While music industry leaders discuss superfan monetization and craft economic models for AI music applications that don’t yet exist, Ola Sars, founder and head of Soundtrack, says they are missing out on $1.4 billion in royalties that go uncollected in the United States every year from businesses illegally playing copyrighted music.
That’s according to a new study released Thursday (Nov. 5) by Soundtrack, a commercial music streaming platform backed by Spotify that is now used by 60,000 businesses in 75 countries.
The independent study, which Soundtrack commissioned, surveyed around 1,500 representatives of some 15,000 U.S. business locations and found that only 19% of those that play music are fully compliant with commercial music requirements. Nearly 80% of U.S. businesses use consumer streaming services, which are only licensed for personal use, to play music in-store, and just 5% reported having licenses from all four major performing rights organizations (PROs): ASCAP, BMI, GMR and SESAC.
At a time when the revenue growth from subscription and ad-supported streaming is slowing, Sars says the music industry could “unlock exponential growth” in the money it collects from U.S. businesses by turning their attention to this “extreme” level of non-compliance.
“People are playing music already, but they simply don’t know that it’s not licensed for commercial use. They haven’t read the terms and no one has told them,” Sars tells Billboard. “It is what you guys in the U.S. would call a pretty big no-brainer. If you’re playing music in your business, artists should be fairly compensated. There is a rate structure in place, and you can’t use a personal service in your business. But it’s complicated.”
Commercial music streaming in businesses can be the next growth area in music, Sars says. Soundtrack says it recently partnered with SESAC to round out its pitch to U.S. businesses.
For around $35 a month, subscribers get Soundtracks’ licensed commercial player with playlisting tools customizable for different locations and catalog of more than 155 million tracks represented by ASCAP, BMI, GMR and now SESAC.
Based in Sweden, Soundtrack generates roughly 60 million euros ($67 million) in annual recurring revenue and is on track to generate $100 million by 2028. Previously called Soundtrack Your Brand, the company raised $15 million in 2023 from investors like Matt Pincus’ MUSIC and Dundee Partners, who joined existing investors Balderton Capital, Fuel Venture Capital, Industrifonden, Telia, DIG and Matt Spetzler.
“Ultimately, our aim is to create a healthy ecosystem for the background music industry by growing the ‘pie’ for music creators and rights-holders, while not breaking the bank for hard-working businesses,” SARS says.
