By George Howard

I’ve tried the Deezer service out. I was able to do this because they made a deal with Sonos, where those with Sonos gear (and if you don’t have Sonos gear, I’m not sure we can still be friends) can gain access to Deezer’s high-end (and higher-price) service. It’s a good gambit; people who have Sonos clearly care about sound quality, and thus represent a good match for Deezer who are trying to distinguish themselves from the ever-increasing pool of streaming services out there.

The issue really is that gaining competitive advantage in the streaming market is very, very hard. Companies typically gain competitive advantage either by having more/different/better features than competitors, or by charging less. In both cases, these “advantages” aren’t terribly durable as features (etc.) can be imitated, and prices can be cut.

The net/net is that the concept of brand loyalty with respect to streaming music services is basically non-existent. Customers will (and do) go where the price is lowest and the features highest, and – when there’s feature parity – price will win.

Companies try to avoid these exoduses by increasing the cost of abandonment. For instance, encouraging you to create playlists, so that, should you consider leaving, you reconsider because you don’t want to go through the effort of recreating the playlists. Again, not a great startegy, and – as always – price will trump these types of tactics.

What’s left then is to offer a completely differentiated service. Concert Vault/Daytrotter are examples of this; you can only get their recordings from their sites (Disclosure: I’ve had a long working relationship with both companies). Alternatively, you can create a product that resonates so deeply with a customer that they will stay loyal to the brand even in the face of cheaper/more feature-rich competition. No streaming service has this type of brand equity.

Thus, Deezer is trying to carve out their niche via super-servicing a specific crowd: audiophiles. This could work. It’s a small market, but typically a relatively well-heeled one, and one not really disposed to pirate music. Interestingly, however, Deezer isn’t really playing this obvious (and, to my mind, only) competitive advantage up. For instance, they claim a voluminous catalog of music, and yet, there are no playlists highlight the best sounding recordings (hint: just put a playlist together of Steely Dan recordings), nor is there any type of social effort that I’ve seen where people are recommending great sounding tracks, and directing people back to Deezer.

I’m sure they’ll get to these things, but, I’d hurry up.

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