Targeting business for music streaming

SOUNDTRACK Your Brand, the Spotify Technology, SA-backed streaming service that targets businesses rather than consumers, has expanded its catalogue to 26 million songs after securing licensing deals with rights holders including Sony/ATV Music Publishing, the world’s largest music publisher.

The new deals with music labels and publishers include a per-stream-based compensation model to pay artists and composers accurately for background music from retailers, restaurants and hotels, chief executive officer and cofounder Ola Sars has said.

“The market for background music or commercial music services has been dysfunctional and is still 10 years behind the consumer streaming services,” Sars said. “Now, this represents a significant area of growth for the entire music industry.”

The market for business background music is worth as much as $5 billion, less than a third of the size of the consumer market, but it has much better margins, said Sars.

Soundtrack, which streams cloud-based background music to customers including LVMH’s TAG Heuer watch stores and McDonald’s restaurants, used Spotify’s catalogue for its first 18 months of operations, but last year pursued a more independent path by building its own library of music.

Consumer streaming has become the music industry’s largest source of growth in the past few years, but small and medium-sized businesses have, by and large, used consumer services illegally.

Larger enterprises and chains have used commercial services, but haven’t had access to the benefits of full streaming, and have worked off CDs or patchy satellite feeds, Sars said.

Soundtrack’s exclusive focus on businesses means it isn’t under the same pressure to reach a mass audience as the likes of Spotify and Apple, which dominate streaming for consumers. A café or a shop pays about $35 a month for Soundtrack Your Brand’s service, compared with about $10 for a consumer service.

Soundtrack is pushing into global markets to attract retailers with hundreds or even thousands of locations to its cloud-based music, and still counts Spotify as one of its largest external shareholders.

Sars and Andreas Liffgarden, co-founder and chairman of Soundtrack, hope the Stockholm-based startup can replicate Spotify’s success in weaning users off pirated music or illegal streaming now that their catalogue is big enough.