As Spotify continues its reign as the world’s biggest consumer music streaming business, a startup from its backyard in Stockholm (and even backed by Spotify itself) has raised a large growth round to take a leading place in providing music streaming services to businesses.
Soundtrack Your Brand, started by an ex-Spotify executive and one of the co-founders of Beats (now part of Apple), has raised $22 million — funding that it will be using to expand its business globally and continue building out its tech to select and play music in stores and other retail locations. The company already counts McDonald’s, TAG Heuer and Toni & Guy among its multinational customers, along with “thousands” of smaller businesses (which include national operations for huge chains, such as Starbucks in Sweden). It is also the operator of Spotify Business — which is powered by Spotify’s network — in Sweden, Norway and Finland.
This latest round is led by Balderton Capital and Sweden’s Industrifonden, and it brings the total raised by Soundtrack Your Brand to about $40 million. Other investors in this Series C include Telia, Northzone, Creandum, the H&M’s family investment fund HMP, industry veteran Jörg Mohaupt and Spotify’s Chief Content Officer Stefan Blom. Previous investors not in this round include two strategics — Spotify itself and PlayNetwork — as well as Wellington. (Soundtrack Your Brand, based in Stockholm, shares many common investors with Stockholm’s Spotify.)
Soundtrack Your Brand was first founded in 2014 by Andreas Liffgarden (who used to run Spotify’s business development) and Ole Sars (the co-founder of Beats), aiming fill a specific place in the market: businesses today are often faced with a limited, uninspiring, or potentially illegal set of choices if they want to play music.
Most commonly, businesses will use their own sets of CDs and mix tapes, or subscribe to services that send these to them, which can be a chore and cost to keep refreshed; or they will play the radio. And, if they are using a streaming service like Spotify, they are likely breaking the law, since these services are only licensed for non-commercial, individual usage.
Although it’s a gap in the market, that doesn’t mean there aren’t others also trying to fill it: competitors include Mood Media (owner of Muzak, and partner to Pandora for its business offering in the US), Play Network (the same one investing in the startup), and local players like ImageSound in the UK.
Soundtrack Your Brand, Liffgarden and Sars say, is differentiating themselves in the market in a few ways.
The first is that it’s offering a very simple way to sign up and use the service without any additional physical hardware beyond a store’s speaker system and internet connection. It charges €34.99 ($37) per location per month.
The second is in the selection of music that it’s providing, and it’s plans on that front in the future. Several consumer streaming companies have coalesced around a figure of about 30 million music tracks available for listening, out of a global total of about 50-60 million tracks in existence. But that is not the whole story.
Liffgarden notes that at best most streaming services see the most heavy play on their platforms of only “a couple of million” tracks. “Last year we played 200,000 unique tracks on our service, and our competitors played roughly the same amount,” he said. Today SYB’s competitors have libraries of about 1 million songs that they are tapping for their services, and SYB itself is working with platforms like Spotify and Play Network to relicense roughly the same amount of music for the SYB service.
But longer term, the plan is for SYB to move to its own direct licensing deals with labels. Licensing has proven to be a major headache for companies like Spotify, which is trying to renegotiate its own terms in order to get a bigger margin for this. Liffgarden and Sars say that their scenario is different because SYB is an enterprise service. As a more narrow use case, it will only license around 15 million tracks at the end of the day. This will give it a significant edge over competitors in terms of the quality it can provide. And the fact that it is charging more per user to play the music will also mean a higher margin for SYB.
The third area where SYB is hoping to outcompete is in terms of what it’s actually providing to customers as a service. There is, of course, straight playlists that SYB will curate for its customers, as well as give retail workers the ability to play music on demand. But it is also powering its system with big data and analytics that will help improve the selection of music, aimed at helping retailers figure out how to better boost its sales, bring in more customers, and keep them longer (or perhaps subtly usher them out faster).
This is not just about music, Sars said. “This is about moving into retail tech and the bigger move to digitize businesses.”
As part of this round, Balderton’s Lars Fjeldsoe-Nielsen, previously head of mobile at both Uber and Dropbox, will be joining the startup’s board.
“I’ve witnessed disruption first hand. Dropbox made storage cool, and achieved a shift from a consumer to a business proposition. Uber changed the way we think of transportation. Soundtrack Your Brand will do the same thing to background music,” he said in a statement.