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You may not have heard of Soundtrack Your Brand but you may have heard its playlists. The Spotify-backed business-to-business streaming company is the world’s fastest-growing background-music streaming business. Last week the Stockholm-based music company announced a stream of licensing deals with rights holders including Sony/ATV Music Publishing and WarnerChappel.
The idea is simple: Soundtrack Your Brand provides ready-streamed Spotify playlists to fit the client's brand. Global clients include Joe & The Juice, McDonald's, TAG Heuer, Uniqlo, Aesop, W Hotels and Moschino and most recently, a firm of lawyers. And in case you are wondering, it is illegal to play your own personal streamed playlist at work, whether that's to colleagues or customers.
Music can be a powerful tool in the battle to keep consumers in outlets and away from online sales. “Music can affect your emotions, it can probably affect your behavior,” observes Ola Sars, CEO, and co-founder. Sars, who set up the first DJ-driven music curation service, Let’s Mix, in 2010 and became a co-founder of Beats Music, later acquired by Apple, adds:
Whereas e-commerce is transactional, when people go and browse round a clothes store, it is an experience. And that is the key. When you talk experience, you think about scent, lighting, the people you interact with, the materials. Sensory marketing is a big thing for brands, but for some reason, music was never part of that conversation in the same way as interior decoration. If you build the platform, which is the hard bit, then the sky is the limit when it comes to sound-tracking your brand.
Back in 2011, Sars and his two co-founders – Joel Broms Brosjö, who launched r.fm, a music streaming platform and built up Beats with Sars, and Andreas Liffgarden, then Global Head of Telecom business development at recently IPO-d Spotify - got together in a branch of Café Nero in Stockholm. At Spotify, Liffgarden was inundated with calls about setting up a Spotify for business. He recalls, “We were turning down mega brands who were asking ‘this is great for consumers, why can’t we use it in a retail scenario?’”
But Spotify was focusing on streaming to consumers. So Sars, Broms-Brosjö and Liffgarden decided to set up a new company to be a Spotify for business. All understood how licensing worked and how to build a product; they just needed capital. Their first port of call was down the street to Daniel Ek and Martin Lorentzon at Spotify, who agreed to put up nearly half the initial capital. Subsequently, as further capital has been raised - $40m in total - Spotify’s share has diluted.
Clients, whether a café, hotel or retailer, pay a monthly subscription of about $35, compared with around $10 a month for a consumer service. Playlists are compiled so that the client can choose the best music for their customers and vary it across different locations. Local staff can change the playlist if the number of customers or weather changes, with a quick swipe of the iPad.“It makes it super-easy for anyone to control the environment," says Broms Brosjö, who is responsible for product and music. "And the best sensor in the world is a person.”
For the three founders, it was a given that they would use streaming to play their music. Yet no-one else was doing this. “When we set out, we started looking at our competitors and saw distribution was still analog – i.e. people were mailing USB sticks and CDs and they sold analog with ink and paper,” recalls Liffgarden. CDs were being packed up in Eastern Europe and shipped to clients - but there was no way to track which artists were being played, so artists weren't necessarily getting paid when their music was played. He continues:
We started thinking ‘surely someone must be selling music online for businesses? Are we the first to do this on an international scale?’ In every industry 10-20 years ago, we were talking about digital disruption. But there was a patch that God forgot and it was background music . And so we disrupted analog distribution and sales and moved it into sales online. We tend to forget that every other business has been disrupted - but that this is one of the last.
Does it really work?
Yes, actually. Academic research had shown that music could influence sales and customer decisions but few studies had looked at the actual business impact on music played in-store. That all changed in 2015 when McDonalds’ invited Soundtrack Your Brand to its future leadership conference. The company was providing music for McDonald's outlets in Sweden, but McDonald's asked it to bring something to the table that would not just provide useful data on the effect of particular music at particular times on sales, but that could be scaled up.
Soundtrack Your Brand already had the software to schedule music across an unlimited number of locations and see how it influenced sales, second by second. So researchers from Soundtrack and HUI, The Swedish Retail Institute, analyzed 1.8m transactions at McDonald's. Overall sales increased by 9% when music that matched the brand was played, compared with randomly selected songs. Sales of shakes and smoothies went up even more, by 15 - 16%.
Playing a mix of popular and less well-known songs turned out to be the recipe for even higher sales than just playing music that only reflected brand values. For McDonald's, the evidence was good enough, and it awarded Soundtrack Your Brand a global contract, propelling them out of the Nordics and onto the world stage. It now has an office in Seattle in the U.S., in addition to its Stockholm HQ.
What are the barriers to competition? “Anything digital like we have can be copied. The only measurable thing you can have is a head start," answers Liffgarden. "I think we have 3-4 years head start. Can we be copied? Yes."
Soundtrack Your Brand is growing fast: with 30m songs in its catalog it has twice as many as its closest competitor Rockbot. Liffgarden adds:
Our product development is very connected to our users, but I think it is actually the ingredients that go into our business that make it so different. If you look at other tech companies’ DNA, it's where ours comes from that makes the difference.
Certainly, the three founders have been around the block a few times and have an impressive track record. For our interview, Liffgarden is ready in his cycling gear to collect his 7 year-old-son and 10 year-old-daughter from day-care while Sars’ 8 year-old-daughter is sitting drawing while on holiday from school. The atmosphere is relaxed, and inevitably, there is music playing around the studios and office. These guys may be laid back but they have put the work in. The thing that most struck me? Hell, they are having fun.
