Ola Sars - Soundtrack Your Brand
Ola Sars is the founder, CEO and chairman of Soundtrack Your Brand - a music streaming platform for businesses. He was also co-founder of Beats Music which went on to become Apple Music, and was also behind the hardware music platform for DJs, Pacemaker.
Ola talks about the importance of partnering with independent academic research, applying neuroscience and econometrics to the deployment of music in different commercial contexts, and the deep science of music selection and familiarity with respect to consumer behaviour.
Dubber Hi, I’m Andrew Dubber. I’m Director of MTF Labs, and this is the MTF Podcast. Now, whatever your business happens to be, whatever you do for a living, ultimately, at some point and at some level - often very much at the most direct level - the success or failure of what you do comes down to how you make people feel. And if your work is the kind of work that involves bringing people into your space - whether that’s a hairdressing salon, a restaurant, a retail outlet of some kind, or maybe experimental labs for cross-sector innovation - a large part of how you make people feel has to do with music.
And, of course, that means that the music you choose and the manner in which you play it makes a valuable contribution to your ongoing revenue, which is, of course, a strong argument in favour of paying the creators of the music. Not actually optional, but there’s a good reason for that. And also an argument in favour of a good sounding system, a decent acoustic space, and all the things that go along with having given the music you play some consideration, which, of course, includes choosing the actual songs and moods for the context, the time of day, and the desired behaviours of your customers and colleagues.
Now, someone who’s given this kind of value a great deal of thought is Swedish entrepreneur, Ola Sars. Ola is the CEO of Soundtrack Your Brand, which started life as Spotify Business before it was spun out to its own separate entity. And he has a track record as the co-founder of Beats Music - now you know it as Apple Music - and the co-founder of Pacemaker, the world’s first DJ-driven music making and sharing platform.
Dubber Ola Sars, thank you so much for joining us for the MTF Podcast. How are you doing?
Ola Doing great. How are you doing?
Dubber Yeah, very well. It’s nice weather in Stockholm?
Ola It’s winter in Sweden, and it’s snowing, and it’s really, really cold, even for a Swede. Actually, I’m enjoying it because I prefer a real winter to the in-between thing.
Dubber Yeah, fantastic. So you’re in charge of something called Soundtrack Your Brand. You’d better tell us what that is.
Ola It’s pretty simple. It’s a streaming service for businesses, basically. So just like in most of our industries, like mobile phones or internet connectivity, you have a consumer market where the consumers are buying, and then you have a corporate market, a B2B market, where businesses are the buyers of the subscriptions. That also exists, obviously, for us in the music industry, where you have music in cafés, restaurants, retail, whatnot. Any type of physical domain. Basically what is referred to as the public performance. And I came from the consumer side, and when I started looking at this, I realised that, actually, music streaming and how we deploy music streaming models have not been transferred into the B2B market, so I decided to do that and sell business subscriptions, basically.
Dubber Right. You better explain, why can’t cafés just put on Spotify? Play their playlists?
Ola Well, first of all, can you open a cinema with your Netflix account? That’s the equivalent, basically, of using someone’s IP or creative art and showing it for commercial purposes or a public purpose. So just like in the movie industry or anything else, when you’re actually using the art to drive a brand experience or drive a business, there’s a logic in… I didn’t invent that logic. That’s been around for almost close to a hundred years, where you should actually pay more in order for using the music to sell more coffee. So there’s a high rate for businesses to use music and drive their brand experience, which I think is perfectly logical. And I think, even, we should look to improve that value through time because music is so important for the brands using it. So I’m merely trying to help out in terms of bringing streaming to those customers and enabling music in new, fresh ways for them.
Dubber Right. Streaming gets a lot of flack from, particularly, independent musicians, who say that not enough of the money ends up in their pocket. And I think they assume, whether rightly or not, that it’s because these streaming services aren’t paying out enough money. I suspect there’s something in-between those two things that’s also taking a cut along the way. But is it a better rate of return for artists who are being played in businesses, or does the same trickle-down happen?
Ola Yes, it’s significantly better. Just to answer your question, primarily. And that is basically my quest here. I came from the consumer side. I was one of the co-founders at Beats Music. That turned into Apple Music, obviously. I’ve worked very closely with Spotify, and I actually co-founded Spotify Business. I founded Spotify Business with Spotify, which was the first attempt of bringing streaming into the B2B market. And now, in 2018, we pivoted that into Soundtrack to become a completely independent B2B streaming service.
Answering your question, I think when you talk about streaming, there’s obviously multiple perspectives in this dialogue. And I am quite into this discussion the whole time. But if you’re selling a subscription at ten dollars, which everyone refers to in the consumer space, it’s not actually ten dollars anymore. It’s around five dollars on a global scale because the ARPU, the average revenue per user, has gone down through all the discounts and diluted through free. So let’s talk about it in terms of five dollars instead. And then the consumer services have agreed to share what they generate. So they give away roughly seventy/seventy-five percent of what they’re generating, which I think is actually quite good. They’re giving away three-quarters of what they’re earning, and they’re actually…
Dubber Yeah, there’s a technological infrastructure that needs to be supported.
Ola Right. I try to stay objective, but, honestly, they’ve actually taken this market back, to the nightmare where it was ten years ago. You have to give them some credit for actually bringing consumers into legal consumption of music again and actually paying for consumption.
And there’s a huge debate to be had about value of music, of course, and I think it’s time to have that right now. But I still think sharing seventy-five percent of what you’re actually extracting is, I’d say, fair. And they can’t share more than a hundred percent. The hundred percent is a hundred percent. So should they be sharing ninety-nine percent, then they won’t be able to build these fantastic products and this infrastructure.
So let’s just start with the thesis of five dollars, them sharing roughly three and a half. So that’s the reality of the consumer market. What I’ve done in the B2B market, with the very basic logic of “Businesses should be paying more because they’re using it for multiple ears and using it to sell stuff.”, so I’m actually charging thirty dollars per subscription, per business location, per month, meaning that…
Dubber Regardless of the size of the business?
Ola Independently of the size of the business.
Ola So for the subscription. But if you’re a hotel, for example… Let’s take W Hotels, which is a client, and their LA premise has around… In one of their hotels, they have around fifteen subscriptions because every sound zone, as we refer to them - the lounge, the pool bar, the gym, restaurant A, restaurant B - all of them have different soundscapes. Hence it’s a great customer. So W Hotels is paying the music industry, in their perception, thirty dollars times fifteen. So they’re at five hundred dollars, roughly, to light up their beautiful hotel with beautiful music. So I’m extracting that value.
But let’s get back to the subscription and not get too technical. I’m charging thirty dollars. So I’m actually paying out more than twenty dollars, in real terms, to the music industry. So, in general, I’m ten x to the consumer services of what I’m sharing, roughly. Eight/ten x, depending on if you’re the publisher or the label. So B2B, we have the same distribution model, we’re sharing roughly the same percentage of what we’re collecting for our interactive subscriptions, but the absolute number - meaning the number of dollars - is so much higher.
Dubber Yeah, so same percent of a larger amount.
Ola Yeah. So that’s why I think it’s very important that B2B becomes an opportunity for the music industry to add additional incremental revenues into this streaming market.
Dubber Right. So just a quick question from a… I don’t know. It’s not really a technical perspective. But just so that I know how the mechanics of it works. If I have a café and I give you thirty dollars, and you give out… Let’s say it’s twenty-three dollars of that, and I only play Elton John, does Elton John get twenty-three dollars from me?
Ola Right. So that’s the pro-rata model that is applied in the whole music industry, including the consumer… Or invented in the consumer market. So I’ll try to simplify the response to that.
If you’re a café and you’re only playing Elton John, then a hundred percent of Elton John - that Elton John track or just Elton John - is being reported back to our rights holders into what they call the pro-rata distribution of everything that they’re collecting from the subscription services. So, no. All of my money doesn’t go through all the way to Elton John’s account, but it goes with the recorded data on it that “In the total distribution, this account, one hundred percent of that contribution should be the percentage in the distribution machine.”, so to speak. So it’s called pro rata. It doesn’t move that specific money all the way to Elton John, but it affects the distribution of the total pot of money that the label or the publisher is distributing. I know, there’s no easy way of explaining this.
But what you are referring to - which I think you are - is what people are discussing now. More of a user-centric way of paying that actually goes directly to… What’s being played should be actually distributed to the actual artists and not through this pro-rata machine that the music is today.
Dubber Which seems fair. Is there a reason that wouldn’t be fair?
Ola No. I think it’s a very interesting thought. But, remember, it’s all very new. I think the pro-rata model is fair - the one that’s being adopted today - because, basically, the labels and the publishers are distributing the total amount of royalties that they are collecting based on what’s being played. And I’m paying, as a service provider in the B2B space or Spotify in the B2C space or Apple Music in… I’m paying them based on what my users are playing. So we still are trying to distribute the royalties based on the consumption, but it’s not a one-to-one relationship.
But the problem with… Or the challenge, I would say - it’s not a problem - with user-centric is that it becomes extremely complex in terms of the amount of data that is required to collect all of the playback data in real-time from every account and distribute the cents based on those different types of accounts and all the different rates. I don’t know the number, but my data team all have big experience from consumer services, and we’re talking a hundred x more data that’s being distributed today. And labels and publishers are challenged today with the data amounts that they’re being…
Dubber Well, metadata alone is a problem for labels and always has been, so dealing with a hundred times as much data as before is going to be problematic for them. Which I don’t have a great deal of sympathy for because if that’s your business, that’s your business, but I can see what the problem is with that.
Ola For me, we’re actually looking at this somewhat because we’re a smaller market in terms of absolute numbers. The total market for B2B, number of locations that are addressable in the western economies - excluding China and developing economies - around 128 million locations, so it’s very small. The consumer markets, we’re talking billions. We’re already estimating that the music streaming market for consumers will bypass a billion paying subscribers in 2030. But mine is small, but there’s more value. But I also have lower levels of data required, so I think B2B would be a very interesting place to experiment with user-centric models because the data requirements aren’t so… So we are actually doing that as we speak. But that becomes a very technical discussion, so that would take twenty minutes to go through that.
Dubber Exactly, and probably not the right context for it. What I’m really interested in, particularly, is… Just to be open with you, one of the things that I’m working on - it’s a long-term project - is I’m writing a book about playlists and mixtapes, and I’m really interested in the way in which those things create meaning for people. And so in the context of something like a café, when you say ‘soundtrack your brand’, what I think of is not just “Have music on while people are drinking coffee.”, but what music, in what order? And what falls into “This is the sound of our brand.”, and what falls outside of that? To what extent are you involved in those sorts of decisions?
Ola So I think that is, obviously, the question that gets me excited because I… Just a little bit of context, I’ve spent more than ten years in the music tech scene. I moved into music out of pure passion from a previously boring career and have been able to live with my passion and through very interesting times, obviously. But it’s always been, in these ten years starting companies… And this is my fifth start-up in the music tech space, and starting successful and not so successful companies. All of them have actually been about the same thing, to be honest. It’s being able to distribute the right music to the right place in the right time. Contextually relevant musical experiences. Be it for the consumer or for, now, the public domain. So it’s all about that. All the technology around it are merely the enablers of…
What happened twelve/fifteen years ago, twenty years ago, when digitisation came into the music industry, all of a sudden, digitisation for production… Everyone could become a producer. So, all of a sudden, all of these artists started emerging, and you could produce a record on your laptop. Digitisation in distribution through just digitisation of files and the internet, legal or non-legal. Preferably legal and monetised. And then the digitisation of consumption. Everyone with a smartphone. It was a massive tectonic shift that was occurring. That’s why I entered the market.
But then with all this complexity and all these fancy words, it comes down to exactly your point. In this market of abundance - over fifty million tracks and lots of new music coming in, big and small, the whole time - being able to actually help someone fulfil their need in terms of playing the right music for that specific moment in time or place. So it’s all about that.
And the fun thing was, I was lucky enough to be able to work with that in the consumer domain and the job for the consumer. And we’ve all been following that, with the battle between man and machine. And I was on the Beats side building The New York Times for music, and Daniel was here building the robot for music. And then the reality is somewhere in-between, I think.
But now, it’s for the new context of a public music experience in a public domain, which I found extremely interesting because I’m a former really lousy club DJ. We all know when we’re in… Even though you prefer sitting at home in front of your computer. I prefer hanging out in a really good club.
Dubber I like small gatherings. I’m talking about big crowds, I’m not so much a fan of.
Ola Okay. A small, intimate club with an amazing DJ. We’ve all been there, hopefully. If not, you need to do that in your life. And that is an amazing experience. Or a restaurant that actually just got it so right. And I think that was just a whole new, intriguing music curation dilemma that I was able, now, to jump into and I’ve been working with the last five years.
Dubber Right. So to what extent… If somebody comes to you and said “We want music in our hotel lobby.”, for instance, is there somebody at Soundtrack Your Brand that says “Here’s what you should play. Here’s a playlist that you should think about for…”, or even customised specifically for who you think your audience is? Is there any of that going on?
Ola No. I think, first of all, it’s a completely different challenge of thinking about music in the public domain, and it’s a completely different challenge thinking about music that represents a brand. So you need to think about those two components. That’s completely different than listening in your headphones.
So let’s just take that Hotel W as an example. Hotel W, as a chain, has a brand strategy, first of all. How they’re positioning the brand. That brand strategy is obviously then interpreted into music platform. That’s basically how all brands, even small ones, think. “What kind of an experience do I want to deliver with everything, through all the senses?”, and music is a huge one. So you need to think about “Okay, what’s the W brand sound?”, and then you need to start adding “What’s the W brand sound in the Los Angeles premise? The hotel in Hollywood.”, and “What’s the brand sound at W Hotels in Los Angeles in the reception versus in the gym?”. So it needs to filter through that logic. And then you need to start delivering on the right musical experience at the right time. So a Monday morning in the reception in W, LA, sounds different than a Thursday, six o’clock when the bar is just about to kick off or the weekend is coming in. There’s also a public context challenge. Explicit lyrics, repetitiveness. It just becomes so much more complex and more business-like. It’s ready for business, the kind of distribution that you need to do there.
Answering your question, that curation process can be done by humans, of course - like any type of curation - but that doesn’t scale. And in music distribution, serving thousands and millions of businesses in real-time, we’ve obviously had to build up the equivalent AI and machine-learning logic that Spotify built up for the consumer market but for the B2B brand market. So, no, it’s not about people in our office helping W at every single instance playing the right music, it’s our technology stack empowering them to deliver a contextually relevant brand experience around the world in real-time. The right music at the right place at the right time for that brand.
Dubber For sure. Which makes me think… Because I’m from radio. That’s my background. And there’s a lot of… Since 1948. Todd Storz goes into a restaurant, and the waitress is putting on the same songs in a jukebox over and over again. He comes up with this idea of playlists and rotations, and then that gets more sophisticated, and then you have two separate boxes of records that are rotating at a different rate. And from there, the whole architecture of how radio station programming has been built, around “You have your A rotates, you have your gold tracks, you have your…”, etc. And then you also have things like rules, like dayparts or a song separation or artist separation, or “Don’t play the same song at eight o’clock in the morning on a Monday that you play at eight o’clock in the morning on a Tuesday because people have routines.”, etc. How much of that last sixty/seventy years of thinking goes into something like this AI which at the moment, I understand, is choosing music? Is it choosing orders, rotates, dayparts, those sorts of things as well?
Ola I would almost say everything. I think radio is the benchmark, or radio is the historical music experience that we’re looking at. We actually were looking at radio and radio programming software at Beats Music, as well, when we were starting up and building that, and we were studying the whole radio programming process even though we were building a one-to-one consumer service. Even more so does that logic come into play when trying to create millions of radio stations in real-time, worldwide, for brands. So you can almost use that analogy and say what I’m helping brands with is creating multiple radio stations for every sound zone worldwide that are relevant in real-time. So, obviously, they can’t hire a radio DJ for every… So that would be fifteen radio DJs 24/7 for one W hotel. That doesn’t scale. But that’s what we’re trying to replicate with the technology that we’re empowering music with for brands.
Dubber Right. The other precedent for what you do, and I don’t know how welcome the comparison is, but Muzak basically was the prehistoric version of what you’re doing, essentially. How much of the thinking from the Muzak corporation has carried over to what’s being done now?
Ola I think it’s fair to say a lot as well because everything has a history. It started with elevator music in my world right now. So when I explained what I’m doing to my mother the first time, I said “I’m redefining elevator music.”, or background music. Or Muzak, actually. That did become a term just like rollerblades did.
But, jokes aside, yes, because Muzak was the initial approach to “What does a musical experience have to be in a public domain?”. And the public domain sets requirements. If you’re walking into an elevator, playing speed metal is probably not the best thing for the psychological experience when you’re, during the ‘20s, riding an elevator fifty floors. They were using elevator music to calm people down.
The real core of this whole discussion - playlisting, radio, what I’m doing right now - comes back to the psychological effect that music has on the human brain. And I think that’s what really got me excited with B2B, because looking at B2B, that doesn’t sound that sexy. “I’m moving from B2C to B2B. I’m really downgrading my efforts.” was what you would think, but, actually, no. It was such an interesting… I started reading up on neuroscientific research on music. How it’s been used, how it’s been used to help patients calm down, how it’s been used in commercial settings for almost a hundred years to drive advertising messaging and feelings. And all the testing, like watching a movie with different types of music. It just changes the experience. And it’s so interesting how it actually can affect the brain.
Dubber Yeah. You get authors like Daniel Levitin and Oliver Sacks and all these people who are thinking about how music works on the brain. Do you go so far as employing psychologists to think about things like not just how to make people feel relaxed and welcome in a hotel lobby, but things like productivity, getting people to work faster and more and those sorts of things, which I guess some businesses would want the music to do?
Ola We actually don’t hire the scientific staff ourselves because it becomes very biased when you’re into research. What we do is we collaborate with independent academic platforms in our research, which I think is a much healthier way of running R&D around this. We’re building a sophisticated distribution system, but, at the end of the day… We have multiple research projects going on in the neuroscientific field, for example, which is amazing because we…
One example that we did, which was actually a more econometrical field study together with a huge US chain, was we applied our method onto their retail network and proved nine percent top-line growth in the product that they’re selling. And it’s a fast-food chain, in this instance. Nine percent. And we applied it with external academics. The world’s biggest field study. That’s a lot of money, put in the context of that brand, that the music industry… Or let’s say just the music creatives’ side is unlocking for a brand. Imagine.
We have to think about how we can extract more value from the art of music. We have not done a good job. I would say we’ve done a very bad job as an industry, as such. But there is such an interesting value potential in the music, moving forward, and in specifically B2B. And I made it my quest to go and unlock that value. Because you know what? If you don’t want music in your premise, don’t play it. But if you’re going to play it, you’ve got to pay it. Sorry for sounding a bit cheeky saying it, but it’s that simple. And the way to extract that value is obviously through science and statistical research showing the effect of music, and then at the end of the day just having them not play music. Walk into a restaurant without music and see how fun that is.
Dubber Obviously, from radio, what we found was always that you don’t want to surprise people too much. You want to reassure. You want the same… And so what you end up with is “Here is a whole lot of music not that people like, but that people don’t dislike.”. And because you’re using it in such an instrumental way, in such a way that it is a function rather than… You’re not playing music so that people will like the music. You’re playing music so that people will like the hamburger. And to what extent does that extract any of the… I don’t know. The joy of music?
Ola Well, I think you’re somewhat spot on in terms of the historical thinking about background music. Why is it called background music? Because it’s not supposed to take over. It’s supposed to be there to facilitate something else or stimulate something else. And, somewhat, radio has the same role. Passive listening, which people talk about, or proactive listening. But you know what? Most of the consumption of audio is actually passive listening, and very seldom are we engaged in active listening behaviour into podcasts or music. So it’s the bigger proportion of music that needs to relate… Or music creation that needs to relate to this backwards-leaning music experience. And I think it doesn’t mean that it’s less cool or less interesting, but it’s just that’s where… Music belongs there. It belongs in the foreground and in the background.
But, answering your question, yes. Science points to… For example, if you use too much frontline catalogue and the level of recognisability - meaning like “I know this track. I know this track.” - if that’s too frequent then it will disturb the actual, for example, consumption behaviour, and you will distract the customer from a buying behaviour. In some instances not so much, because if you’re in a restaurant or in a bar, for example, recognisability actually affects the consumption pattern in a positive manner. It fuels sales. So there’s no answer… It depends on the business, what you’re trying to achieve, what daypart and everything. So it becomes very complex, but it does have an effect. The level of recognisability affects the brain in different ways.
Dubber Right. Okay, so here’s my big question. Why you? What sort of kid were you that made it so that this is where you would end up and this is what you would be so fascinated by?
Ola Well, I think - as I referred to - my history is trying, like everyone, to get an education, trying to get a job, constantly challenged by the fact of “What’s my life going to be like? Am I going to be just trying to survive, or am I going to be okay? Or where am I then?”. I won’t give you the history of my upbringing here in Sweden, but at some point, I was able to achieve a level of security, education, work, and career which provided me with the opportunity of actually thinking about what I really wanted to do. And that’s a luxury that I’m very happy to have had. I’m very fortunate to be born here in the context of the family that I have and in Sweden. So I was provided an opportunity which I chose to go after and work with my passion. And as a boy, cliché, it was sports or music.
Dubber You’re significantly younger than me. Did you get the mixtape bug, or is that before your time?
Ola Oh, no. For sure. I don’t think I am significantly younger than you are. I’m actually completely a mixtape fanatic, and I think… My first music start-up was all about replicating the mixtape in the digitised world. I was subscribing and I’ve been pen palling on mixtapes and things like that as well. So I think it presented me with the opportunity to actually work with my passion.
And, obviously, I wasn’t just jumping in there romantically. It was twelve/thirteen years ago. I was in Ibiza, and the electronic music scene was just kicking off properly, and digitisation was just kicking off. And I was hanging out with some very good friends who were all in the music industry in deep levels, both on the creative side and on the business side. And I obviously emotionally felt like “These people are working with their passion. I should be able to do so myself. I have some money put away. I could take a risk.”. But the other part of my brain was “Look at what’s going on in this, macro. Digitisation is exploding right in front of us. This market will change. There will be massive opportunity. I should be able to make a living by making an effort.”. And then my thing was building companies. So we started up our first company in this space called Tonium Pacemaker.
Dubber Pacemaker is something that I remember very well when the first one came out. This idea that this was a palm-held DJ decks that you could load up with tracks and all the rest of it. You were a hardware company. What was the thinking behind that?
Ola Well, we weren’t a hardware company. We became a hardware company because we couldn’t find any other way to distribute our idea. So Pacemaker was basically a full-on two CDJs and a 2000 mixer and a… You know. In an iPod, back then. It was a full professional DJ setup but the same size as a sandwich. But the idea wasn’t to build the DJ sandwich hardware. The idea was to do exactly what I’m trying to do today, was to extract lots of information and knowledge from the DJs of the world because we thought “In a market of abundance - there’s going to be fifty million tracks available - what is the best source of curation I can find? There’s a breed of people out there calling themselves DJs or selectors. What if we could aggregate the collective intelligence of them and turn that into a filtering machine?”.
So that was really the company’s idea. We started collecting the metadata from DJs and connecting to DJ software and hardware. Then we realised we had to build the actual capture platform ourselves, which was the hardware, and then we built this beautiful Swedish hardware and spent eighty percent of our money doing that. But the software idea was actually creating a taste exchange market between tastemakers of music and tastetakers of music in a market of abundance in the digitised music market. Then it became a hardware company, democratising DJing.
Dubber Right. Is tastemaker still a thing?
Ola Tastemaker is a thing. Pacemaker is also a thing.
Dubber I mean in terms of tastemakers being people that you follow their… I think of somebody like Gilles Peterson, for instance, who I’m really interested in, who is somebody who if he likes something, chances are I’m going to, and so… But there isn’t a definition of a genre that he represents. It’s just Gilles Peterson’s sort of thing, and he’s a tastemaker in that culture.
Ola Yeah, I know. So I’m assuming we listen to the same Mixcloud show every week on the Monday, then.
Ola And Chris Coco as well. That was my whole idea in the initial part. Instead of following an algorithm, following a human is so much more interesting. But if you could find the evolution intersection of that with also machine-driven recommendations, that’s the future. But, yes, I think tastemakers… Beats, Jimmy’s brief to me was “I want to build The New York Times for music.”, and what he meant by that was a completely editorial-driven product. And then we obviously ended up building more sophistication than that.
But I think tastemakers are as relevant as they were ten/fifteen years ago but in a different context where you can start by coming in through a tastemaker and then expanding from there, or you can start with the track and then finding a tastemaker based on that track. It’s just different levels of aggregation of curation, in my world. And I still think humans are the most interesting because they’re not machines. They can act completely illogical and add track A with track Z that has actually no interrelationship, but they’re still awesome tracks. But a machine could never figure out the interconnectivity between them.
Dubber Right. So Zane Lowe was a good call for Beats and then Apple Music.
Ola I haven’t listened to his interview with you yet, so that’s on my list. So, yes. Honestly, I thought it was very late and very opportunistic and, may I use the word, cheesy when Beats… We started bringing in just one or two of these curators, but they were all of a sudden positioned in a commercial context, which became much more interesting because then the music industry are looking at it.
But look at BBC. I’ve grown up on BBC online radio, and that is, I think, the historical example of a human-driven curation and a really good service, and still a source for inspiration for myself. And Zane Lowe cut his teeth at BBC, right?
Dubber Sure, yeah. So how did the Beats thing come about for you? Because there was already the headphones, right?
Ola Yeah. The short story is that when we did Pacemaker, Jimmy and Dre had seen our vision with that company. It was an aggressive vision. It was a vision about creating the next music service and taste exchange between all the Zane Lowes of the world with all the tastetakers, meaning the whole global consumer market. And then they also were into hardware at that time, because we all know the history where they realised that they were not going to make that much money from their publishing anymore, and they needed to do something else. And they started off with consumer electronics, which they did very successfully. But the idea was always to build a power brand and the leading pop culture brand of the US. That was the Beats ambition, and what better epicentre of that ambition than a music service?
But our connection came from them actually looking at Pacemaker, the device. We were at CES, and we had won six innovation prizes as the only start-up who have ever won that. And I was able to meet with them, and we created a relationship where they actually wanted to acquire Pacemaker and add it into their hardware portfolio, and then the software components as well.
Unfortunately, we weren’t able to sell Pacemaker to them at that time because we were able to get in Wired magazine - the middle page of that - and we were all over the place, and people were talking about Pacemaker as the new Apple. Completely nonsense, but our investors thought that we would be a very, very valuable company, and Jimmy and Dre didn’t want to pay anything, basically. They just wanted a piece of the company in order to bring it to the next level. I believed in that, but I wasn’t able to broker that understanding between my investors and them. So we failed with bringing them into Pacemaker.
But then when we crashed with Pacemaker, which we did, we couldn’t manage reiterating hardware as a start-up. It was just too complex. So then I acquired the software components and the online distribution platform for DJ mixes, which was the first uploader share DJ platform. Way before Mixcloud. So moving from there, we quickly turned that asset into a company called Let’s Mix, which became the leading DJ-driven, human-curation-driven music platform. And that music platform, then, I owned because I bought it from Tony with my own money. And I was able to reengage with Jimmy and Dre, and then we decided to, the second time around, actually turn Let’s Mix into Beats Music and my team, they acquired Let’s Mix, and we started building Beats Music. And then we acquired a company in the US and so forth, and then it all ended up in a very nice place.
Dubber And now it’s got the Apple brand on the top of it. Was that your exit point?
Ola No. I exited way before that, unfortunately. So eight/nine months before the acquisition. And then I was still there working and just realising the fact that the company was bought for more than three billion dollars, and I had moved back to Sweden.
Ola It was an interesting one. You know what? No foul play. They did good with me, and I actually left for personal reasons. I couldn’t move my family, and my father was sick at the time, so I was just on a plane two hundred days and just had to move away.
Dubber Well, you didn’t do too badly by the look of things because Soundtrack Your Brand seems to be doing rather well. But I guess it’s been a tough year.
Ola Oh, yes. For any industry or any individual, it’s been a tough year. 2020 was supposed to be the year when we had launched what I think was the complete product. And we’ve done ten thousand licensing deals - the equivalent of Spotify or Apple but for B2B streaming rights - which, obviously, took some time and effort. And we had gotten to what I thought was a product-market fit where now we have the streaming product for businesses. It’s a very different product than a consumer product, by the way. It works in a different way when you’re using it for B2B use case. But then in March, everything changed right in front of us, and, basically, this year didn’t become the rocket ship that we were planning it to be. It became a struggle to survive.
Dubber Was this a case of not getting new customers, or old customers dropping off?
Ola This was a case of both. We actually had a really nice run. The story was that I founded Spotify Business with Spotify as my co-founder in 2013/2014, with two other co-founders. And then Spotify Business was the experiment to see if streaming could be done in the B2B space. It could, we concluded, two years into it. And 2016 into 2017, we made the decision to go completely independent because we wanted to go with our own brand and build our own company and go globally and renegotiate all the deals and everything. So we pivoted into an independent company.
Dubber When you say independent, do you mean that Spotify doesn’t own any of it anymore?
Ola They’re still a shareholder in the company, but the product… And we were sourcing music from their backend initially when doing it, and the product was called Spotify Business, obviously. So the pivot was “Okay, we’re moving away from home. We want to build Soundtrack into the next big music-streaming component.”. And we started working on that, and that takes, obviously, a couple of years of reengineering the whole licensing structure logic, getting everyone aligned - from publishers to the labels - and rates structures and models and everything. And then in 2018, we were able to roll out our first markets and move out. And then into 2018, towards the end of 2019, we were live in seventy-four markets with fifty million tracks, the equivalent catalogue as the consumer service.
So a fairly complex exercise, building software, raising money at the same time, and getting to a point where “Okay, we’re ready. We’re ready to go. This is it. This is the next big growth ambition into the music streaming industry.”. And then COVID hit, and we had to deal with… Just in two weeks or something, we lost thirty-five percent of our revenue. The engine stopped. And then we’ve been finding our way through this year.
And actually - believe it or not - we’re coming out of this year with some growth to last year, which is more than a miracle, in relative terms, with what’s going on. But that’s been just because we’re a software company. We’re so flexible. We can move in-between markets and react to the reality. But hopefully 2021 will be what 2020 was planned to be for us.
Dubber Right. One last thing, which is something that I’ve been interested in for a long time. And the situation’s got better, but even though fifty million tracks is an awful lot of music, it’s just the tip of the iceberg in terms of what has ever been released on particularly the major record labels. It’s something like eighty to ninety percent of everything that’s ever been released by the major record labels has never been available digitally. To what extent is that interesting to you in terms of actually expanding that fifty million to start to recover the archives or the lost music?
Ola We’re so early in the process, so we do have somewhat of the luxury of following behind the consumer market here on what’s going on there and letting them pave the way. So that’s my first statement.
And the second statement is that B2B and the music challenge is very different, as I’ve spoken to previously and we’ve discussed. So it’s obviously not about frontline catalogue and about the next release. It’s about the right art for the right context. And, having said that, obviously, and with more sophistication in the tools of AI and ML and classification and analysing and actually tracking and targeting and pinpointing music that is right for that specific purpose, then more content to pick from creates broader creative opportunity.
So, yeah, fifty is a lot. Very few of them are consumed. But also, in the B2B context, we consume a lot more music because music is played in hotels 24/7, so music is on the whole time. Music is there. So we need a deeper bucket to select music from.
But right now, that’s not my challenge, obviously. Fifty million is… No one else is even close to providing that in the B2B space. The legacy competition we have are still uploading downloads from iTunes or burning CDs without any type of ambition to put the correct metadata, hence no ambition to report or remunerate accordingly which I think is absolutely unacceptable, and that needs to be fixed first. So we monetise this opportunity. We monetise it correctly and fairly. That’s the first stage of B2B.
Dubber Right. Finally, is there a bigger horizon? Beyond Soundtrack Your Brand, is it Soundtrack Your City or Soundtrack Your Army or… Are there other contexts for music to go into that currently aren’t?
Ola For sure. Back to why I think this is such a fun place to be in. When I entered it, I thought I was moving from B2C to B2B and just fixing something, but, honestly, when I started thinking about “There’s a soundtrack for everything.”… There’s a soundtrack for when you were travelling to island X when you were young or you were in love with this person, or there’s a soundtrack to New York, 1978. The soundtrack is there and can be expanded in any direction, and I think that’s the quest of this company.
Our initial monetisation path is background music, fixing background music and extracting more value for the creators from background music, but it can expand into very visionary thoughts moving forward. But I think, still, our role is always the public context and the public experience or the physical experience, and I think that’s what divides us in-between the consumer services.
Dubber Right. And, presumably, you have a room full of technicians and salespeople making all this happen. What are they listening to?
Ola First of all, Soundtrack is still a very small company. We’re only seventy people, and it’s mainly - typical Swedish style - engineering and product. We hardly have any salespeople or anything. The product will distribute itself online if it’s good enough. That’s the thesis of… Somewhat same approach as Spotify.
But the team, obviously, work here for multiple reasons. Small, tight technology, fun team, but all of them are obviously interested in music. But there is absolutely no red thread in terms of music preferences throughout the team. Anything from death metal down in the engineering caves all the way to our music science team who are training our ML models, who are obviously fairly sophisticated people, digging into niche jazz stuff. And somewhere in the middle is me, the old guy, who can kick off anything from an old Café del Mar CD to some good old MTV Unplugged stuff. So there’s obviously…
Dubber So you don’t have your product in the office piping music to keep people productive and…
Ola Oh, you mean in the actual office. Sorry. So that’s an interesting follow-on question. How do you then cater to that?
Ola Because, obviously, how does that work? And the way we cater to it is actually… Because we don’t have customers. We only have us, so we don’t have to think about the brand-to-customer experience here. We only have to think about everyone being happy in the kitchen or in the lounge or in the entrance. So we have a system here in the office, who actually can choose the soundtracks for all these in different time periods, and it goes through our music technology team.
So there’s been a massive debate on how we do this, obviously. And you know what? A lot of our customers are actually office spaces as well. So believe it or not, law firms actually like to have music in the reception. And for them, it needs to be according to the brand, and their customers come in. But if you don’t have customers coming in, it’s a staff-driven soundtrack that you need to get to. And that’s a whole socio-psychological experiment, I promise you, but a whole lot of fun and with great technology and platform. Music at the office is intense but diverse.
Dubber You can please everyone?
Dubber Or just not annoy everybody all the time?
Ola If we had customers, I would have the very easy response to everyone and say “Look, we’re not here to play music for you. We need to find the perfect balance for our customers and that you can survive through working here.”. But we, unfortunately, don’t have customers, so it’s all about them. Hence it becomes this…
Ola Complicated dilemma. But also fun because there’s very interesting things coming out in the kitchen today, for example.
Dubber That’s a challenge to program for, I’m sure. Ola, thanks so much for your time. It’s been really fascinating and really enjoyable. It’s a real favourite subject of mine, so thank you very much.
Ola Thanks very much.
Dubber That’s the CEO of Soundtrack Your Brand, Ola Sars, and that’s the MTF Podcast. You will, of course, find Soundtrack Your Brand at www.soundtrackyourbrand.com. I’m Dubber, @dubber on Twitter, and you’ll find MTF Labs at www.mtflabs.net and @mtflabs on all the social bits and pieces. Thanks to Sergio Castillo for the additional technical production, Marek Jakubowicz and airtone for the music, and Run Dreamer for the MTF audio logo, which you’re going to hear again very shortly. And, of course, thanks also to you for listening. Hope you enjoyed and that you’re now somewhat inclined to share, like, rate, and review, and I will catch you back here next week. Let’s talk soon. Cheers.