Warner Music's Parent Company Now In Control of Deezer Following French Approval

Access Industries, the multivalent business owned by billionaire and former oligarch  and the parent company to the Warner Music Group, now has control its own streaming service: Deezer. L’Autorité de la concurrence, France's competition regulatory body, made its decision public this week after ruling on Access' move in early August. The document, reviewed by Billboard, was first sourced by Music Business Worldwide.

Access already held a 26.9 percent fully diluted share in the company, and infused the upstart platform with $100 million in funding this past January. One source suggests little will change in the near-future operation the company, given Access' already established relationship with Deezer. The company has had difficulties launching stateside, overshadowed by competition between Apple, Spotify and Tidal (and the looming shadow Pandora's streaming service). Whether this new arrangement will fast-track its international footprint will no doubt become clear over the next year.

While most proprietary (read: interesting) metrics -- like ownership percentages, subscriber counts and some revenue estimates -- were redacted from the document, it does have some. Deezer's annual revenue is said to be €150 million (about $169 million), and that it holds a large share, 40-50 percent, the streaming market in its home country France. France, with 56.8 million on the internet and 56.2 million smartphones in the country, is the world's fifth-most valuable recorded music market, according to the IFPI, generating $118.5 million in both paid and ad-supported streaming in 2015.

Deezer scuttled its plans for an IPO last year, inspired by the beating that Pandora's stock received after Apple Music's success. Last month, the company also lost its North American CEO to the pot vaoprizor company Pax.

Deezer's N. American CEO Departing for Pot Vaporizer Company Pax

, president the Autorité de la concurrence, writes in the organization's decision that, despite what would be a close association with one the world's three major labels, it does not think that approving the deal would result in anti-competitive behavior based on a number factors.

For one, Warner Music's digital market share -- estimated to be 20-30 percent, the same as Sony, with Universal at 40-50 percent -- precludes any possible antitrust because the label holds less than 30 percent market share. ("Les risques de verrouillage lorsque la part de l’entreprise issue de l’opération sur les marchés concernés ne dépasse pas 30 pour cent.")

The same goes for Deezer, which the Autorité says has the lion's share France's streaming market (40-50 percent), but far less than that internationally (0-5 percent).

Maybe most importantly, music streaming subscribers expect that all major catalogs music would be available to them, thus Deezer would have to work with both Universal and Sony in order to compete in any meaningful way with any the other services. "The growing importance this listening mode in France and in the world requires, for all majors, they strike licensing agreements with the major platforms," the Autorité writes.

Whether Deezer will receive a friends-only discount on licenses for Warner Music catalogs is addressed as well. "The market power enjoyed by some competing platforms over Deezer is likely to limit the risk discrimination by Warner Music to Deezer in terms licensing," and that any preferential treatment could likely cause headaches for Warner Music when negotiating with other streaming services. This, however, is dependent on how willing Access is to build up Deezer, either through preferential licensing deals or artist exclusives, at the expense Warner Music.

The Autorité notes that competitors, either to Deezer or Warner Music or both, think the same and "have expressed fear that the deal allows Warner Music to implement discriminatory practices in favor including Deezer consisting the latter exclusive licenses on certain securities or artists. This scenario however is not credible, both in terms competitive pressure faced by Deezer as incentives for Warner Music." A source with knowledge the companies' relationship affirms that conclusion to Billboard, given the vested interest all labels have in maintaining a competitive streaming landscape.

Warner Music, Sony Music and Spotify (Deezer's principal competitor in France) declined a request for comment. Deezer and Universal Music did not immediately respond to a request for comment.