Music streaming service Deezer plans Paris listing

Deezer generated €93.2 million (about $104 million) in revenue in the first half of this year, up 41 percent from the same six months last year.

The initial public offering (IPO) will allow Deezer to expand its offering, “drive deeper distribution through our telecom and manufacturer partnerships” and improve its product and content, Chief Executive Hans-Holger Albrecht said. Swedish competitor Spotify has over 20m subscribers and 75m active users.

Music streaming, where users play music from a remote library of tracks, is expected to become the largest music distribution channel by 2018, outstripping both physical acquisitions and downloading, according to market research group Enders Analysis Ltd.

Founded in 2007, the company raised its last private funding of 100 million euros from Russian-American billionaire Len Blavatnik in 2012.

The French service, which has 6.3 million paying subscribers, is planning an IPO on Euronext in Paris. The company has teamed up with phone companies to sell its premium subscriptions coupled with mobile-phone packages and, when it did launch in the United States about a year ago, it partnered with speaker-maker Sonos and later with Bose. Revenue for Deezer parent company Blogmusik SA rocketed 52% in 2014 to 138 million euros ($154.44 million), but the firm remained in the red, losing EUR23 million, according to a legal filing this summer in France.

Yet such services are so far unprofitable, since they have high costs for licensing music and face challenges persuading people to pay, and have been criticized by artists such as pop star Taylor Swift for not paying them enough. However, it is targeting aggressive expansion in other markets, with plans to increase revenues to €750 million in 2018.

Merhely controls 8 percent and major record labels Universal, EMI, Sony and Warner account for around 15 percent of the shares.

BNP Paribas and Bank of America Merrill Lynch are managing the listing, along with Citigroup and Societe Generale.