Swedish Startup Space

Epidemic Sound, the most successful Swedish startup you know nothing about

Written by on November 11, 2013

Epidemic Sound has to be one of Sweden’s most underrated startups – they’ve been around for 5 years, have an extremely sound and steady business model – and one of Sweden’s most well respected entrepreneurs Hjalmar Winbladh as a co-founder to boot. Despite all of this, they’ve managed (read: tried) to stay out of the tech press and build an extremely solid business, that many people haven’t even heard of.

Essentially, Epidemic Sound is the world’s largest library of “production music” (i.e. music to be used in TV or film). They have over 20,000 tracks in the library, and they purchase each track from the creator directly.

I caught up with Oscar Höglund, CEO of Epidemic Sound for a chat about the company, how they’ve stayed under the radar and what the future holds for the company.

Oscar, tell us about your background and why you started Epidemic Sound

I came from the TV production side of things – from Zodiak Television where I met Jan Zachrisson, one of the first employees of Sweden’s TV4.

The average TV station uses about 5,000 hours of music per channel, per year, so we experienced firsthand the nightmare of licensing music for our soundtracks. To clear your music, you had to go to local collecting societies to approve and pay for the compositions in your film or TV show, but at the same time, content was being broadcast globally over the Internet, making it impractical to clear music with every collecting society around the world.

And, the process of sending physical sheets of papers to report how music was used is truly absurd. At the same time our co-founders Per Åström and David Stenmark had a lot of musician friends struggling to make a living. Getting paid for their compositions was basically a lottery. So, it quickly became obvious we could fix both sides of the problem with a little creativity and a professional quality service.

You seem to have assembled an extremely solid (and diverse) team. Tell us about it

There are five of us in the founding team. Per Åström is an award-winning producer for the likes of Madonna, Kelly Clarkson and Enrique Iglesias, and produces all of the music for the FOX hit show Glee. Jan (Zac) Zachrisson is best know for co-founding Zodiak Television, one of the world’s largest TV-production companies. Hjalmar Winbladh is a serial entrepreneur with a list of successful tech start-ups, including Sendit (sold to Microsoft), Rebtel (a $100 million mobile VoIP company), and Wrapp (the social gifting service). David Stenmarck started and owns one of the most successful shows in Swedish entertainment history, called Ladies Night, and is the other creative force at the company, producing hit singles for international superstars such as his brother, Martin Stenmarck, Celine Dion and Westife. Between David and Per I think the two have sold more than 150 million albums and/or downloads. And then there’s me, Epidemic Sound’s CEO, who was done being a management consultant at the Boston Consulting Group, and joined Zodiak Television where I started 5th Element, one of Zodiak’s fastest growing production companies, and served as a member of the management team before we sold it to the De Agostini Group.

The story sounds like smooth sailing so far! What challenges have you faced, or do you plan to hit in the future?

First we had to figure out how to create this company and business model. Production music accounts for about 90 percent of all music used in professional TV and online visual content production, but the old-school way of licensing music for soundtracks is extremely complex with a million players involved in creating, reporting, billing, blocking – and often suing – one another. It’s totally crazy and broken.

Once we figured out that we had to reinvent this industry, not just operate within it, and how to do that legally, then the challenge was all about building a library with professional quality music and scaling it, which has taken the last few years to achieve.

We screened over 3,000 composers to find just 200 who can create music to our standards, and we now more than 25,000 tracks that are tagged and formatted for our search tools that visual content creators use to explore, edit and download the music.  Each track, by the way, is broken into STEMS – individual tracks where the instruments can be heard and edited separately – thereby creating over 100,000 sound files available for use.

Finally, why have you chosen to stay out of the “press/limelight” for 5 years? What is the reasoning behind that?

Rome wasn’t built in a day.  As I mentioned, once all the legal issues were addressed and we settled on a viable business model, to be competitive we had to create a library of truly professional quality music, and that just takes time.  Professionals know junk when they hear it and we wanted to make sure our first impressions were good ones.  Once we felt like we had critical mass we had to prove this thing could actually work, so we had to get real customers who create and broadcast content people watch and love.  We decided to start with broadcasters in the market we know well – Sweden – and while we have a very compelling proposition, good sales, like creating good music, also take some time.  I’m proud to say that we’re now the largest supplier of production music to TV in the Nordics.  In September we signed a commercial agreement with the U.K. trade association Pact where they’re paying the fees to give their members – who produce more hours of content for British TV than the BBC – free use of our library.

Last month we did a similar agreement in the U.S. with Maker Studios, one of the largest YouTube multi-channel networks, to give their 60,000+ content creators access to our library.  So it feels like our act is sufficiently together that we can come out of the closet and let the world know what we’re up to.

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