‘Spotify For Business’ Creator Soundtrack Your Brand Gets $11M From Telia, Spotify And More

While Spotify has been building up its own war chest in preparation for the battle with Apple and others to win more music streaming consumers, it’s also funding a smaller company that’s focused on building up another side of its revenue strategy: businesses and enterprises.

Soundtrack Your Brand — makers of two services called Spotify Business and Spotify Enterprise that let retailers and others control and stream Spotify music in stores and other venues — is today announcing that it has raised $10.9 million in a Series B round of funding.

Co-founded by former Spotify head of business development Andreas Liffgarden and co-founder of Beats Ola Sars, Soundtrack Your Brand is positioning itself very much as a Spotify satellite. Its backers include not just the successful streaming company but several of its investors: this round was led by Telia Sonera (which put $115 million into Spotify’s last round), with participation from PlayNetwork, Creandum, Northzone, Wellington Partners, as well as Spotify.

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Sars, left. who is the company’s CEO, tells me it’s not disclosing valuation except to note that it’s a “healthy B round” that could have been bigger if they’d wanted it to be. That’s partly because in the year since it’s been live the startup has been picking up some pretty impressive traction.

In its home market of Sweden — the only country where it is live now — Soundtrack Your Brand is working in a number of single-venue businesses; it is also pumping music into McDonald’s restaurants across the country and is now also working on a pilot with Starbucks. The funding will be to roll out those deals and win new business in the wider Nordics before expanding to Europe, the U.S. and beyond.

Currently, the company, which today has 32 employees, exclusively works only with Spotify to supply music, but that could change as it grows “Given my background in particular as a former Spotify employee, there is a close relationship with Spotify not just as a shareholder but as a co-founder of the business,” says Liffgarden. “But it is in 60 countries and some of our customers like McDonald’s is in over 100, so at some point, when they demand we cover everywhere, we will need to serve music in markets where Spotify may not be.”

When we first wrote about Soundtrack Your Brand around the time of is launch last year, we noted a couple of key motivations for the startup. One was that it could help businesses with the tricky issue of making sure they are on the right side of the law when it comes to streaming music legally in public venues.

Another is that companies simply were asking Spotify when they could get a business version of the service — a request Spotify could not accommodate while all of its focus was on growing its consumer business. The logic for wanting Spotify in a venue is clear: it’s a far more dynamic solution than whatever CD- or radio-based offering they may have opted to use in the past.

Fast forward to today and the latter of these is very much what is driving growth at the startup.

“This B round is all about expansion in what has essentially been an untouched market, and one of the few that has not been digitized,” Sars says of the in-venue music streaming business.

Liffgarden, meanwhile, points out that the power of being able to select and stream music not just at a single venue but across multiple locations remotely raises some interesting ways that this can be used.

“When you are starting a company you always wonder what the market fit will be,” he says. “It’s convenient that Muzak is what most businesses buy. Here, what we have for the first time we have a real time is a platform to adapt music on the fly. Staff or customers can influence what is played — using an app for example — and you can adapt the music or playlist based on the crowd, the weather or more.”

In addition to providing a music controller, Soundtrack Your Brand is working on music analytics. This includes correlating data on what is played with what is paid — the idea being that businesses want to find the right combination of music to get customers into a mood to buy more — and in some cases even trying to change other kinds of behavior, like getting people to eat faster.

Yes, it may sound a little Orwellian, but it is in fact an inevitable evolution of the same kinds of tweaks that retailers often use to get us to spend more money, use facilities in a more efficient way, and so on.

“We are trying to turn a business’s music platform into something more valuable, and particularly from some of the cooler brands we are working with, there is a lot of interest in that,” he said. “Taking music out of utility land and making it a business driver is an important part of our business.” Interestingly, in-stream ads is not something that they are focusing on so much right now, instead making sure it’s more about a good music experience.

Also worth noting: while Spotify and the rest of the streaming players have settled around the $10/month mark for premium subscriptions to their services, the pricing and margins for the business tiers are significantly higher (if of a smaller number).

The pricing for Spotify Business currently in Sweden is around SEK450 ($55) per month for single store deployments. Spotify Enterprise for larger deployments is around SEK750 ($92) per store per month. This is for the software and music usage; over time I wouldn’t be surprised if there were more value added services charged on top of that.

Longer term, while the company is continuing to expand into new geographies, it’s currently intent on staying standalone even in the face of all the competition in the streaming market. Sars says he is “super positive” on the launch of Apple Music because “it’s great that Apple is coming in and verifying that streaming is the way forward.”

Liffgarden meanwhile admits that early on the startup was focused on exit its strategy but that has changed. “For us as founders, when we started it was on our map to get acquired and be rolled into Spotify, but now that we have seen the customer interest and how large the opportunity is, we have no interest in being acquired. We are looking to go long and big.”