Norwegian startup Soundrop first made its name as an app on Spotify, tapping into the streaming platform’s catalog to create real-time group listening rooms that were popular places for Spotify users to congregate for more social listening experiences. But as Spotify has become a more social platform by default, Soundrop is expanding what it does, and where it does it. Today, it is announcing a $3.4 million round of funding led by none other than Spotify’s lead investor, Northzone. The company wants to use the funding to turn up the volume on its growth to more platforms beyond Spotify and into more areas beyond simple listening rooms.
In addition to Northzone, Norwegian-government-back Investinor also participated. Northzone also led the previous $3 million round in the company last year.
The news comes at the same time that another listening-room service, Turntable.fm, is also expanding its focus; in this case from listening rooms into shared live music experiences online.
Inge Sandvik, the CEO and co-founder of Soundrop, tells me that while Spotify is currently the only music platform where Soundrop has an app, in the coming weeks this is due to grow. As for where Soundrop apps might appear in future, think about other music-streaming platforms such as Deezer that also offer app stores as one likely port of call. Another could be other kinds of streaming services that may operate more around video rather than audio; Soundrop already offers an integration with YouTube on its standalone service for its web app at play.soundrop.fm, its Facebook integrations and its standalone apps for iOS and Android.
While it makes sense that Soundrop will expand to be used in more places as a way of capturing more users, on the other this is quite a change for a company that started out at first working very closely with just one: not only was Spotify its first platform, but the two share an investor, and for a while Soundrop was actually working out of Spotify’s offices.
As Soundrop looks to expand its scope to more platforms, so too is the focus of the app changing somewhat. “We are quite tired of talking about ‘music discovery,’” Sandvik told me. “That is a crowded space and everyone wants to solve music discovery.”
So Soundrop is gravitating to where it has seen not just a lot of interest from users, but from labels on the business side, too — specifically in the creation of rooms dedicated to specific artists. Those who have created rooms on Soundrop include Imagine Dragons, Robin Thicke, Zedd, Owl City and some 130 others. The most successful of these are not trivial: Universal Music’s DJs Sebastian Ingrosso & Alesso picked up 28 million OTS users (a traffic metric standing for “opportunities to see”) after heavy marketing from both Universal and Spotify.
“Labels see us as a promotional platform,” Sandvik told me, noting that this is also where the company is generating the most revenues today. “We have seen that our artist events have been growing a lot. We are doing artist events almost every day now and several per day and we think we can scale this up quite a lot. This will again drive up their market share where music has been licensed and their revenue will grow.”
That is not to say that larger user-generated listening rooms are disappearing but they will increasingly be complemented by these artist-specific or label-specific rooms. “Music discovery and engaging a crowd is living in symbioses,” he said. “We think we are very well positioned to help out in both areas, but we think we need to focus on what tools we can give artists to amplify themselves when they are aiming to create a engaging relationship with listeners.”
At a time when Spotify is still looking for the magic formula to turn its popularity with consumers into a profitable enterprise, it’s interesting to see Soundrop making a sharp turn to services that, while popular, are also squarely aimed at revenue generation effectively as a music marketing platform. This is one of the reasons that Northzone re-invested.
“In the year since Northzone invested in Soundrop, the company has had a focus on product development and tight integration with Spotify,” noted Torleif Ahlsand, General Partner in Northzone and Chairman of Soundrop’s Board of Directors. “Now that the product has reached a new level of maturity, the company is ready to take its next steps. It feels so very right to bring Investinor in to provide additional rocket fuel. With the product well-established, Soundrop is now in pole position to drive revenue and growth in 2014.”