Swedish Streaming Service Inks Deal With Universal Music Group

A Swedish business-to-business streaming service that counts Spotify Technology SA as a minority owner has signed a global licensing agreement with Universal Music Group.

Stockholm-based Soundtrack Your Brand Sweden AB hopes the deal will provide the carrot needed to convince small business owners using private streaming accounts to move to its legal streaming alternative.

“I see this as probably the biggest event in the history of the company,” chief executive Ola Sars said in an interview. “Since Universal has about a 30% market share, a lot of people have artists from their catalog in mind when they try out the service.”

The streaming service, originally known as Spotify For Business, began building its own music library in 2017 and has since secured 9,000 deals with record labels and publishers.

With the UMG agreement, the company has signed contracts with the three major labels that control large swathes of the market. It will now offer songs from artists such as The Weeknd and Katy Perry, making Soundtrack’s catalog fully comparable with that of the largest consumer streaming services, according to Sars.

Pause Button

A key challenge facing Soundtrack has been a reluctance among business owners to move away from private accounts to a licensed music service that is about three times more expensive.

Sars hopes that industry organizations will now try to regulate the market in a similar way that sports broadcasters such as Sky Sports have done with pubs and bars showing Premier League soccer games in the U.K.

“Now that we have an offering that is on par with consumer services, there is no reason to use those illegaly,” Sars said. “We have shown that there are some 20 million businesses that are using consumer accounts. That’s about $2.7 billion in royalties that labels and publishers miss out every year.”

Sars admits getting licensing agreements in place has taken longer than he thought, and meanwhile, Soundtrack has been forced to cut jobs and shift its sales setup amid mounting losses. The company introduced a function to pause subscriptions for a limited period of time after the coronavirus pandemic impacted its end markets.

“We’ve had small business owners calling us, crying,” Sars said. “80% of clients that had to shut down paused their subscriptions instead of canceling. Those who canceled were probably hit so bad that they weren’t going to make it through.”

©2020 Bloomberg L.P.

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