Your next Big Mac might taste the same, but it’s going to sound a lot different.
A Spotify-funded startup has secured a global partnership with McDonald’s Corp., one that will give 36,000 McDonald's restaurants access to playlists compiled from Spotify’s vast music catalog and mountains of listener data, each tailored to specific times, locations and context. The Swedish company, called Soundtrack Your Brand, also said Thursday that it is open for business in the United States and that it wants to change the role music plays in retailing.
“Background music is usually a utility,” co-founder Andreas Liffgarden told International Business Times. “We want to take it from a utility to a value driver.”
At the moment, most of the music that hits our ears when we enter a store or a business is chosen in a very low-tech way: a radio dial locked on the manager’s favorite station, say, or a playlist of MP3s chosen by whichever bartender is on shift. At larger chains, the music is often still delivered in the form of mix CDs, which are burned and sent to locations, where they are simply played over and over again.
Soundtrack Your Brand, or SYB for short, which has raised some $20 million from backers including Spotify, does things differently. It allows businesses to control the music playing in each location remotely from an app, and it offers an unprecedented level of control over the kind of music played, from special playlists designed to set a certain mood to separate ones filled with the music that’s trending or most popular in a specific geographic location.
Down the line, SYB’s founders said, it could look to create a product that’s capable of reacting to the mix of customers inside a specific store at a specific moment. “We want the music to react to you,” co-founder and CEO Ola Sars said.
Sars and Liffgarden started SYB in 2013, when Sars was working at Beats Audio, which he co-founded, and while Liffgarden was serving as the global head of business development at Spotify. At first, they thought about launching it as a business inside of Spotify, but ultimately decided to form their own company after Spotify indicated it wanted to focus on selling its subscriptions to people, rather than businesses.
After spending about two years building its product and team, the company quickly forged local partnerships with brands including Nike, Starbucks and Absolut. It also closed deals with several mom-and-pop-sized businesses in Sweden, ranging from museums to clothing stores to restaurants. Today, Liffgarden said, the split between large, enterprise-sized clients and smaller brands is about even, and they intend to go after both big fish and little fish in the U.S.
“The existing market [of top brands] is there in plain view,” Sars said. “But we also want to develop this new area of [small businesses] that's been completely underserved.”
Combine the two, and there is a sizable opportunity. Last year, more than 700,000 businesses paid licensing fees to play music for their customers, according to ASCAP, and the vast majority of them had brick-and-mortar locations. For SYB, the smallest of those businesses can be signed up for subscriptions that start at $40 per month; franchise locations would pay more like $90 per month. Even though Spotify powers the SYB's back end and provides it with their catalog, it doesn't take a cut of any of the fees. Much like Spotify, however, a sizable share of SYB's fees go to artists, labels and songwriters.
But even though SYB is powered in large part by Spotify, its U.S. operation is not necessarily purely dependent on them. For example, a number of the McDonald's franchises that are served by the companies' partnership are located in countries where Spotify isn't yet available. That required SYB to source the music from a third party, something the company expects it may have to do again as it builds out its client list. “For us, it's quite natural to develop multiple back ends,” Liffgarden said. “It's probably unlikely that we'll use Deezer as a content source, but other white-label sources of content, sure.”
The ultimate goal, of course, is to offer business owners the flexibility to quickly adapt the ambiance of their stores. “If there's 10 guys that walk into your bar on a Tuesday afternoon [because] they just closed a deal, you can change things up to reflect that,” Liffgarden said.
SYB is not the only company offering a digital background music product. Mood Media, a conglomerate best known for Muzak, which generated more than $475 million in revenue last year, launched a product called Mood Mix last year; Play Network, based in Seattle, offers a suite of music services to major brands, including Uniqlo and Starbucks.
Down the line, the company expects that it will be able to integrate its product with a whole suite of tools that allow companies to react to their customers.
“We were lucky,” Liffgarden said. “We didn't see the bigger trend of digitization in the retail space. We just sort of knew that the music sucks when you're out in shops.”