Deez Music Streaming Services

I’m a religious consumer of the Digital Music News podcast.

Source: Statista

About two weeks ago, I caught the latest podcast episode, which focused on the growth potential of the Latin American digital music market. The featured guest was Oscar Castellano, CEO of Americas for Deezer, a French subscription-music service like Spotify or Apple Music. To be quite honest, before working in the music industry, I don’t recall hearing about Deezer. As it turns out, it’s quite the major player in the music streaming space.

According to a streaming service review, Spotify has more than 30 million songs in its library, which reaches 58 countries, while Deezer has 40 million songs that reach more than 180 countries. In the race for emerging market market share, Deezer recently announced a distribution partnership with Rotana, a Dubai-based media company in the MENA region.

All this said, I thought I’d be interesting to give Deezer a spin and see where the value proposition lies.

Right off the bat, two things stood out to me on the home page of the Deezer mobile app: My Flow and live radio. My Flow is essentially what My Mixtape is to YouTube’s music streaming platform. In my opinion, the discoverability aspect was mediocre. I felt that about 20 minutes into listening, My Flow would repeat an artist that was previously streamed. I’m personally a bigger fan of YouTube’s My Mixtape. The live radio option was pretty interesting. I haven’t used it much, but could see myself use it frequently when at work or commuting to/from work (especially the KEXP station). I’m extremely curious as to what Deezer’s profit margin is for the streaming of these live stations. After exploring the app a bit more throughout the last few weeks, I found that Deezer lacked a bit in the music library aspect (to my disappointment, the T. Rex library was missing the essential Electric Warrior album). In my opinion, Deezer’s unique selling proposition (other than its diverse set of audio content), is its audio quality and control. Much like Tidal’s value proposition (with the exception of ALAC which Tidal includes), Deezer offers 320 kbps MP3 audio on their Premium tier and 1411 kbps FLAC HiFi tier. The expansive selection of audio content and the control of audio quality looks to be a more affordable version of what Tidal offers to audiophiles.

In the above-mentioned Digital Music News podcast episode, Oscar Castellano, detailed that My Flow was going to play a significant role in the expansion of Deezer in LATAM. I could see that, along with its diverse selection of audio content, being vital motivators for LATAM consumers to select Deezer as their one-stop shop for music/audio streaming consumption. I’ll be keeping a close eye on the Deezer LATAM market share, that’s for sure.

Binaural Beats on Spotify

In my later days of being a Visual Artist (I normally go with the title of “Photographer” for the sake of simplicity, but photography was only one of the mediums I used for conceptual projects), I was pretty fascinated with the concept of synesthesia, which ultimately led to studying binaural beats for a video project. Since then, I’ve been using these tones to help me focus when reading or writing. While the science behind the cognitive effects of listening to binaural beats seems to be far from complete, there’s a chance that listening to binaural beats might not have an actual effect on my cognitive processing, but I chose to continuing listening to them even if it’s just the placebo effect I might be experiencing during mentally-demanding tasks.

On a day when I have to write, I usually hop on youtube to listen to this specific “beat”, but my curiosity got the best of me and I decided to check if there were any binaural beats on Spotify. It turns out there’s handful of Spotify-curated ASMR (autonomous sensory meridian response) playlists, one with over 125k followers containing binaural beats.

Source: Statista

A criticism frequently brought up on Spotify’s business model is the operating expense that comes in the form of royalties they have to dish out royalties to the three major record label companies for the act of licensing out their IP on the Spotify platform. In order to decrease market share from the record labels, which held 79% of the share of listening on Spotify in 2017, and as a result decrease operating expenses, the streaming company has been launching strategic initiatives that included the suspected low-royalty ‘fake artists’ fiasco earlier this year.

I would think that binaural beats would potentially provide higher-margin revenue for Spotify. It looks as if there are actual people (artists) that upload these tracks, as seen by the artist of the first track on the ASMR Sleep Sounds playlist, Creative Calm ASMR. However, who’s to say that some of these beats aren’t coming from Spotify themselves? I mean, they’re just tonal frequencies so how difficult would it be to export these frequencies and upload them onto the platform?

Most of the tracks are 2-3 minutes in length and, in my own consumption behavior, I normally listen to binaural beats on YouTube an average of 1-2 hours. That would mean that if I’m listening to a binaural tone for 2 hours on Spotify, I would be looping a track 40 times. What about people that use binaural tones as a sleeping aid? If someone sleeping about 7 hours a night, a track would be looped 140 times! With the potential of stealing share of listening via binaural tones, I’m not quite sure why binaural tones on Spotify aren’t advertised.

Stream On

Spotify: One of the handful of monthly subscriptions I don't mind dishing out a few bucks for. While most on-demand video-streaming services rely on new content to draw viewership, the consumption of music on the Spotify platform relies on its back catalog, hence its significant marginal costs - the royalties it pays the music industry.

The music-streaming company filed to go public last week. With competition like Amazon Music and Apple that have an overwhelming amount of financial backing, in addition to the cost of revenue that Spotify has to pay to record labels, it's going to be interesting how Spotify navigates the music-streaming seas. At the same time, there's potential to leverage the data acquired from their platform (I recently saw a tweet that mentioned that Metallica was adjusting their concert playlist in particular cities based on local Spotify listening data) and for the company to launch its own record label. Whatever the case, Spotify's expected to make a big splash when its shares begin trading.

In light of the upcoming IPO, I thought it was worthwhile to share a bit about the business.