Spotify is funding a startup, Soundtrack Your Brand, to tackle the untapped business market
Spotify now counts nearly 30 million users as paying customers, but has its sights set further on a large potential opportunity- the business segment. “Two-thirds of businesses play CDs still,” explains the startup’s cofounder Ola Sars, who also co-founded Beats Music.
The idea of targeting businesses is not a recent revelation for Spotify – the streaming service quietly helped co-found a startup in 2013 to take advantage of the imminent opportunity. The startup, Soundtrack Your Brand, has been developing Spotify Business and Spotify Enterprise products in Scandinavia since then, and now has its sights set on the US business market.
When it was introduced, Spotify Business “stumbled on an area that hadn’t been digitized,” Sars told Business Insider. The service’s first-strike advantage helped secure deals with large corporations like Starbucks and McDonalds in Sweden. For large companies, the benefit of Spotify’s business product is centralization. Startup co-founder Andreas Liffgarden, former head of business development at Spotify, explained that the ability for a retail store to customize its playlists while simultaneously having control from a central location is a strong selling point for corporations.
Spotify first realized the need for a business component of its service in 2011, when the team noticed that businesses like bars and restaurants were using the single-user version of Spotify in their establishments without a license. If Soundtrack Your Brand is successful at converting businesses to subscribers, the royalty rates paid to artists may be as much as four times higher than current US rates. 21% of the new subscribers to the service didn’t play music at all in their businesses before, and 41% migrated from “other streaming platforms,” including ones without licenses. Spotify’s main competition in the space is Pandora for Business, which has established its foothold in the market by partnering with Mood Media, a B2B music provider specializing in background music services.
For now, Sars commented, Soundtrack Your Business is content to be “background music 2.0,” but eventually the company envisions a fully-integrated system that can sense what is going on in the store in real time, and making the music help.
H/T: Business Insider