Despite starting up in 2009 and having names like legendary music producer Peer Åström and Wrapp CEO Hjalmar Winbladh as cofounders, Stockholm-based Epidemic Sound has managed to keep a low profile within the startup scene. Their product, which could come across as an unremarkable stock music site, has managed to build a library of 25,000 tracks within 170 genres, and is now the source of 70-80% of all music used on television in Northern Europe. Now that they feel they've gotten the traditional background music consumers locked down, they're bringing in the massive long-tail of independent filmmakers and startup video creators who need some jams in the background of their videos.
Epidemic Sound CEO Oscar Höglund came from the TV production side of things, from Zodiak Television where he met Jan Zachrisson, one of the first employees of Sweden's TV4. From their backgrounds they knew firsthand that the music liscensing process was as archaic as it could get. 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 sent globally through the internet, making it impractical to clear music with every collecting society. When the average TV station uses about 5,000 hours of music per channel, per year, the process of sending physical sheets of papers to report how music was used needed to be improved.
On the other side of the table, musicians and composers faced problems - their payout for creating a single piece of music was either a nice paycheck or nothing, but could take years to see any results. The way it works was that musicians created their background music and then asked to register it in a collecting society. This music was then passed around to broadcasters (sometimes physically sent around on hard drives), and if the musician was lucky enough to be selected out of 200,000 tracks, and if everything was reported correctly, the musician might get paid two years down the line.
Epidemic's solution was to pay for all the rights from artists upfront for a fixed fee, just to be added into their collection, so that other creators could just buy the tracks and run with it and use it however they like.
On the tech side, they also built a web player, making sending around hard drives obsolete. And rather than giving full tracks to TV producers, which sometimes didn't fit exactly like it should with the visual content, Epidemic breaks down each track by instrument, letting producers easily take out that annoying high-hat if you don't like it.
The company started with just 500 tracks and brought it around to broadcasters, whose positive response told them they should start pumping money into it. Since then, they now have around 25,000 tracks with 400-500 tracks being added every month.
One way Epidemic Sound has been able to source these tracks has been through the feedback and coaching they provide to their artists. Each of their 3,000 composers are monitored by a team led by Peer Åström, the producer noted for having the most ever entries on the U.S. Billboard chart for productions like Madonna, Kelly Clarkson, and all the music behind the FOX show, Glee. Additionally on the team is co-founder David Stenmarck, one of Sweden's most decorated music producers. "It's like we'll let you play football with David Beckham, and we'll pay you for it," says Oscar Höglund, CEO of Epidemic Sound.
Since the company was founded, it's revenues have climbed to 13.7 million SEK (€1.58 million) in 2012. It should be very interesting to see what happens with Epidemic Sound as they move out of their five year "stealth mode" and start pushing their solution out on the wider market of Youtube video creators.
They should find a welcoming market. Standard music libraries charge varying fees for the right to use material in different countries, and across different formats, like web or mobile, which makes no sense in the internet age.
Epidemic's standard track is available as a non-exclusive purchase, but for one flat fee for use on any platform in any country, forever. Epidemic Sound will let some producers request exclusive tracks, which have a fairly high price of something around €300,000.