songs through pre-paid mobile packages.

Mr Albrecht said Deezer’s global footprint, competitive product technology and high engagement rate (the frequency of subscriber use) should help Deezer fend off competition and build a platform that also helps new and existing artists to monetise their work.

“Our philosophy is that there’s always room for two or three players, we’re used to competition in every market we operate,” he said. “But you have to build scale to be able to compete.”