Stockholm - the Powerhouse of Sound- The birthplace of Musictech innovations - Invest Stockholm

 
Stockholm - the Powerhouse of Sound- The birthplace of Musictech innovations - Invest Stockholm
Stockholm –
the Powerhouse
of Sound
– The birthplace of
  Musictech innovations

                          June 2016
Stockholm - the Powerhouse of Sound- The birthplace of Musictech innovations - Invest Stockholm
Introduction                                                                                          2

Stockholm – the world’s
Musictech capital

It’s in Stockholm where it all happens. This is where ideas become reality and where companies
are created and grow strong. One of the hottest sectors at the moment is Musictech, where music
and technology come together.

Stockholm is the driving force in Musictech. Here, innovations are transforming the music
sector into a more transparent, accessible and democratic industry and offering new forms of
entertainment in the process.

By Musictech we mean software and hardware for producing and consuming music. Today,
companies from Stockholm are dominating the world of streaming music. When combined,
Spotify, Apple Music and Pandora Radio (which acquired Stockholm-based Rdio) have a profound
influence on the world of revenue-making streaming services.

However, Stockholm is not only about streaming and Spotify. Music electronics, digital music
production and new companies developing smart new ways of managing music rights are also
flourishing and garnering interest from other countries and global giants like Google and Apple.
In 2015, Stockholm’s Musictech companies attracted investments of USD 555 million.

And yet, this is just the start. In an increasingly digital world, markets are growing rapidly. The
streaming sector alone is expected to grow by eleven percent annually and reach a market
volume of USD 7.5 billon by 2020. By then, every forth person around the world is expected to
use some form of streaming service.1

So, why have Stockholm become the world capital of Musictech? One answer is that success
breeds success. Stockholm is a place that acts like an incubator for ideas and where the tech and
music industries respectively, have grown into world leaders. It’s in the intersection of these two
successful hubs where synergies emerge. We have the future ahead of us. Stockholm’s journey in
Musictech has just begun.
Stockholm - the Powerhouse of Sound- The birthplace of Musictech innovations - Invest Stockholm
Content                                                            3

                            Content

                            1 Why Stockholm is the leader in Musictech
                              – Success breeds success                                        5

                            2 The main creators of the Stockholm Musictech scene
                              – Stockholm, the birthplace of the innovations that are         7
                                transforming the music industry
                              – The Stockholm Musictech scene, 25 companies in five markets   8

                            3 Milestones on the road to success
                              – Ten years of Stockholm Musictech                              19

                            4 Examples of how Stockholm Musictech influences
                              the future of the music industry
                              – ”It's about the future of great ideas.”                       21

                            5 Sources
                              – Media and interviews                                          24

Stockholm Business Region
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www.investstockholm.com
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Stockholm - the Powerhouse of Sound- The birthplace of Musictech innovations - Invest Stockholm
Why Stockholm is the leader in Musictech                                4

Why Stockholm is the
leader in Musictech

                                                Photo: Happy plugs / Image Bank
Stockholm - the Powerhouse of Sound- The birthplace of Musictech innovations - Invest Stockholm
Why Stockholm is the leader in Musictech                                                               5

     Success breeds success
     The Musictech companies of Stockholm have already become very successful and are making their
     mark thanks to several groundbreaking innovations. But why is it that a city in the north of Europe
     has become the breeding ground for so many innovative Musictech companies? There may be
     several answers to that question, but here are three.

                                       01
                       Stockholm - an incubator that
                       quickly turns ideas into reality

                   02                                     03
          A world-leading          Music Tech     Where global
             tech hub                              music hits
                                                   are born

01    Stockholm – an incubator that quickly turns
      ideas into reality
      Stockholm is the capital city, but with an intimate feel. It has a high density of informal meeting
      places for smooth knowledge exchange and highly educated, curious and ambitious people who
      cross-pollinate different ecosystems.

02    A world-leading tech hub
      Stockholm has, after Silicone Valley, produced the most unicorns per capita – startups sold or
      valued at over one billion US dollars. The city is the birthplace of international brands and tech
      unicorns like Skype, Mojang (Minecraft), Klarna, King (CCS) and Spotify. But also the home of
      large corporations like Ericsson – the world’s largest supplier of telecom infrastructure. Did you
      know that programmer is the most common work title in Stockholm and that every fifth Stockholmer
      works in the tech sector?

03    Where global music hits are born
      Sweden is one of the world’s leading exporters of music. Ever since the 90s, a lot of the world’s
      biggest pop acts come to Stockholm to produce their music in cooperation with the city’s many
      music creators. In fact, this is where a substantial part of American and British hits are created.
      Producer and songwriter Max Martin, with more than 20 Billboard number ones to his name, is
      the world’s third most successful hit maker after Lennon/McCartney. There is also a well-developed
      infrastructure around music with publicly subsidized music education for children.
Stockholm - the Powerhouse of Sound- The birthplace of Musictech innovations - Invest Stockholm
The main creators of the Stockholm Musictech scene                        6

The main creators
of the Stockholm
Musictech scene

                                                          Photo: Viktor Gårdsäter
Stockholm - the Powerhouse of Sound- The birthplace of Musictech innovations - Invest Stockholm
The main creators of the Stockholm Musictech scene                                              7

” Stockholm has outpaced other European cities
  with a mix of unique cultural traditions, visionary
  tech leaders, globally oriented startups and smart
  government policies. Stockholm has produced
  more unicorns per capita than any other city in
  the world.”
 Tech Crunch, January 2016.2

 Stockholm, the birthplace of the innovations
 that are transforming the music industry
 During 2015, Stockholm’s Musictech companies attracted USD 555 million in open/reported
 investments3. Total investments in the entire tech sector amounted to USD 892 million4, which
 means that Musictech got a majority share of the entire investment volume. While perhaps best
 known for streaming services, there are also many other successful companies in the Stockholm
 Musictech sector.

 Tech investments 2015
 USD
 million

 1000'

 800'

 600'

 400'

 200'
                 USD                                   USD
                 555                                   892
 100'
                million                               million
 0
           Stockholm’s Musictech              Total investments in
           companies                          the tech sector

” Stockholm is becoming Europe's premier tech hub.
  There is a startup scene here that is rivalling the
  likes of London, Berlin and Paris as the most
  important tech startup hub in Europe.”
 Mashable, 2016.5
Stockholm - the Powerhouse of Sound- The birthplace of Musictech innovations - Invest Stockholm
Whymain
The Stockholm
        creators
              is of
                 thethe
                      leader
                         Stockholm
                             in Musictech
                                   Musictech scene                                                                      8

The Stockholm Musictech Scene
- 25 companies in five market segments
Below follows a short presentation of the 25 leading Musictech companies in Stockholm, divided
into five segments. Together, these companies have more than 1000 6 employees and continue to
grow and attract cutting-edge expertise from all over the world.

                                                                     04
                         03
                                                               Music publishers and
                                                               rights management

               Digital music production

                                                                             05
                                                                         Streaming and other
                                                                         forms of music and audio

                            02
                                                                         entertainment

                      Musical instruments,
                      aids and equipment
                                                         01
                                                     Music accessories

                                                                                  The image shows the distribution of the
                                                                                  25 companies in five segments
The main creators of the Stockholm Musictech scene                                                            9

01
                                                                   “ Urbanears has changed the way
                                                                     we look at personal electronics.”
                                                                        The Future Positive, 2013.7

Music accessories
This hardware segment comprises accessories for enter-
tainment electronics. These are aimed mainly at music
consumers. The segment is contiguous to Fashiontech.

Happy Plugs                     Pugz Gear                                Sudio                           Zound Industries

Product/business idea:          Product/business idea:                   Product/business idea:          Product/business idea:
Since 2012, the company         The company creates                      Sudio produces studio quality   To create products at the
produces a range of popular,    distinctively designed wireless          designer headphones.            junction of electronics
colorful headphones. The        headphones with high                     The name originates from        and fashion. Urbanears
products are sold in more       functionality. It became one             an incident where one of        headphones are the
than 6 000 stores in 70         of Kickstarter’s most successful         the founders by accident        company’s best-known
countries, including through    projects in 2015.                        happened to see Phil Collins    product, but it has also
wholesalers like Colette, Le                                             having an issue with his        developed other kinds of
Bon Marché, Selfridges and      Founded: 2014                            headphones in New York.         electronics in cooperation
Urban Outfitters.                                                                                        with the British company
                                Founders:                                Founded: 2012                   Marshall. The products are
Founded: 2011                   Hamid and Vahid Toosi                                                    sold in 20 000 stores in 95
                                                                         Founders:                       markets. In 2015, three of
Founder:                        Investment:                              Johan Gawell, Carl              Zound Industries’ products
Andreas Vural                   USD 1.5 million (2015)                   Sundqvist och Jonas             were awarded the iF Design
                                                                         Wistrand                        Award, one of the world’s
happyplugs.com                  pugz.com                                                                 most prestigious. The same
                                                                         Investment:                     year the company secured an
                                                                         USD 0.18 million (2015)         investment of USD 11 million.

                                                                         sudiosweden.com                 Founded: 2008

                                                                                                         Founders:
                                                                                                         Andreas Enkvist, Erik Petersen,
                                                                                                         Kenneth Schönborg, Konrad
                                                                                                         Bergström, Markus Rudbäck,
                                                                                                         Niklas Bergh, Oscar Axhede
                                                                                                         and Vincent Skoglund

                                                                                                         Investment:
                                                                                                         USD 11 million (2015)

                                                                                                         zoundindustries.com
Whymain
                          The Stockholm
                                  creators
                                        is of
                                           thethe
                                                leader
                                                   Stockholm
                                                       in Musictech
                                                             Musictech scene                                                          10

02
                                                 ” Swedish hardware designers Teenage
                                                   Engineering have made a name for
                                                   themselves by building some of the most
                                                   unique and creative musical gear on the
                                                   market.”
                                                     The Verge, 2015.8

Musical instruments, aids and equipment
This hardware segment is comprised of physical instruments
like keyboards, drums and guitars, as well as physical aids
facilitating the production of music.

Mind Music Labs Sensus           Nord Keyboards Clavia                     TactSense                     Teenage Engineering
Smart Guitar

Product/business idea:           Product/business idea:                    Product/business idea:        Product/business idea:
The company has developed        The company manufactures                  Tactsense captures an         The company was started by
the world’s first smart guitar   keyboard and drum products                infrared video signal         the founder of the clothing
which is able to wirelessly      that are used by stars such               from the conductor’s          brand Acne and produces
transmit, process and share      as Prince, Pet Shop Boys and              hand and transform that       synthesizers in a garage in
music and data. This enables     Madonna.                                  into tactile impulses on      Södermalm, Stockholm. The
the user to perform, record                                                to the musician’s body        best-known product is called
and share performances           Founded: 1983                             surface – helping visually    OP-1. Teenage Engineering
online. Behind the guitar are                                              impaired musicians feel the   cooperates with Swedish
Swedish and Italian artists      Founders:                                 movements of the conductor.   design brands like Ikea and
along with scientists from the   Hans Nordelius and Mikael                 Tactsense received the City   Cheap Monday as well as
Royal Institute of Technology.   Carlsson                                  of Stockholm Innovation       Elektronmusikstudion. Half
Nominated for the Stockholm                                                Scholarship in 2015 in the    a million synthesizers have
Innovation Scholarship in the    nordkeyboards.com                         Creative sector.              been sold worldwide and
Creative Industries category,                                                                            are used by the likes of
2012.                                                                      Founded: 2015                 Depeche Mode, Beck and
                                                                                                         Pharrell Williams.
Founded: 2015                                                              Founders:
                                                                           RicWasserman, Jan             Founded: 2006
Founder:                                                                   Lundqvist, RunoAndersson,
Michele Benincaso                                                          Ellen Sundh and Wu Jing       Founders:
                                                                                                         Jesper Kouthoofd, David
Investment:                                                                                              Eriksson, Jens Rudberg and
Undisclosed amount in 2015                                                                               David Möllerstedt

mindmusiclabs.com                                                                                        teenageengineering.com
The main creators of the Stockholm Musictech scene                                                     11

03
                                                                     “ One of our favorite
                                                                       music-making apps...”
                                                                         Wired about Auxy, 2015.9

Digital music production
This software segment comprises software for music
production – alone or together with other musicians.
The products are aimed at both professionals and consumers.

Auxy                             DoReMir Music Research                   Moodelizer                    Musifier

Product/business idea:           Product/business idea:                   Product/business idea:        Product/business idea:
Auxy is a music app for          The app ScoreCloud Express               Moodelizer’s technology       Music Adaptive Improviser
electronic music production      is a notation software                   customizes music to match     (MAI) is a software
on iOS. Within one month         that turns music into sheet              the mood of a film and        system for adaptive music
of its launch on App Store       music and has been called                thereby strips away much of   generation, based on music
in 2014, it had been             “Google translate for music”.            the complexities of adding    morphing. MAI composes
downloaded 500 000               Behind the technology lies               music to film.                and performs music in
times. The app has, among        20 years of research and                                               real-time. Connected to
other things, been awarded       cooperation between two                  Founded: 2012                 interactive applications
“Apples Best of 2014”.           processors from the Royal                                              like computer games, MAI
                                 College of Music and the                 Founder:                      generates highly adaptive
Founded: 2014                    Royal Institute of Technology.           Carl-Michael Herlöfsson       musical soundtracks.
                                 In 2013, the app was
Founder:                         awarded a Gold Lion in                   moodelizer.com                Founded: 2004
Henrik Lenberg and Fredrik       Cannes. It has become
Gadnell                          the most sold app [all                                                 Founder: Lars Jonas Edlund
                                 categories] in Japan.
Investment:                                                                                             musifier.com
USD 0.85 million (2014)          Founded: 2008

auxy.co                          Founders:
                                 Sven Ahlbäck and Sven
                                 Emtell

                                 Investment:
                                 USD 1 million (2013)

                                 scorecloud.com
Whymain
                         The Stockholm
                                 creators
                                       is of
                                          thethe
                                               leader
                                                  Stockholm
                                                      in Musictech
                                                            Musictech scene                              12

Propellerhead                   Soundtrap                                 XLN Audio

Product/business idea:          Product/business idea:                    Product/business idea:
The company develops            With Soundtrap you make                   A software company that
software products for digital   music online. You can plug                creates virtual musical
sound production for PC         in your own instrument, use               instruments. Swedish star
and Mac, along with apps        the software instruments                  producer, Max Martin,
for mobiles and tablets. The    available in Soundtrap                    co-owns the company.
company is best known for       or just record a song                     Addictive Keys and Addictive
its software Reason, which      directly with your computer               Drums are two of its better-
helps musicians from all over   microphone.                               known products.
the world to co-create and
cooperate.                      Founded: 2012                             Founded: 2005

Founded: 1997                   Founders:                                 Founders:
                                Per Emanuelsson and                       Niklas Möller and Lars
Founders:                       Fredrik Posse                             Erlandssson
Ernst Nathorst-Böös, Marcus
Zetterquist and Peter Jubel     Investment:                               xlnaudio.com
                                USD 2.5 million (2015)
propellerheads.se
                                soundtrap.com
The main creators of the Stockholm Musictech scene                                                        13

04
                                ” A weirdly large number of the music and audio
                                  related companies that you have heard of came
                                  from Stockholm. The capital of Sweden not only
                                  has a curiously large number such companies
                                  operating there, but it also gave rise to some of
                                  the most important.”
                                  The Observer, 2016. 10

Music publishers and rights management
This segment comprises digital music publishers and software
for handling copyright revenue streams. The segment may be
contiguous to FinTech.

Auddly                          Epidemic Sound                           International Copyright       X5 Music Group
                                                                         Enterprise

Product/business idea:          Product/business idea:                   Product/business idea:        Product/business idea:
Auddly is a music               The company manages                      ICE is a service center for   This digital music publishing
management tool that            and buys production music                the global management of      company licenses existing
gathers all information about   directly from musicians who              music rights. It’s a global   music and publishes
a musical piece in one place,   are not affiliated with a                company which is owned        compilation albums like
as an independent bridge        copyright organization. Its              and cooperates with, among    ”The 50 greatest pieces of
between the music industry’s    more than 50 000 customers               others, Swedish collective    classic music”. The album
copyright owners and master     are production companies,                management organization       topped the download chart
owners. In 2015, ABBA’s         websites and TV-channels in              STIM as well as British PRS   in ten countries when it was
Björn Ulvaeus, star producer    some 100 countries. In 2014,             and German GEMA. ICE          released on iTunes. In 2013,
Max Martin and Aviciis’         venture capital company                  provides more than 19         the Red Herring magazine
manager Ash Pournouri           Creandum invested USD 5                  million musical works.        named X5 Music Group one
invested more than USD          million in the business.                                               the 100 most innovative
1 million in the business.                                               Founded: 2007                 companies in Europe. In
                                Founded: 2009                                                          June 2016 the company
Founded: 2012                                                            Founder:                      was acquired by Warner
                                Founders:                                Founded as a joint            Music Group.
Founders:                       Oscar Höglund, Jan                       venture between collective
Niclas Molinder and Daniel      Zachrisson, David                        management organizations      Founded: 2003
Hagenfeldt                      Stenmarck, Peer Åström and               STIM (Sweden) and PRS for
                                Hjalmar Winbladh                         music (UK)                    Founders:
Investment:                                                                                            Johan Lagerlöf, Daniel
USD 1 million (2015)            Investment:                              iceservices.com               Bäckström, Stefan Enberg,
                                USD 5 million (2014)                                                   Jan Nordlund and Fredrik
auddly.com                                                                                             Nyström
                                epidemicsound.com
                                                                                                       x5musicgroup.com
The main creators of the Stockholm Musictech scene                                                         14

05
                                                                         “ Pacemaker, our favorite DJ
                                                                           app, just got even better.”
                                                                               The Verge, 2015.11

Streaming and other forms of music
and audio entertainment
This software segment comprises software for streaming
music and other music and audio entertainment. The
segment is contiguous to GameTech.

Blicko                           Pacemaker Music                          Singbox                        StrumLive

Product/business idea:           Product/business idea:                   Product/business idea:         Product/business idea:
Blicko is a digital jukebox      Pacemaker Music is a DJ                  Singbox is a karaoke app       StrumLive is an online
that lets the users influence    app with access to Spotify’s             that lets the user compete     community for live music. It’s
the playlist while listening     and iTunes’ music libraries.             against friends and share      an arena where anyone can
together. It offers a            It offers a whole host of                the results. Singbox have      perform his or her music for
democratic music service for     mixing effects and can be                previously developed           free in front of an audience
your restaurant, bar, store or   used on iPhones, iPads and               versions for the Swedish       that can communicate with
even your home.                  Apple Watches. Last year,                edition of the Eurovision      the artist in several ways.
                                 the app received the Apple               song contest and the world’s
Founded: 2012                    Design Award - Honoring                  first official ABBA app.       Founded: 2014
                                 Outstanding Design and
Founders:                        Innovation.                              Founded: 2007                  Founders:
Jesper Ahlberg, Theodor                                                                                  Lucas Sandberg and Petter
Zettersten and Andreas           Founded: 2011                            Founders:                      Ögren
Andrén                                                                    Carl Ljungström and John
                                 Founders:                                Ardelius                       strumlive.se
blicko.com                       Jonas Norberg, Daniel
                                 Wallner and Olof Berglöf                 singbox.com

                                 pacemaker.net
Whymain
                           The Stockholm
                                   creators
                                         is of
                                            thethe
                                                 leader
                                                    Stockholm
                                                        in Musictech
                                                              Musictech scene                                                                                        15

                                    “ Now Spotify is the Netflix of music sites.
                                      MarkZuckerberg, Facebook’s founder, says,
                                      'Daniel [Ek] just saw the opportunities of
                                      streaming music before anyone else.”
                                        The New Yorker, 2014.12

                                        Innovations from Stockholm is leading the way

                                                     30
                                        30

                                        25

                                        20

                                        15

Spotify – the world’s                                                   11
streaming giant                         10

Product/business idea:                                                                        6

The music, and recently                 5                                                                          4
video, streaming service                                                                                                              3,5                     1
that in just a few years have
developed into a giant                  0
                                                 Spotify           Apple Music            Deezer               Pandora            Rhapsody/                 Tidal
that dominates the world                                                                                       Radio              Napster
market.13                                     Spotify still leads the way regarding the number of downloads, income and active users15 – currently 100 million
                                              people16. Compared with its closest competitor (Apple Music17), Spotify has almost twice as many paying users18.
Founded: 2006                                 In fact, Spotify has more paying users than the five largest competitors combined.

Founders:
                                                                                                                                                                    30
Daniel Ek, Martin Lorentzon              30

Investment:
USD 526 million (2015)                   25

USD 500 million (2016)

                                         20                                                                                                            20
spotify.com

                                                                                                                                             15
Spotify is the most popular
                                         15
app on Facebook14 and
at the beginning of 2016,                                                                                                          12,5

it released a new version                10                                                                               10
containing podcasts, video
and ‘fresh finds’ – a playlist
                                                                                                                  6
with new songs from artists              5                                                     4
                                                                                                        5
                                                                           2,5        3
that have been identified
                                                                  1,5
as shooting stars by a set of                  0,5
                                                           1

algorithms.                              0

                                               Jul        Mar   Jun       Nov       Jan      Aug       Dec      Mar       May      Nov      Jan       Jun         Mar
                                              10          11    11        11        12       12        12       13        14       14       15        15          16

                                              Spotify is Europe’s highest valued venture capital funded startup19 and in 14th place globally20. In 2015 it was valued
                                              at USD 8.53 billion21. During 2015, the company secured investments of USD 526 million. This year, it has received
                                              a further USD 500 million22. Spotify employs more than 1 500 people all over the world.
The main creators of the Stockholm Musictech scene                                                    16

                                                                                     Photo: Henrik Trygg

     Other Stockholm-born innovations
     Stockholm’s innovation power in Musictech flows over the city limits and across the globe. There
     are a whole host of world-leading companies and innovations that was developed by Stockholmers.
     Companies that are active in other places or owned by global corporations. Below are eight
     companies or innovations that first saw the light of day in Stockholm and continue to make an
     imprint in the world of music.

01   Digital music production
     Coding Technologies
     Coding Technologies is the Stockholm company that created the audio technology for Dolby.
     The company was started by Lars Liljeryd in 1997 and was acquired by Dolby in 2007 for USD
     250 million. GIPS (Global IP Solution) is the Stockholm company behind Skype’s technology. The
     company produces software for real time voice and video processing for IP networks. It was started
     in 1999 by Roar Hagen, Bastiaan Kleijn, Espen Fjogstad and Ivar T. Hognestad. In 2010 it was
     bought by Google for USD 68 million.

02   Music publishers and rights management
     Kobalt Music Group
     Kobalt Music Group is the world’s largest independent music publishing company representing
     14 000 songwriters and artists, who together makes up 40 percent of the British and American top-
     100 lists. The company was founded in 2000 by Stockholm entrepreneur Willard Ahdritz, who still
     runs the company from its London HQ. Kobalt has been a driving force behind the push to improve
     transparency of the hundreds of thousands of revenue streams in the music industry. In 2015,
     Google Ventures invested USD 60 million in the company22.
Whymain
     The Stockholm
             creators
                   is of
                      thethe
                           leader
                              Stockholm
                                  in Musictech
                                        Musictech scene       Stockholm Gay & Lesbian Network              17

03   Streaming and other forms of music and
     audio entertainment
     Beats Music
     Beats Music is a music streaming service based on the service created by, among others,
     Stockholmer and serial entrepreneur Ola Sars. In 2010 he launched the streaming service Let’s
     Mix, which two years later was acquired by headphone producer Beats, making Ola Sars a
     partner in Beats in the process. Apple bought Beats Electronics (which at that point included both
     the streaming service Beats Music and headphone producer Beats Electronics) for USD 3 billion23.
     Beats Music is today known as Apple Music, second only to Spotify, with 11 million paying
     subscribers.

     Filtr
     Filtr was developed by the digital team at Sony Music Entertainment in Stockholm. The app is the
     world’s largest third party service for playlists and gets 30.000 new listeners daily.

     Rdio
     Rdio is a music streaming service which was created by, among others, Skype founder and Stockholmer
     Niklas Zennström in 2010. Before being acquired by competitor Pandora Radio for USD 75 million, the
     service was available in 85 countries.

     Spinnup
     Spinnup is a platform for unsigned artists who want to get their music played on, for example,
     Spotify, iTunes, Apple Music, Tidal, Rhapsody, Amazon and Google Play, making it possible for the
     music industry to discover new talents. Spinnup is owned by Universal Music and was developed
     by their team in Stockholm in cooperation with the Stockholm company X5 Music Group.

     SoundCloud
     SoundCloud is an online platform for distribution of sound, primarily music. It is the world’s largest
     music community to which twelve hours of music is uploaded every minute. SoundCloud has 175
     million unique, active users per month and reaches every tenth online user between 16 and 64
     worldwide. The company was originally founded in Stockholm, but was established in 2007 by
     Alexandet Ljung and Eric Wahlforss, both students at the Royal Institute of Technology in Stockholm.

     Soundtrack your brand
     Soundtrack your brand is a joint venture with Spotify and the only supplier of Spotify Business and
     Spotify Enterprise. The company develops and sells solutions to companies and chains that want to
     make music a part of their brand experience. McDonalds and Starbucks Sweden are among the
     users. The company was founded in 2013 by Ola Sars and Andreas Liffgarden.
Milestones on the road to success                       18

Milestones on the
road to success

                                         Photo: Viktor Gårdsäter
Milestones on the road to success                                                                                                            19

                                  Ten years of Stockholm Musictech
                                  It was against the backdrop of the decline of the music industry in the beginning of the 21st century
                                  that Stockholm’s Musictech scene got started in earnest. For many of the entrepreneurs it was
                                  about making music more accessible to consumers through the use of new technology. The quick
                                  proliferation of technical music services in Stockholm that followed came as a result of the fact that
                                  the people of Stockholm were able to adopt the new services thanks to tax-exempt home computers
                                  and access to the world’s largest open fiber optics network24.

                                                                                                     2014
                                                                      2011                           Auxy launches for
          2006                                                        Spotify is named a pio-        iOS October 29.
          Spotify is founded by               2009                                                   Gets named one of
                                                                      neer by World Economic
          Daniel Ek and Martin                Epidemic Sound is                                      best apps
                                                                      Forum. Launches in the
          Lorentzon.                          founded.                                               by Apple.
                                                                      USA.

2005                                               2010                                                   2015                                                 2020

                                                                                                                 2015                          2016
                                                                                                                 Pugz becomes Sweden’s         Spotify launches a new
                                                                                                                 most successful Kickstar-     version containing podcasts,
                                                                                                                 ter ever with SEK 11.5        video and ‘fresh finds’ – a
                                                                                                                 million.                      playlist with new songs
2005                                                     2010
                                                                                                                                               from artists that have been
Teenage Engineering                                      Teenage Engineering
                                                                                                                 Midi Hack – a music           identified as shooting stars
is founded with Jesper                                   launches the synth OP-1.
                                                                                                                 hack-a-thon – takes place     by a set of algorithms.
Kouthoofd at the helm.
                                                                                                                 in Stockholm.
                                                         Napster/Facebook-
                                                                                                                                               Soundtrack your brand/
                                                         founder Sean Parkers’
                                                                                                                 Teenage Engineering           Spotify for Business and
                                                         Founders Fund invests              2013
                                                                                                                 launches the Pocket Ope-      Starbucks enters into a part-
                                                         in Spotify. Spotify pays           Spotify launches
                                                                                                                 rator 10-series together      nership covering more than
                                                         more than €45 million              for phones and in
                                                                                                                 with Cheap Monday.            7.500 American Starbucks
                                                         in licenses.                       eight new markets.
                                                                                                                                               locations.
                                                                                            24 millions active
                                  2008                                                      users have strea-    A report from the Euro-
                                  Spotify launches in                                                            pean commission points        Spotify reaches 30 million
                                                                                            med 4.5 billion
                                  Sweden, Great Britain,                                                         to clear evidence that        paying subscribers.
                                                                                            hours of music.
                                  Germany, France,                                                               Spotify has contributed to
                                  Italy, Spain, Finland and                                                      the decrease in the illegal
                                  Norway.                                                                        downloading of music25.

                                  Zound Industries is foun-
                                  ded by Konrad Bergström
                                  and Kenneth Schönborg.                            2012
                                                                                    Spotify reaches four mil-
                                                                                    lion paying subscribers.
Examples of how Stockholm Musictech influences the music industry of the future                     20

Examples of how
Stockholm Musictech
influences the music
industry of the future

                                                                                       Photo: Robert Höglund
Examples of how Stockholm Musictech influences the music industry of the future                    21

“ We are two to three years ahead in
  Sweden, which means that the rest of
  the world is very interested in what
  we do and how we do it. The next step
  is to go international.”
 Michelle Kadir, Digital manager at Sony Music Entertainment and
 former product manager at Spotify.26

 ”It's about the future of great ideas”
 With those words, Spotify founder Daniel Ek opened the Brilliant Mind Conference, which took
 place for the first time in Stockholm in 2015. Music and tech is the basis for the conference, which
 brings together the world's gurus of music, media and tech. Behind the initiative, in addition to
 Daniel Ek, is Aviciis’ manager Ash Pournouri. The conference is one example of how the future of
 the music industry is developed in Stockholm. The trend is clear - progress is by leaps and bounds -
 and Stockholm is playing a major role. Below we list some of the hottest trends.

 Musictech grows as the world becomes more
 and more digital
 Music consumption is expected to grow significantly in the next few years. The streaming segment
 alone is expected to grow by eleven percent and reach a market volume of USD 7.5 million by the
 year 2020. It is expected that almost every forth person in the world will be using music streaming
 services by then.27

 Stockholm contributes to more ‘intelligence’ in the music industry
 As the digitization and hence streaming increases, artists, producers and songwriters can use
 technology to get more "intelligent" contact with the market. This way, music develops and music
 services can be fine-tuned to suit specific target groups.
Examples of how Stockholm Musictech influences the music industry of the future                     22

One example of a Stockholm company in the ‘intelligence sector’ is MIMA. This Musictech
company uses artificial intelligence for real time analysis of billions of news, music, image and
video flows, and conversations about music in order to make predictions on hot artists, albums
and songs. The company was launched during March 2016 and is a collaboration between Jay
Solomon and Ash Pournouri.

Another Stockholm example is the app Sony Insights, which has been developed by the digital
team at Sony Music Entertainment in Stockholm. It was launched during March 2016 and is aimed
at the record company’s artists and managers who, using the service, achieves continuous control
over how their music is used in the world’s largest streaming channels. It also tracks what happens
in the artists’ social media channels. The information about how the target groups communicate
is, among other things, used to plan how the artist should market its music and where the next live
performance should be booked. The app is the first of its kind in the world. It is being tested in
Sweden and if the outcome turns out to be positive, international expansion awaits.

A new music format as the net becomes our new reality
Scientists28 are seeing a new effect of the digitalization and that is that the net is increasingly
becoming the real (as opposed to virtual) reality where we live our lives. We are moving from
being an individualized culture where we only convey personal experiences, to becoming a culture
of participation, where we instead create and experience more together.

There are several companies and innovations in this presentation that promote interaction and
co-production, but one of the most interesting examples is perhaps ORB Industries, which has filed
a patent for a completely new music format in Virtual Reality. Using ORB Industries services, artists
and creators will be able to package the music experience in a totally new way and allow users to
interact through VR.

The success story continues
Keeping in mind that Stockholm is called ”the streaming capital of the world”29, the future
looks bright for Stockholm’s Musictech scene. Stockholm vibrates with ideas and offers unique
possibilities of quickly turning ideas into reality. There are many reasons to keep track of
Stockholm’s Musictech – this is only the beginning.
Sources                       23

Sources

               Photo: Viktor Gårdsäter
Sources                                                                                           24

Sources
Media and interviews

1.		   Statista 2016: Digital Music, Key                        11.The Verge 2015: Pacemaker, our favorite DJ
       Takeaways, worldwide                                        app, just got even better
       www.statista.com/outlook/202/100/digital-music/          		 http://www.theverge.
       worldwide                                                   com/2015/12/17/10293578/pacemaker-
                                                                   DJmixing-features-ios-update
2.		   TechCrunch 2016: Sweden Is A Tech
       Superstar From The North                                 12.   The New Yorker 2014: REVENUE STREAMS- Is
       techcrunch.com/2016/01/26/sweden-is-a-tech-                    Spotify the music industry’s friend or its foe?
       superstar-from-the-north/#.czceqpa:RjFV                        www.newyorker.com/magazine/2014/11/24/
                                                                      revenue-streams
 3.    Primarily obtained through searches on
       CrunchBase of their respective companies                 13.   Statista 2016: Number of paying Spotify
                                                                      subscribers worldwide from July 2010 to
 4.    The Nordic Web 2016:                                           March 2016 (in millions)
       www.thenordicweb.com/news/                                     www.statista.com/statistics/244995/number-of-
                                                                      paying-spotify-subscribers/
 5.    Mashable 2016: How Stockholm is
       becoming Europe's premier tech hub                       14.   Statista 2016: Most popular Facebook apps
       mashable.com/2016/01/22/stockholm-europe-tech-                 in November 2015, by monthly active users
       hub/#AW9KHjxpU8qw                                              (in millions)
                                                                      www.statista.com/statistics/276371/most-popular-
6.		   Webbsökning på respektive företag                              facebook-apps-by-monthly-active-users/
       These figures we have obtained from various sorces,
       allabolag (figures from), corporate web sites, emailed   15.   TechCrunch 2015: Spotify Claims Streaming
       companies and from SvD which wrote that Spotify                Music Throne Worldwide, But Pandora Is
       has 800 employees. www.svd.se/spotify-har-egen-                Still Top Service In U.S.
       bostadsko                                                      techcrunch.com/2015/12/01/spotify-claims-
                                                                      streaming-music-throne-worldwide-but-pandora-is-still-
 7.    2013: Interview Urbanears                                      top-service-in-u-s/
       www.thefuturepositive.com/blog/interview-
       urbanears/                                               16.   Statista 2016: Number of global monthly
                                                                      active Spotify users from July 2012 to
8.		   The Verge 2015: Teenage Engineering                            January 2016 (in millions)
       designed a set of incredible pocket                            www.statista.com/statistics/367739/spotify-global-
       synthesizers that cost $59 each                                mau/
       http://www.theverge.com/2015/1/22/7868157/
       teenage-engineering-pocket-operator-synthesizers         17.   Billboard 2016: As Spotify Nears 30 Million
                                                                      Subscribers and Apple Music Exceeds 11
 9.    Wired 2015: Auxy’s Awesome iPad Music-                         Million, Is Streaming Turning the Corner?
       Making App Comes to the iPhone                                 www.billboard.com/articles/business/6875477/
       http://www.wired.com/2015/12/auxy-for-iphone/                  spotify-30-million-subscribers-apple-music-11-million-
                                                                      subscribers
10.    The Observer 2016: Stockholm Is the Next
       Powerhouse of Sound                                      18.Forbes 2016: With 30 Million Users, Spotify Is
       www.observer.com/2016/03/stockholm-is-the-next-             Gaining Subscribers Faster And Faster
       powerhouse-of-sound/                                     		 www.forbes.com/sites/hughmcintyre/2016/03/21/
                                                                   with-30-million-users-spotify-is-gaining-subscribers-
                                                                   faster-and-faster/#48f5d646402e
Sources                                                                                              25

		 Financial Times 2016: Spotify within                      24.   Wall Street Journal 2014: Apple Buys Beats
		 earshot of 30m paying subscribers,                              for $3 Billion, Tapping Tastemakers to
		 http://www.ft.com/intl/cms/s/1159aca6-d1e3-                     Regain Music Mojo
		 11e5-92a1-c5e23ef99c77,Authorised=false.                        http://www.wsj.com/articles/apple-to-buy-
		 html?siteedition=intl&_i_                                       beats-1401308971
   location=http%3A%2F%2Fwww.
		 ft.com%2Fcms%2Fs%2F0%2F1159aca6-d1e3-11e5-                25.   IFPI 2015: Musikförsäljningsstatistik helåret
		 92a1-c5e23ef99c77.html%3Fsiteedition%3Dintl&_i_                 2014
		 referer=&classification=conditional_                            ifpi.se/dokument-och-statistik?cat=2014
		 standard&iab=barrier-app#axzz40L5VXOWt
		                                                           26.   Europeiska Kommissionen 2015: Streaming
		 Svenska Dagbladet 2016: Konkurrenten:                           Reaches Flood Stage: Does Spotify Stimulate
		 ”Vi försöker inte ta kunder från Spotify”                       or Depress Music Sales?
		 http://www.svd.se/vi-forsoker-inte-ta-kunder-                   ec.europa.eu/jrc/en/publication/eur-scientific-
   franspotify/om/deezer                                           and-technical-research-reports/streaming-reaches-
                                                                   flood-stage-does-spotify-stimulate-or-depress-music-
19.   The Telegraph 2015 : Spotify valued at                       sales?search
      $8.53bn valuation after fresh funding round
      www.telegraph.co.uk/finance/newsbysector/              27.Breakit 2016: Hennes vision har tagit form –
      mediatechnologyandtelecoms/11664186/Spotify-              ny app skakar om musikbranschen
      hits-8.53bn-valuation-after-fresh-funding-round.html   		 www.breakit.se/artikel/2744/hennes-vision-har-
                                                                tagit-form-ny-app-skakar-om-musikbranschen
20.   The Telegraph 2015: These are the most
      valuable startups in the world                         28.   Statista 2015: Digital Music, Key
      www.telegraph.co.uk/finance/picture-                         Takeaways, worldwide
      galleries/11904378/These-are-the-most-valuable-              www.statista.com/outlook/202/100/digital-music/
      start-ups-in-the-world.html?frame=3460665                    worldwide

21.   The Telegraph 2015 : Spotify valued at                 29.   TV4 2016: Nyhetsmorgon
      $8.53bn valuation after fresh funding round                  www.tv4.se/nyhetsmorgon/artiklar/alexander-
      www.telegraph.co.uk/finance/newsbysector/                    bard-instagram-kommer-att-d%C3%B6-ut-
      mediatechnologyandtelecoms/11664186/Spotify-                 56c9b172b9a9f6cd43000069
      hits-8.53bn-valuation-after-fresh-funding-round.html
                                                             30.   Financial Times 2014: The Spotify effect
22.   Crunchbase 2016: Spotify,                                    http://www.ft.com/intl/cms/s/0/59e6e6d6-5a49-
      https://www.crunchbase.com/organization/                     11e4-8771-00144feab7de.html
      spotify#/entity
                                                             		    Interviews and mail contacts
23.   TechCrunch 2015: Kobalt Tunes Into $60M                		    Björn Lindborg, #sthlmmusic, among others.
      Led By Google Ventures For Its Music Rights            		    Jens Rudberg, Teenage Engineering
      Collection Platform                                    		    Jon Mauno Pettersson, Breakit
      techcrunch.com/2015/02/26/kobalt-tunes-into-           		    Rikard Jönsson, Midi Hack
      60m-led-by-google-ventures-for-its-music-rights-       		    Sara Herrlin, SUP46, #sthlmmusic
      collection-platform/                                   		    Contact with some of the companies through e-mail

                                                                                        Photo Cover: Teenage Engineering / Press
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