The music business has a big problem (well there are a lot of them, but I will focus on one here). Consumers and often many businesses don’t think much about the music being played in stores, but there are specific regulations that go into it so higher royalties are paid to artists if the music is played for more individuals. It is estimated that up to $2.7 billion is lost per year in royalties to artists through misused streaming. While much of this is certainly not malicious, the cumulative impact of thousands of restaurants, coffee shops, bars and businesses can make a big difference for rights holders.
This is where a company like Soundtrack Your Brand can step in. They are a B2B music licensing company that aims to solve those licensing problems for businesses and provides playlists with cleared music to use. They have over 50 million cleared songs in 74 markets.
Getting paid for when your music is played in any circumstance is hard enough, whether it is through a streaming service, in a club (when those were open) or at a mall. When businesses have the right license, it helps simplify the process and increases payouts. That is the goal here.
We chat with Soundtrack Your Brand CEO and founder Ola Sars for a new Industry Insider feature to learn more about the issues with business licensing. He was a co-founder and COO at Beats Music before co-founding DJ-driven music software company Pacemaker. He started Soundtrack Your Brand in 2013 as a joint effort with Spotify and seven years on is still working in the business, despite the difficult conditions of the pandemic. Read on for our interview to learn more about part of the music industry that is often in the background, but vital to consumer behavior and how artists can get paid.
How did you get into the music business?
I left a career in consulting to enter the music industry with my first startup in music tech in 2006. Since then, I have been focused on reforming the music streaming space. I saw that music was going digital and decided to lean in that direction. Through every step, I’ve been focused on unlocking the intrinsic value of music through various startups in the music-tech space, first in the consumer sector and now in the B2B sector.
Before Soundtrack Your Brand, I was a co-founder and COO of Beats Music, which was eventually sold to Apple and transformed into Apple Music. I also co-founded Pacemaker, the world's first DJ driven music platform. The platform included hardware, software and an online community, and was the most awarded innovation at the CES innovations Awards in 2009.
I started Soundtrack Your Brand in 2013, as a joint effort with Spotify, and am currently focused on disrupting this multi-billion dollar market opportunity of B2B music streaming at its core, providing the right music at the right place at the right time for businesses.
Why did you found Soundtrack your brand and what is the problem you are trying to solve?
I believe that music is undervalued as an art form and I saw that there was significant opportunity for value improvement and growth. Soundtrack Your Brand was created with the ambition to move the antiquated background music market into the streaming era, bringing transparency, compliance, and fair compensation and correct flow of royalties to artists and composers when their music is played in a public or commercial environment.
We are taking the music streaming revolution that happened in the consumer space to the B2B sector. We are upgrading a broken legacy model and combining streaming with enhanced proprietary technology, and in doing so, unlocking a multi-billion dollar market for the music industry. We want to increase royalties to artists and songwriters and ensure that they are paid when their music is played.
How does Soundtrack Your Brand work?
Soundtrack Your Brand is a B2B music streaming service. We offer a subscription service model to businesses that want better and properly licensed background music. Soundtrack has the world’s largest catalog of popular music licensed for businesses with over 50 million music tracks for use in 74 markets. This means that businesses now can legally access a music streaming solution when evolving their customer experience through music.
Soundtrack has 10,000 direct deals with labels and publishers, which allows for royalties to flow directly to rights owners based on what has been played. Our model increases transparency and royalty flow to music creators. At the same time, we are helping thousands of businesses strengthen relationships with customers through the power of music. We provide an all-in-one solution that combines expert curation and world-class tech for streaming music that’s properly licensed for stores, hotels, restaurants, and other commercial settings.
How can you get more small businesses to be more aware that they are illegally streaming music in their stores (pandemic aside) without draconian enforcement?
Small and medium sized businesses have no bad intent when it comes to streaming music from private accounts in their venues, they are simply not aware of the fact that it’s illegal and that artists and composers miss out on well deserved compensation when this occurs.
After providing thousands of business owners with our service and talking to hundreds of them, it is clear to me that they happily will pay what is required to do right by the creative industry simply if they can access a satisfying service like Soundtrack, and if they are properly informed around B2B licensing vs B2C licensing, it’s as simple as that.
Now the industry needs to improve and increase the information efforts towards the B2B market and raise awareness on this matter. They also need to distinctly go after music-services that are not properly licensed but who provide and market their service in the B2B market, and there are hundreds who do...
Why do you think so many businesses don’t have the right licenses for streaming music in their spaces?
A study by Nielsen reported that around 20 million businesses in western markets are using consumer music streaming services illegally when playing music in their businesses. I think multiple factors play into this. Music licensing can be a complicated topic and many business owners simply are not aware that playing music in a commercial space with a consumer music streaming service, from a rights perspective, is the equivalent of opening a cinema with a Netflix account. I also think there has been a lack of enforcement and, until now, a B2B solution that’s on par with consumer streaming services.
How much money could be gained by artists if all businesses had the right licenses and how would it be paid to artists?
The misuse of streaming services is leading to an annual loss of almost $2.7 billion dollars in royalties per year that should rightfully have gone to artists and composers. The global music market is expected to double - from $70 billion - to over $140 billion in the next decade, mainly driven by music streaming, which will more than triple in value from $22 to $75 billion by 2030. In this continued streaming revolution, as transparency and efficiencies continue to improve, Soundtrack could potentially be contributing with an additional 15-20% of incremental value on top of this $75 billion streaming market.
How have you seen the pandemic impact businesses you work with and your business?
The pandemic has undoubtedly impacted most of the industries we serve. Many brands saw declining sales in revenue between April and June, so we took the unprecedented move of offering our customers an option to “pause” on their monthly music subscription, rather than outright canceling the service. About 80% of clients that had to shut down their business for an extended period of time opted to pause their subscriptions temporarily rather than canceling. Those who did cancel were hurting so badly that they likely weren’t going to make it through. Although we did lose some customers, we are now experiencing a stronger recovery than expected. We’ve had a 75% return rate on all those pauses and are now back to our steady growth.
We are still monitoring the situation and things could change for better or worse at any moment, but by giving businesses the opportunity to take a break during unstable times, it has allowed them to return when they are ready.
Given your background in streaming, what can be done to make streaming more equitable so artists can actually make a living from it since 99.9% can’t?
We need to increase the value of music. We are already charging 5-10 times more for B2B subscriptions than B2C subscriptions, which leads to 6-10 times more royalties per subscription distributed to artists and composers. We think this is leading the music industry in the right direction by increasing the value of music and improving compensation to the artists.
Especially in these times where artists have been significantly impacted from eradicated revenues from live performances, it is even more important than ever to provide additional revenue sources for the continued creation and flow of great music.
What attributes and qualifications do you look for in potential new employees?
We look for people who believe in our mission and vision for the music industry, who support the purpose of artists getting fairly compensated for their art.
Our employees share the belief that the value of music has been deteriorating and are committed to fixing this problem the industry is facing. I think the music industry in general needs problem solvers, people who can identify dysfunctions and obstacles and focus on bringing creative solutions to the table.
Our contribution to the future music industry is through building cutting edge products that the B2B customers just want to have, then the music industry has to support by fixing the broken market alongside us.