Ola Sars, founder of Soundtrack

Hello, I'm Fernando Gustapacheco and today Monaco meets Alla Sars, founder of SoundTrack, which serves 150 million licensed music tracks to over 110,000 businesses across 75 countries. Let's have a listen. Alla Sars, what a pleasure, welcome to Monaco Radio and we're here to talk about the most important thing of the no music, right? Thank you for having me. Yes, music is something that we do not want to live without. Absolutely not. Of course, I want to talk everything about SoundTrack, but before I want to know a little bit more about you and your background because you have an amazing CV, you know, been looking that you're a co-founder of Beats Music and you also first Spotify, tell us a bit more, what was your first connection with music in the music industry? Well, my first connection with music is not the same as my first connection with the music industry. My first connection with music was my childhood and where music was in the epicenter of my life and I was crazy about music since, you know, as far as I can remember, I would go to see concerts by myself or with friends at very young age, run away from home to go to concerts and any genre, actually, I would go to, you know, a prince concert, I would go to a cure concert, I would go to, you know, techno, I would just explore. So for me, it was early and it's always played a central role in my life. So I've been having fun with music and enjoying music, but then the last 20 years of my life, I've been trying to make a living in the music industry. And with the, based on the thesis is, if, you know, I have the opportunity and the privilege of actually working with something that I love, music, I would, you know, go all in and really try to make a living in the music industry. And I've been trying to do so now for 20 years and founding primarily technology companies being in the forefront of the music streaming revolution, if you may, but also building DJ technology and music production software and anything that could kind of pay the rent and working with what I love. So that's the short story of my life and how I've kind of had music as a central point in everything that I do. And you come from a country where at least when it comes to music, the country itself is definitely pulling above its weight, right? Not just with the artist, but even the industry itself. Yes, Sweden and Stockholm, where I'm raised and born, does punch above its weight. I've been asked many times in my career why people come to Stockholm to try to figure out what's going on, what's in the water. We have producers, artists, songwriters and music technology entrepreneurs that, you know, I would say Stockholm is probably the world leading city for kind of the new music industry if you may. And I don't think there's a single answer why that has occurred. But one thesis is that in our upbringing and in our school system, we have a very, very strong public schooling infrastructure for music schools, where as a young kid, you can enter music schools and kind of have that as an integral part of your, you know, initial education. So I think that's the best explanation where this over indexing kind of derives from, but who knows. Let's see which theory is right. Can you describe a soundtrack because of, I think it's fascinating and I think, you know, we all listen to music when we go to a store or to an office or whatever, but not many people understand the behind the scenes, but tell us, introduce a soundtrack to us. Sure. Soundtrack is a very simple thing to figure out, but a very hard thing to build. So I'll maybe give some context and background. The last 20 years, as I said, I've been trying to contribute to the music industry by building different types of platforms and technology in order to grow the music industry because if we grow the music industry, then more artists can make a living through their art. So I'm not solving cancer, but I'm trying to contribute. When I wake up in the morning, I feel good about what I'm doing, which is trying to bake a bigger pie for all the creators to share. And in that quest, I've built technology companies because that's what I was good at. And most of them have been targeted towards the distribution dilemma of music. So 20 years ago, music files were going digital, music consumption was going digital. People were starting to use their phones to listen to music. I know you still use your CD, so do I, sometimes I love CDs, so we can trade CDs if you like. I have a full basement. But anyway, and so there was this big chest, this treasure of these millions of tracks in the world. And there was these billions of consumers, and I wanted to connect it to and see to that the music of the world reached everyone in the world. So that's the thesis I've been working on. And that in business, lingo, that spells distribution. So I've been building distribution technology and maybe music discovery technology or music curation technology, whatever you want to call it. But at the end of the day, it's all about one thing, delivering the right music to the right people at the right place at the right time. So I built consumer technology companies. I was part of building beats music, which got acquired by Apple and became Apple music. The irony of that is I'm Swedish, and my Swedish neighbors obviously found it Spotify. And in Stockholm and Daniela Martin, I know well, and the team there, good friends. So we were competing initially. And we were in the forefront of the digitization of the streaming economy, if you like. And I learned about that and the good side of it and the bad side of it and kind of how it would work. And then fast forward, when Apple acquired beats, I went back to Sweden, because I was in the US working with beats obviously, with a very simple notion and a very simple idea, which was what happened in the consumer markets, we most likely happened in the business to business markets. And what is the business to business markets for music? Well, one use case, which is very evident, which soundtrack is targeting primarily, is music in venues. So restaurants, bars, gyms, we've all been there, right? Having a terrible experience sometimes and a wonderful experience sometimes. And it was such an interesting notion that this part of the music industry had been completely forgotten about. It was kind of the ugly duckling of the music industry. It was referred to as background music, something that the labels would not touch or the artist would even, wouldn't even know about. So that was a long way of saying that I came home. I founded the company called Soundtracker Brand back then together with Spotify. Spotify was my initial investor and my partner in this venture. And the product initially was called Spotify Business. So it's a business subscription for music. Nothing more complicated than that. But it is more complicated when you start scratching on the surface. There's different licensing required. Nobody had licensed business for music. So you can't use a Spotify account or Apple Music account in your business because it's not licensed for commercial use. It would be like opening a cinema with a Netflix account. And Hollywood wouldn't let that happen of course. So it's a different licensing required and it's a different product required. And that's what I set up to build. The world leading music platform for businesses. And that is Soundtracker. In 2018 we launched Soundtracker as an independent brand and now we are the world leader in music for business. Fantastic. And I've seen the numbers. It's a lot of business that use Soundtracker. Can you give us an idea where in the world is it? Is it kind of global? Do you have your kind of what are your main markets? So it's still a small company. We're just kind of in the beginning of this, you know, I think it's going to be my lifetime build here now because I really found my place. But when we license, we've licensed with actually 13,200 rights holders. So publishers and labels and CMOS which is kind of collecting societies. Today we have around 160 million tracks into 75 countries. So when you license, you license directly with labels and publishers but you license global. So we are actually live in 75 countries including the UK, the US, all the big kind of markets. But I wouldn't say we are full on distributing at full speed in all markets. We are currently focusing on the US market, the UK and then the Nordics because that's where we come from and it's a good place to start. And if somebody becomes a customer, do you do a lot of different playlists as well, right? Because as we were talking here, I think music can make it a break if I go back to a restaurant or to a place. I think it's so important, you know, I… Yes and that's really the, you and I share that view. That's where it all started for me, it didn't start with some sophisticated business equation. It started with… my upbringing and traveling the world and experiencing the world and experiencing walking into a club or a bar or a restaurant or whatever and hearing when the music was perfect and the experience and what happened in the room. That's always been there, that notion. Now I have the opportunity to actually build in that direction. But the general idea of this is providing brands with the opportunity to access the whole world, all the music in the world, this amazing treasury in order to improve their customer experience and kind of give their brand experience the best possible musical dimension. So it starts with providing the brand with the opportunity to access all of this wonderful art. So that's not trivial to do these licensing deals and build a platform for them to kind of engage with in order to start. And then the second part of that is what you're talking about, helping them find the right music for their brand. What is the soundtrack of my brand? What is the soundtrack of Monaco, for example? I'm assuming that's what you're thinking about, 22 hours every day. So it's a really fun challenge. It's an amazing exercise to think about the soundtrack of your brand. And we want to empower the brands to kind of truly go after it and if done correctly and if followed through just like you're doing any type of brand effort with your advertising or with your design or with your product. Music is equally important and if it's done correctly it's an amazing augmentation of the brand experience and it can drive your business. Well, in a company like yours you have access to amazing statistics. I mean I know it's being reported in the press as well. What actually people can listen when they go to you know to place. I mean I'm sure Olivia Ding is doing very well. Why is that? What works and what doesn't? I know that we can be specific but I think we can talk in general terms here as well. Okay, how long do we have? I mean Olivia Ding clearly is a story. I mean she does have a beautiful voice and it's very easy to listen to. I think the interesting part of this is that I've spent my previous 10 years in the consumer markets. And the first thing I want to say is that the consumer markets meaning what do people listen to in their headphones when they're using Spotify or your terabyte iPod that you've acquired or Apple Music or whatever or BBC Radio. Like that's that's one dimension and it's interesting that it's that when we started with it is very different to what brands are consuming. If you look at the consumption pattern on soundtrack versus the consumption pattern on Spotify it's very different but there are similarities of course. So in general terms the short story not the four hour session about this the consumption of brands that brands kind of engage with is much more niche. It's much more so called long tail when you look at it and it's you know very specific for different types of industry types. So restaurants have you know over indexing in one type of genre gyms obviously different because you could see the use case spars obviously have a completely different use case so it's a completely different consumption structure. Having said that when you look at our top lists on different markets let's just use UK as an example then when you really look at the top 10 or top 20 you see that indexing similar to the consumer services and I would say currently Olivia Dean is obviously completely killing it in the UK. She is indeed and she's worth it but which is an amazing artist. What about from your place in Sweden because I'm not going to lie because when I look at the music here I'm always look to Sweden for new artists as well because I like that the charts there there's always something new there you know what are people. I usually look at the UK. We're always looking somewhere where we are not yeah. Well if we kind of keep it within the realms of us discussing soundtrack in music for business and what's happening in the restaurants and the bars in Sweden it does look completely different than the UK. In Sweden we tend to have like in the top performing artists we tend to have a very strong over indexing of local repertoire meaning Swedish artists and then of course secondarily the Anglo-American repertoire including Olivia Dean and so forth. But when you look at Sweden actually three to four of the tracks that are performing even in the business domain come from a Swedish repertoire Swedish artists. Not all of them are sung in Swedish they might be a Swedish artist singing in English and then obviously if you want to double click on that which you want to do you can see it's surprising how kind of these really front line catalog pop artists are even being used in cool restaurants and so forth because there is this I think this local pride as a small country a small entertainment aspect of hearing a local art is saying yeah that's great hearing that Robin track here. So there's an interesting dynamic for sure but you know what comes out of Sweden most is mostly pop or Eurovision like our top producers Max Martin and you know the clan around that are obviously completely focused on top chart tracks worldwide. So that's kind of like the thing is Sweden I don't want to speak about your beautiful home country Brazil but I assume it looks very different there as well. Also very local like Sweden I think Brazil has a very strong kind of we do consume music from outside but much less than actually compared to America is super interesting as a phenomenon. Yeah and I have to ask you about AI because even this morning we had the news that the Australian charts are banning songs with AI. Is there a concern on a platform like soundtrack because my problem is you know if you want to do AI music you know do it but it needs to be labeled as such right. Yeah I'll allow myself to take a step back on this one as well so try to simplify it or at least give give you my view of course. So for me it's completely relevant I'll just start with that statement when I look at the music industry I look at this treasure again with I mean we're currently distributing 160 million tracks on our platform. Probably 10 to 15% of those tracks are being consumed on any relevant level. So I would start with the statement that in the music industry in terms of us distributing to brands or Spotify distributing to consumers there's no need for more content. There's Fleetwood Mac out there you know there's Marvin Gaye in there so you know everything beautiful is there so I kind of rolled my eyes a little bit when people talk about like okay we have an exponential development of music growth that's true but who needs music that's not being played or monetized which is the same thing in our world as a distributor. And then I also oversimplify say the beautiful thing about the music industry there's there's no need for additional content some new content is good but not in the you know the volume that we're seeing now coming from robots. And then the beautiful thing is that there's no need for expanded demand meaning there's so much demand out there for all this beautiful stuff the really challenging thing in the music industry right now is monetization or actually fair distribution. So just one number a business number I know I'm going to stay away from from from that but Goldman Sachs does this report every year called music in the air where they kind of calibrate the music industry and they're currently estimating that music penetration in terms of paying subscriptions is only at 20%. So there's still 80% left in the consumer markets to monetize and they they look at it as a portion of smartphones and you know paying subscriptions. So why am I telling you this I'm going back to your question about AI and the statement about why do why would we need you know a couple of hundred million tracks or 10 20 million tracks that sound very similar to whatever else and doesn't have the context or the artist or the interest when we have all this. So for me I think it's going to fade away over time this hype and this worry and there will be content that is produced by robots or humans and robots in collaboration that's been happening for 10 years I mean when you're producing music you're already using AI components. And at the end of the day if you produce music you need demand for it so you need to do more than just putting a track out there you need to promote that you need to tell them about yourself and evolve as an artist and everything that comes. So for once again a long way of responding to your question I think yes there might be a threat short term for a couple of percentages of universal music market share maybe but over time I think the best art will win and the best art with the best context with the best story produced yesterday or 50 years ago. We already have enough beautiful content to be worried about 128 bpm generic music coming out of a machine. love your answer very pragmatic. I love like that. One thing I was going to ask you is because I think that you are already doing because some people say that streamers don't pay artists enough. There's some concern, I mean, unless you leave your team because then you have billions of strings in your group and it's going to be fine. But a place like soundtrack apparently artist is more valuable for artists as well, right? I wonder if you can mention that a little bit. Once again, I'll ask to take a step back. I like it. I like your answers. So there's critique to the streaming model and rightfully so in some instances I would say, but I want to start by saying where the music industry was 20 years ago when I started was on a highway to hell. Like it was a really bad situation. File sharing had taken over. People were getting fired. There was no future. Fast forward. We now have an industry growing faster than ever before. It's bigger than ever before and we have another 80% to monetize in the consumer markets back to my previous number from Goldman Sachs. So for me, we're in a wonderful place. We're growing the pie. So someone has to grow the pie in order to share the pie and sharing the pie means distributing the royalties that are being collected from the consumer. You and I, maybe not you, but me. I'm paying for Spotify at least every month. I have to say I do pay. I do have a wallet. Maybe you expand set. So the beautiful thing is that Apple Music, Amazon's pens and Spotify is growing the pie, the full kind of monetization pool. Then of that monetization pool, we all know that around 70% is redistributed to the music industry. The distributor keeps 30% to build the technology and market it. So I think that's a fair share. One can argue maybe someone would say, oh, 20% is better or 30% but still Spotify is giving 70% back to the music industry after doing all the work of monetizing this market. So then of that 70% that's then distributed to publishers, to labels and kind of into the different rights classes. But let's just simplify this. Use the labels as an example. So it's then distributed on what is referred to a pro-rata share. So sophisticated way of saying our market share of the consumption. So if universal has 30% of all the streams, they have 30% of market share of the current the month or day or the millisecond. I think there's a fair distribution and a very transparent distribution. How much is the DSP giving away Spotify in this case? How much is universal receiving based on exactly what's being consumed by universal? And then universal as an example only in this has specific deals with their artists. And that's the subject between the artist and the label. Spotify or Soundtrack doesn't have anything to say in that. So if an artist has a bad deal with their label, it's I can't fix that or Daniel or Alex that Spotify can't fix that beyond their reach. But still the sharing from the distributor to the industry I think is fair. The distribution of that I think is fair because it's based on what it's being listening. So if Olivia Dean has 5% of all the streams in England tomorrow, then she gets 5% because that's what the consumers are choosing who to pay by listening to her. I think that sounds fair. Let's get to your question. What does Soundtrack do differently? We do the same thing as Spotify. We sell subscriptions. We grow the pie by adding business to business revenues to the pie, which is by the way, a 40 billion dollar opportunity, background music, the ugly duckling that everyone didn't want to kind of think about is actually a significant opportunity in a market that's currently going towards 200 billion. So it's meaningful. The reason why isn't because we have billions of shops, it's only roughly 100 million actual locations in the world that are addressable for background music. So it's not. But we're charging 5 times more per subscription. And that's how I contribute. I think that if you're selling coffee across the street where I had a coffee for, I think I paid like 12 or 15 pounds for the coffee, I didn't even reflect, but then afterwards it's crazy. And that's great. I'm happy to do so because it was a beautiful atmosphere. The music was actually great. And if she or he who runs that place wants music to sell more coffee, then they need to pay for a business subscription and that costs 50 pounds, not 10 pounds. And it's like if you're showing the premiership here in the UK, in your pub, it's 30 times more expensive. So it's a business subscription, logically it costs more because the value of the music is higher because it extracts more coffee buyers or t-shirt buyers or whatever we're doing. Hence, Olivier Dean gets paid more on her paratha based on that because they're using her music to sell coffee. You know, I just want to end on a personal note. I want to hear, what do you listen to it at home? On your CDs, vinyl, streaming, I don't know how you consume your music privately. But I'm curious what's your music takes? Me and my team are the only ones using a business subscription at home. So first of all, we're obviously using soundtrack for all the reasons. We need to live your own product, of course, and like learn and see and find bugs and whatever. But of course, you know, I've listened to analog formats in my upbringing and have a collection and so forth. But let's add to your question today, when I worked at Beats for Jamie and Dre, which I was a Swedish guy in these super mega American superstar context, they also brought in a gentleman named Trent Ressner, who is the founder of Nine Inch Nails, who is an amazing individual and very progressive thinker, who was kind of involved in better than the development team. He said to me, like, "Ola, you need to understand the notion of all the music in the world at your fingertips is a tectonic shift for everyone." And I then, I just took it for granted, that's the technologist first, like, "Okay, of course, we're going to enable all the music in the world at your fingertips." So once again, the incredible opportunity that the streaming service brings to a music lover like myself, with all the music in the world at my fingertips, provides me with the opportunity to, if I was roaming concerts in between the cult and prince and the gang star in Stockholm during my upbringing, I'm now cruising the world up and down, left and right. So maybe one week, I'm listening to an electronic classical artist from Iceland, Olafur Arnoltz, I was listening to him last week, going through all his material and just enjoying it. One week, I might be listening to the stuff that my 16-year-old daughter is listening to, just for the fun of it. And that would then, obviously, I have some influence in the car, which is great because then I control the stereo and I can give her, you know, all the treasuries of British pop music or progressive new rock or old '90s hip-hop and so forth. So I would say what I listened to is completely different one day to the other, one week to the other. Coming over on the plane today, I was listening to an old Smith's record because you're coming to the UK, right? So I don't know why, actually, I was. That's interesting. Why did I, why did I show up? I can't remember. But I loved that. I loved knowing a little bit. 80s hip-hop sounds very good to me and a little bit of kind of Icelandic electronic classical. Sounds like a monocle playlist here. I listened to the monocle playlist, actually, before coming also, your lounge playlist, which was beautiful. Also listened to some of your Latin playlists rather, amazing inspiration, very non-linear. So if I could just sit all day, listen to music and roam, that would be amazing. Amazing. I got to pay the rent. Absolutely, Ola, thank you so much for coming. It was a pleasure talking to you. Thank you very much, Ola Sars there. I'm Feth Nanogus Pasheko and this is Monocle Meets. 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