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Today’s episode is about a blind spot for the music business, B2B streaming. Most small businesses that play music in their storefronts still use consumer-level music streaming. If they used business accounts, it would add well over $10 billion of annual revenue to the business. I talked to Soundtrack CEO Ola Sars about the business opportunity and how he’s talking about this problem.
You can listen to the episode here or read below for thoughts on why the music business hasn’t yet made this a priority.
the blind spot in B2B music
I wish I had a dollar for each time I walk into a coffee shop and see the business using a Spotify playlist for background music. Sometimes I'll even hear ads interrupt the playlist, prompting them to upgrade to the paid tier! For most Trapital events I've hosted, I've often requested Spotify playlists myself. These casual workarounds may come from honest intent, but they cost the music industry billions of dollars annually.
Ola Sars, founder and CEO of B2B music streaming company Soundtrack, estimates the addressable market at 128 million commercial storefronts worldwide. His company's current average revenue per user sits north of $30 monthly. Theoretically, if each business paid that amount, it would generate more than $50 billion in annual revenue. But realistically, accounting for emerging market pricing and adoption curves, this is conservatively a $10 billion opportunity. In the U.S. alone, 78% of small to medium-sized businesses still use consumer-level streaming accounts.
So why isn't this a bigger deal?
The major label leaders want to increase streaming prices, add higher-priced tiers, and maximize revenue from valuable users. Plus, labels rarely hesitate to sue anyone who underpays for music. Business-level streaming checks all those boxes.
But my research reveals several reasons B2B adoption has been slower:
- Lack of awareness. Most business owners don't realize they're short-changing music rights holders! Many don't know B2B streaming exists. Some may know but resist paying 3x more than their current subscription.
- Focus on the consumer. It took decades to make consumer music streaming ubiquitous. As a result, guidance from labels, publishers, and PROs on the B2B opportunity often confuses business owners.
- Misaligned incentives. Spotify, Apple Music, and Amazon Music have no reason to tell business users, "Stop paying us and start paying another company more." Apple Music has since shut down its business tier. How would Wall Street respond if Spotify lost B2B customers to the company that was once "Spotify for Business"?
- Perception of enforcement. Suing Target or Chick-fil-A for in-store music might capture headlines. But suing a mom-and-pop shop, which accounts for most storefronts worldwide? The optics are terrible. It's like Demi Lovato calling out that small frozen yogurt shop in LA.
These challenges are solvable through partnerships between consumer and business streaming companies. Soundtrack could work with these platforms to detect business accounts and create incentives for "upgrading" from consumer to business tiers, shifting priorities for rights holders, too.
The recent Warner Music Group vs. Crumbl Cookies lawsuit highlights these issues. Crumbl used 159 unlicensed tracks in TikTok videos—and they're surely not the only offenders. While different from in-store playback, this case may increase pressure on businesses to secure proper licensing.
In my conversation with Ola, we talked about how Soundtrack converts skeptical business owners and why this untapped market remains largely ignored. If you're interested in where the next wave of music industry revenue might come from, you’ll enjoy this one. We also discussed:
- Soundtrack’s business today: ARR, churn, businesses served
- How Soundtrack convinces businesses to use its service
- Why consumer music streaming services don’t focus on B2B
Listen here: Spotify | Apple Podcasts | Overcast
Chartmetric Stat of the Week - Country Grammar
It’s been 25 years since Nelly released his Diamond-selling debut album, Country Grammar. Nelly just performed at Stagecoach, a great spot for the first hip-hop artist to get on a track with multiple country artists. In 2023, Nelly sold 50% of his catalog to HarbourView Equity Partners. He has fully leaned into his nostalgia act status ever since.
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