Here are three separate news stories about Swedish production music house Epidemic Sound and Spotify.
Story one: Epidemic Sound has sold a 40% stake in its business to private equity house EQT.
Epidemic Sound, you may remember, was embroiled in the Spotify ‘fake artists’ scandal earlier this year, when it admitted that its composers had recorded multiple tracks under pseudonyms which had then appeared on the streaming service’s mood-based playlists and attracted millions of plays.
Earlier this week, Epidemic Sound made strong efforts in the trade press to distance itself from the idea that it had any kind of exclusive or favoured relationship with Spotify.
In completely separate news, MBW understands that Spotify’s Global Head Of Markets, Axel Bringéus, left the streaming company last month to join now-Epidemic Sound investor EQT in Berlin.
His remit at EQT is to source new deals in Europe, using venture capital money initially raised by EQT last year.
Bringéus spent six years at Spotify, heading up its international expansion into regions such as Asia.
EQT previously hired another senior ex-Spotify employee, analytics specialist Henrik Landgren, to lead the fund’s quest to buy fast-growing companies across the EU.
And finally, in our last item of separate news – super-separate news – Spotify investor Creandum has just upped its stake in Epidemic Sound to 20%.
Combined with EQT’s 40%, that means the original founders and employees of Stockholm-based Epidemic Sound now own just 40% of the company.
Sorry if all of these separate stories get at all confusing.
Just treat them separately, and all should make sense.
In a press release, Epidemic Sound said it was seeing ‘increased demand for quality soundtracks from a wide range of creators – everyone from traditional TV broadcasters to up and coming professional online creators such as YouTubers and those that create videos for Facebook’.
But not, you’ll notice, Spotify.
Nobody seems to be mentioning Spotify, or suggesting there is any kind of special relationship between it and Epidemic Sound.
Certainly, nobody’s suggesting that Epidemic Sound composers are getting a pass onto Spotify’s mood and genre-based playlists because they’re cheaper than other licensed music.
If they did, they could suggest that such an arrangement would work out nicely for everyone involved. But they’re not.
Now, let’s cleanse our palette with some uninterrupted PR.
Oscar Höglund, CEO at Epidemic Sound, commented: “Over the past couple of years two things have happened. We’ve seen an explosion of online video and we’ve seen a huge increase in demand for quality soundtracks – both activity based music and more mainstream hit music.
“Our business has rapidly evolved and over the past twelve months as we’ve been responding to these demands and coming up with new models for the industry. For example, in addition to supplying the B2B TV and broadcast market, we’ve recently moved more into the B2C world by uploading our tracks to streaming platforms and sharing the revenue with our musicians 50/50 – something which has gone down really well with our musicians with some of them taking home five figures in payment a month.”
Jan Zachrisson, co-founder at Epidemic Sound, said: “We are at an inflection point where we have the opportunity to capitalise on these trends and introduce new models and a new way of working for musicians – these kinds of chances don’t come around very often.
“Teaming up with EQT supercharges our business and thinking, and more importantly allows us to move towards our goal of making the music industry a better place to be, at a much faster rate.”
“Teaming up with EQT supercharges our business and thinking.”
Jan Zachrisson, Epidemic Sound
Staffan Helgesson, General Partner at Creandum, commented: “We’re very happy to continue our long term partnership with the amazing team at Epidemic Sound and welcome EQT to the company. We look forward to continue supporting the company towards its goal of transforming the global music industry.”
Johan Dettel, Partner at EQT Partners and Investment Advisor to the EQT Mid Market Europe fund, comments: “EQT has followed Epidemic Sound for years and it is truly one of Sweden’s ‘best kept secrets’ with a unique value proposition to its customers in structurally high growing market verticals.
“The success is built on a combination of two of Sweden’s strongest export industries; music and tech.
“The Epidemic Sound founders have in an impressively entrepreneurial way combined these two into a very compelling product offering supported by a highly scalable business model. EQT’s geographic reach and vast expertise within tech and digitalization will support Epidemic Sound’s accelerated growth journey globally and we are excited and proud to join forces with Oscar and the team.
EQT funds have portfolio companies in Europe, Asia and the US with total sales of more than €19 billion and approximately 110,000 employees.Music Business Worldwide