Channel Crossing: CEO Jeronimo Folgueira on Deezer's global ambitions and the future of streaming

Streaming is changing and, according to Deezer CEO Jeronimo Folgueira, the Paris-based company is leading the charge. Here, the former banker talks evolution, artist remuneration and explains why Deezer’s reach has the potential to go way beyond its French connection… If you had to name the top streaming service, the answer would normally be Spotify or Apple. But that’s not necessarily how it looks across the channel. “It is a head-to-head fight with Spotify in the French market,” asserts Jeronimo Folgueira, CEO of Paris-based DSP Deezer. “In France, we’re really big. We’re a force when it comes to local music, we’re the home of French rap. We do a lot of really strong things in the French market with French artists.” Cultural differences abound between the UK and France, so it’s perhaps no surprise that the country – the fifth biggest music market in the world, according to IFPI – should have its own homegrown streaming giant. “It’s such a weird thing because in France everyone knows Deezer,” says the Spanish executive. “And then you go to other places, and no one has ever heard of you. It’s like, ‘Dee-what?’ It’s such an incredible difference between our position here versus other markets.” When Music Week connects with the chief exec at his Paris HQ, gold and silver discs from French and European artists cover the wall in his office. He also takes pride in one from a UK superstar, Ed Sheeran, who played a Deezer Session at the Centre Pompidou in November 2021 for the release of =. “I love Ed Sheeran,” he smiles. Although his first encounter with Deezer’s biggest streaming artist in the UK had an all-too-predictable coda. “Actually, he got Covid the day after I met him,” he recalls. “So he was a close contact and, although I didn’t get it, I had to quarantine for a week.” Even if that was a false alarm, the pandemic had already limited Folgueira’s ability to go out and meet the labels when he started in June 2021. He was new to the music industry, following tech roles including CEO of US-German online dating firm Spark Networks. Was there surprise at his appointment? “I think they just thought, ‘Okay, let’s see what this crazy Spanish kid does with Deezer,’” he laughs. In fact, Folgueira doesn’t see the move from match-making to streaming playlists as a huge leap. “I had never sold music, but I’d sold love and excitement,” he reflects. “And music is pretty much the same.” In some ways, he thinks the music industry and DSPs could try and inject a little more love into the offering. “We’re not really selling emotion, it’s something we’re missing,” he reflects. “We’re selling access to a catalogue and that’s where I think the mindset has to fundamentally change. It all starts with the artists and the music, and we cannot forget that they are the source of our industry.” Deezer’s creative projects with artists include InVersions, new recordings of classic tunes from – so far – the ’80s and ’90s. The line-up for the exclusive Deezer collections includes Ayra Starr, Priya Ragu, Rachel Chinouriri, Holly Humberstone, Laura Mvula, Arlo Parks and Wolf Alice. As he shows off a black-and-white Johnson guitar mounted on the wall of his office, Folgueira admits to his past music ambitions. “I bought it when I was a banker in London – I hated banking,” he shudders. “There was no creativity. I thought, ‘One day I’m going to quit this horrible job and play guitar’. It was always my dream.” While that was never fulfilled (“I had zero talent”), he is now working at the heart of the global music business. “It’s a fascinating industry,” he beams. “Music really has that power of cheering people up and changing people’s lives – all you need is the right song in the right place.” Alongside that passion, Folgueira’s restless drive for innovation is evident. “We want to do more when it comes to selling merch and tickets,” he suggests. Deezer is also targeting livestreaming opportunities with its major investment in Driift. The UK company has produced events by a range of acts including Little Mix, Kylie Minogue, The Smile, Jorja Smith, Michael Kiwanuka, and Niall Horan. During the summer, Deezer livestreamed a sold-out concert by French rapper Jul at the Orange Vélodrome Stadium in Marseille. The in-app performance reached more than 170,000 unique viewers. According to Deezer’s latest results, the streaming service is soaring in its home market – in Q3 2022, subscribers were up 9.5% year-on-year to 3.4 million. But declines in the rest of the world, including withdrawal from Russia, meant total subscriber numbers were down slightly to 9.4m. “We built that critical mass in France,” says Folgueira. “In international markets, we’re struggling because people don’t really know the brand.” It’s a disarmingly honest response from the executive, who’s also cognisant of the industry problem with ARPU (average revenue per user). That is going in the right direction for Deezer, with an increase of 17% in Q3 as a result of price increases (the Premium plan went up from £9.99 to £11.99 a month in October 2021). “The fact that no one touched prices for more than 10 years would be unthinkable in pretty much any industry,” he says. “So that’s where a big chunk of the growth should come from.” Almost two years into the job, Folgueira is confident about the ambitions to be profitable and hitting a billion euros of revenue by 2025. Deezer has long had a wide reach – more than 185 countries – but is now more focused on developing major markets such as Brazil, Germany and the UK. That crucial work is supported by key hires in 2022, including chief operating officer Gitte Bendzulla, chief marketing officer Maria Garrido and chief financial officer & deputy CEO Stéphane Rougeot. With the IPO done and the pandemic no longer causing disruption, the CEO is able to spread the word about his plans. He’s hoping to get to the BRITs next month. “I try to go to London at least once a month, and I’m active when it comes to industry events,” he says. “I was at the Latin Grammys, which I loved, because I’m a Latino myself. I love to be part of the industry, it’s super-important for Deezer to be a key player.” Here, Folgueira opens up about streaming evolution, artist remuneration and why he thinks Deezer has an edge over its rivals... One of your first tasks was preparing to take Deezer public on the Euronext Paris exchange. What was that experience like? “It was a very intense and challenging year. But this was already my second IPO [after Sparks], so I knew what I was doing. I had a really top-notch team to help me execute that. We pulled it off, but I won’t say it was a walk in the park. My first year at Deezer was a difficult year.” Has the IPO given you more financial muscle? “I actually prefer to be a public company, there’s more transparency, things are more professional. We are well capitalised. It was extremely important to make sure that we raised enough money to fully fund the [growth] plan. I do not pay too much attention to the share price. I go and execute our strategy and vision, and keep delivering results. Music is very resilient. We don’t really get affected by inflation – in a way, inflation might actually be a good [reason] for us to keep pushing prices up. The other thing is, we are not affected by the economic crisis because we’re such great value for money. You will cancel your second or third video streaming subscription before you cancel music. So during a mass economic recession, music is probably the best place to be.” Do shareholders expect to see you make some cutbacks during a downturn, though? “My view is that I will not fire people because the market expects us to do so. Actually, I have plans to grow the company, so I am absolutely committed to driving this company to profitability and reaching our targets. I see my job as CEO of a public company to protect it from market nonsense and to do what is right for Deezer. I’m really happy with the performance. When I started, we were growing very little, now we’re growing [revenue] by double digits and accelerating. We showed very strong growth in the second half [of 2022], it accelerated in Q3 and our guidance is for Q4 to show even stronger and faster growth.” Did the price increase have any negative impact? “There was almost no churn. But a lot of our competitors are dragging their feet on pricing because they don’t need to make money on music. The tech giants make money selling hardware or advertising. So the music industry is making the bulk of their money through companies that don’t actually care about music, and that’s really sad and terrible. Spotify is probably the one [rival] that cares the most about music but they want to be all things audio, so they’re going into podcasts, they’re going into audiobooks. Deezer cares about music, we have music at our heart and we are part of the music ecosystem. We want to work more closely with the artists, more closely with the labels and take the industry forward.” What’s your international focus for growth at Deezer? “We repositioned the brand so we’re trying to attract a younger audience. We’re focusing on core markets. In France, we already have a decent business that is more than 60% of our revenues. Germany is now growing through the RTL deal [Deezer powers the media company’s RTL+ Musik app]. Going forward, we want to really unlock the bigger markets where Deezer is very small, in particular the UK, US, Italy, Spain and the Netherlands. But in those markets, we’ll probably be looking at doing a B2B deal first with a partner.” Why is that B2B side so important? “We’re starting to accelerate in terms of B2B, we have announced a lot of deals with more to come. There’s Bouygues Telecom in France, DAZN in Italy, RTL in Germany. We are the best partner for anyone that wants to add music, because the tech giants don’t do B2B. So we’ve found a sweet spot there and we see a lot of traction for companies that want to expand into music.” Can you tell us what those future partnerships might look like? “We want to find big partners, because that’s the only thing that moves the needle. We have partnered historically with telcos and we continue to do so. We’re also exploring partnership opportunities in new verticals. So hardware could be an interesting area to do partnerships, automotive – you can pretty much bring music to anything.” Catalogue had a strong presence in Deezer’s 2022 Rewind round-up. How important is it becoming to the industry? “If you look at people’s consumption, the most consumed music is that which was popular when they were aged 25 to 28. That’s the music that will follow you for the rest of your life. So the catalogue has a big part to play. The DSPs can do a better job at helping people in discovering new music and helping up-and-coming artists. It is harder to break an artist than ever before. There are 100,000 tracks uploaded on DSPs every single day, so for one song in 100,000 it’s much harder to get exposure. A lot of the consumption is driven by algorithms and recommendations, and there are fewer [media] promotion capabilities. That’s where DSPs like Deezer can play a role to help people discover music, even more than we do today, and help the labels break through the next big stars. I would really like Deezer to be more active with discovery of new music.” Will you continue with your existing emerging artist projects? “Yes, absolutely. We have Deezer Focus and Deezer Next, depending on the market. That’s something that we will continue to keep growing. We’re a key part of the ecosystem. And especially with new artists, that’s where we can have an even bigger impact.” What are the plans for Deezer’s UK operation? “We do have an office in the UK and we have our artists relations team. It’s a market that we have always really cared about and where we continue to focus. We also acquired Driift, the livestreaming company, which is based in London. So all of our livestreaming operations are now run out of London. We think that livestreaming might be an amazing opportunity for us to offer something different and better, and grow in the market.” Are there challenges for Deezer in the UK? “The UK is an amazing country for creating global hits, partly because of your language advantage. But that also means that there’s not really very local British music. It’s not like France, which has more of a local scene, or Spain and other markets. It’s harder to find a very unique, UK-specific local angle. And Deezer is fantastic at local music in particular. We’re great for French rap, in Brazil we’re the home of forró, samba, we’re really top-notch when it comes to becoming the champion of all those local genres. In Brazil, more than 80% of the streams are local music. In France, more than 50% of the streams are local music, and that’s a core part of our expertise.” Territories like the UK and US are now very mature streaming markets. What’s the potential for growth in these countries? “The penetration can still go higher. We haven’t reached the limits, neither in the UK nor in the US. But it’s true that the growth will slow down naturally now that we’ve got to that level of penetration and consumption. This is why now it’s not really about growing subscribers, it’s more about growing ARPU. ARPU has been flat or actually going down because of the family plan effect and so on for years. In these more mature markets, we need to all change the mindset and it’s more about focusing on ARPU and monetisation. The moment we do that, then these markets will have so much potential, we can still double or triple the UK or the US in terms of [revenue]. There is a massive opportunity.” Remuneration of artists from streaming is a big topic. Deezer led the way in trialling a user-centric royalty payments system – what happened to that new model? “We continue to be supportive of user-centric and we want to be fair. Ultimately, we don’t pay artists; we pay the labels and the labels pay the artists. So, effectively, what we need to do is agree with the labels about the payment system, and that’s why it has been very difficult – all of them have different agendas and strategies. And if you change the payment system, there will always be winners and losers, it’s a zero-sum game. We haven’t given up on user-centric, we’re trying to find a way of implementing it and making it better and fairer, so that it actually benefits the right people and gets the support from all the labels, especially the majors. We really think that the way streams are paid today [the market share model] is not efficient. With the data and technology we have, you could pay in a far more fair and efficient way. We want to change the industry and make it really happen. I really believe that we will find a way of changing the remuneration system eventually, ideally sooner rather than later. And we will be at the forefront of that change.” Finally, you have identified Deezer as an industry innovator. What does the future hold in terms of innovation? “I really think we’re one of the most innovative companies when it comes to new products. We were the first to offer high fidelity audio [alongside Tidal]. We had [synchronised in-app] lyrics way before Spotify. We have SongCatcher within the app [to identify songs playing around the user or to hum them]. We are now adding livestreaming. When you think about music, it is not just audio. Music is video, music is experiences like going to a concert. That’s where we see our product evolving. Also, the way we consume music is not as social as it should be; music is what brings us together, but we’re missing that element. So we’re looking into video experiences, offline experiences, social experiences, and that’s exactly the direction our product is going to be taking. So there’s constant innovation, and there’s a lot of really cool stuff that is coming up where we will also be the first ones in the market. Deezer has always been an innovator and will continue to be – that’s really who we are.”

'We consider ourselves underdogs': Tru Tribe's Sandy Abuah on the rise of Knucks

Knucks went Top 3 with debut album Alpha Place last year. Here, co-manager Sandy Abuah recounts how Tru Tribe’s work with the UK rapper shows that success is about the long game… "In February 2020, Knucks released the video for [2019 single] Home and it went viral, then Covid hit us. We knew we could sit on our hands and panic, like the majority of the industry at the time, or we could capitalise. “We joined forces with Believe, kept on releasing and his numbers just started growing. Then when it came to making the Alpha Place album [released in May], the idea was to show people that there are different by-products of being in the same environment. It’s about seeing a situation from a third-person perspective, or being the person [involved] and there being only two ways it could go, prison or dying. “We were very meticulous on the artwork and visuals and knew we had something interesting, but we didn’t know how big it would go. We built up a whole infrastructure behind us. At WME, Lucy Dickins, Caroline Simionescu-Marin and Phoebe Holley have been amazing. They orchestrated his first UK tour, which sold out in five minutes. It went on sale before the album came out, that was a big risk. “On release day, we did bundles of merchandise, CDs, cassettes and T-shirts. We did a pop-up tour of six cities where Knucks signed over 5,000 CDs and cassettes. In the process, his streaming numbers were rocketing and we ended up hitting No.3. "No one wants to do something and not be the best. We didn’t get much support from the industry itself, to be transparent. We consider ourselves underdogs, so this was a message to the younger generation that there are other ways to do this. Some people might want to take the lift. For some people it takes 10 years, like Knucks. “Not only is he independent, he doesn’t make music that’s considered regular rap in the UK, i.e pure drill. It’s harder when everyone is gravitating to a certain type of sound and you’re doing something that’s slightly in between. So it was about telling fans and people that you can be true to yourself and still do the numbers a major can. “No one really believed in Knucks, they probably thought, ‘Oh, he’s okay…’ but it wasn’t a thing where [people thought], ‘Oh he’ll be doing a 20,000 capacity show at The O2’ type of belief. That was our ammo, we just decided to put our blinkers on. “Our strategy was thinking outside the box, expanding our team and taking it to a new level that hasn’t been seen before. And with that comes big responsibility, so it’s going to be a lot harder than the norm. We’re pushing boundaries. “We strategised to a tee, going by what the concentration span of young people is. We made sure we shot all the videos, did everything and then we just released, ‘Bam, bam, bam.’ Knucks doesn’t like doing too many interviews, so our aim was to make the press opulent, making sure we had real music and fashion tastemakers. Campaigns are like a puzzle. It wouldn’t have the same energy if we didn’t have radio or press. You use them as moments to add to the energy and excitement. “The biggest stars in the world all have something in common, they tap into your emotions and we wanted to make sure that we did that. To affect people’s mood was our main goal, to be relatable to the everyday person. That was the key to success. “Knucks is very meticulous and very detailed with his lyrical content. We spent nearly a year working on the project, it wasn’t something where he just hopped in a booth and it happened by chance, everything is seamlessly woven together, even the sequencing and the skits, the conversations. It captures real people and real things and that’s what music is about. It’s about support and taking people away from the edge. “The conversation around Knucks is just so wide now. He is a lifestyle, he’s laid-back, the way he dresses and his energy are very unique, which a lot of people will relate to. In America, for example, Los Pollos Hermanos has really connected. We did a deal with Puma and one of the deliverables was to do a freestyle including their sneakers, you notice he says ‘Puma’ on the record. We were advised to put it on Spotify, we didn’t think anything of it because it wasn’t even properly mixed. It went through the roof [Laughs]! It was a freestyle and it’s just gone platinum. The crazy thing is that it’s not like it’s on the radio and everyone’s heard it, it’s just sat on Spotify doing numbers. “The other main thing we did was to push Alpha Place for the whole year. People tend to release and then forget about it, but we were like, ‘Nah, there’s a ton of people that haven’t heard this, let’s keep pushing it like it’s brand new.’ As a result, his following is still increasing, people are still finding out about Alpha Place, the numbers are still healthy. “The word breakthrough is subjective. Are you building a cult-like fanbase, or do you want to be No.1 consistently? Knucks is building a cult-like fanbase and that’s real success, having fans that will grow with you for years on end.” PHOTO: Leanda Heler

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