Sonos Partners With Soundtrack Your Brand for Business Streaming

Originally published on Bloomberg

A Spotify-backed music streaming company will be exposed to hundreds of thousands of potential new customers through a tie-up with U.S. speaker manufacturer Sonos Inc.

Soundtrack Your Brand Sweden AB licenses its music catalogue of 50 million songs to be played in public venues such as shops and restaurants for about $30 a month. The service will now be available to as many as 300,000 businesses using Sonos speakers, Soundtrack Chief Executive Officer Ola Sars said in an interview.

The Sonos deal could also channel more money to music companies and artists. Commercial streaming commands much higher price than the consumer equivalent -- $30 a month versus the industry standard of $10 a month, in this instance, for access to a broadly similar catalogue of songs.

Store owners are obliged to pay for a commercial music license if they play songs in public, but rates often vary based on complicated factors, such as the square-meter size of a venue. The growth of the music streaming market created an opportunity for companies like Soundtrack to simplify the system with flat-rate packages.

The former chief operating officer of Apple Inc.’s Beats Music, who co-founded Soundtrack in 2013, said revenue from businesses taking advantage of the product would be split between the two companies. He declined to specify the ratio of the split.

Soundtrack, which counts Adidas and McDonald’s as customers, used Spotify Technology SA’s catalogue for its first 18 months of operations, but has since moved to build its own library of music. It now has 50 million songs after the company secured some 6,500 licensing deals with rights holders including Sony/ATV Music Publishing.

For Sonos, offering legal streaming music with its business-focused speaker setups could add a recurring revenue stream and help the company diversify from its main business of selling premium home speakers to consumers. Soundtrack estimates that 21.3 million businesses worldwide aren’t paying for licensed music, which at $30 a month for a licensed service represents a shortfall of $7.7 billion.

That potential has attracted new players, and rumours that Apple may be getting in to the fray has been circulating since it was reported last year that the company had registered the trademark Apple Music for Business. A push by the iPhone maker could move the market to become more tightly regulated and increase takeover interest for Soundtrack Your Brand, Sars said.

“If Apple chooses to do this, others will look at it too, and then it may be a good idea to look at us instead of building it yourself,” Sars said. “I have no interest in selling the company, but that is a good development.”

Santa Barbara, California-based Sonos went public in August, and has also partnered with IKEA to offer speakers doubling as furnishing. Soundtrack Your Brand’s investors include Balderton Capital, Northzone, NJF Capital and Swedish carrier Telia Co.