Deezer Adds $185M, Strategic Partner That Should Make Spotify and Record Labels Very Nervous

Earlier this month Deezer added $185 million at a valuation of more than $1 billion. New investors include a top Middle Eastern music and media company poised to give the streamer a distinct competitive advantage on the region.

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Dubai based  media conglomerate Rotana has taken a major stake in music streamer Deezer. 

Controlled by Prince Al-Waleed bin Talal, the company owns what may be the Arab world's largest record label, Rotana Records. The label is part of a media empire that includes a film production company, a magazine of the same name and seven music video channels. More than 100 artists are signed to Rotana.

This new deal, alongside a major investment by Saudi based Kingdom Holding Company, positions Deezer to become a dominant player in the region.

Exclusive Music

Now we've learned that, as legacy agreements with other music streamers expire, all music and videos released by Rotana – both catalog and new releases – will only be available to stream on Deezer.

It's the kind of deal that keeps other music streaming executives up at night. It's also kind of deal for exclusives, that if Spotify or Apple Music made in a signifigant Western market, would trigger apoplexy in major label boardrooms.

Does the Middle East really matter? 

In addition to concern over a new race to land exclusive content,  the real worry for Spotify and Apple Music is where their growth will come from as the US and European markets reach streaming saturation. 

The answer is emerging markets like the Middle East. 

"The streaming market will need to look towards emerging markets for growth," says Mark Mulligan, whose MIDiA consultancy has just released a report, Emerging Music Markets: Streaming’s Third Wave.  The Middle East is particualrly worth prize because, unlike some emerging markets, it offers a potentially profitable mix ratio of users drawn to a free music service and those able to pay a reasonable monthly fee.

Regions like the Middle East are "crucial to the long-term outlook for streaming growth," says Mulligan. "So, mapping their respective trajectories helps to forecast long-term global market growth for streaming."