Swedish Startup Space

Warner Music Acquires X5 Music – For Tens Of Millions Of Dollars

Written by on June 2, 2016
Editors Note: This post is part of a series called Featured posts, presented by Breakit.

The mastodon record label Warner Music has acquired the digital music company X5 Music, which is backed by Northzone. With a price tag in the tens of millions, according to Breakit’s sources.

The digital music company X5 Music, which is backed by Northzone and Vostok Ventures’ CEO Per Brilioth, is a rather unknown company. Despite buying rights to songs in smaller genres like jazz and classical music for the last ten years, the company has been working in the shadows.

But that is going to change now.

Breakit can now reveal that Warner Music has acquired the Swedish music company for an undisclosed sum. According to Breaktis sources, the price tag was somewhere around $25 million (200 million SEK), which seems quite reasonable considering that the latest known company valuation was $22 million (185 million SEK), in January this year.

“I can confirm that we are selling the company, but I can’t comment on any numbers”, Johan Lagerlöf, founder of X5 Music, says when Breakit talks to him.

According to Johan Lagerlöf the deal is all about the company gaining access to a larger catalogue of music and growing faster.

“We have a good model that works and everything is going great, but we don’t have all the music in the world in our database. Combined with Warner, we will have almost half of all the old classic hits.

The company, which will still be operated separately from Warner, has made a business out of buying old forgotten music and repackaging it in new playlists on Spotify. Like greatest hits albums, but digital. Breakit has previously revealed that the company has bought playlists for over 7 million SEK, or $845,000. Last year the company had sales of around $15 million (125 million SEK).

But it hasn’t always been smooth sailing for the company. In the early 2010’s the company tried to go into the American music market, but failed. It operated at a $10 million loss over three years. In 2011 the company raised $8 million from Spotify-investor Northzone, to pay for the failed U.S. venture.

Northzone is the largest external shareholder with 40 percent of the company. Other early investors are Per Brilioth, CEO of Vostok Ventures, and Harald Kjessler.

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