Epidemic Sound raises $450M at a $1.4B valuation to ‘soundtrack the internet’ – TechCrunch

The popularity of video and other streamed content, like podcasts, is growing at a breakneck pace, and is today called a startup Pandemic soundA market for the source of background music for that media is simultaneously announcing a major round of mass financing. The Stockholm-based startup has raised $ 450 million from the Blackstone Group and EQT Growth, an equity round that values ​​Epidemic Sound for $ 1.4 billion.

Pandemic currently features some 32,000 music tracks and 60,000 sound effects, and the plan would be to expand its catalog, to expand its catalog, to provide better tools to creators to match their music. To develop and take global service with more localized offerings.

$ 450 million may seem like a lot of money for a company – if you will excuse the punishment – has not made a lot of noise so far. But the funding is underlined with some big ambitions and important metrics.

“It binds to the size of the vision,” co-founder and CEO Oscar Hoglegund said in an interview. “We are trying to soundtrack the internet. This is what comes down. “

For an idea of ​​how the startup is developing, when we last funding for Epidemic Sound In 2019 (A more modest $ 20 million at a $ 370 million valuation), it watched its tracks on YouTube alone for an average of 250 million hours each month.

Since then, the figure has grown by over 400% and now exceeds 1 billion every month. Hoglend says that in terms of streams, YouTube videos using music from epidemic sound artists are played 1.5 billion times every day. And before you consider Traffic for Epic Music used on Tickcock, Facebook and Instagram, Snapchat and other platforms.

“Macro trends are exploding,” Hoglegund said. Today there are approximately 150,000 people using its platform, counting musicians and other creators.

But given that there are around 37 million YouTube channels, And that’s not counting the many other places like Twitch, Tickcock, Instagram, Snapchat, and other places that you might find people, there’s plenty of room to grow.

“We are looking for a huge open market, and [in this market] The epidemic is growing as the industry’s leader, “John Corngold, global head of Blackstone Growth, who led on its investment, said in an interview.

Two sided music market

Epidemic Sound, positions itself as a marketplace, where musicians can upload their recorded tracks, and those who want to use them can come up with some ideas of what they want to discover – music Can be searched by genre, mood, instruments, speed, track length, and popularity – and then buy them with pricing where they will be used, not how often they will be heard.

It also offers a subscription for unlimited use based on personal use ($ 15 / month) or business use ($ 49 / month). This is a formula that has helped startup tip profitability, although it is currently focusing more on growth and is back in the red.

Founded back in 2009, Pandemic was launched by Höglund and Jan Zachrisson to address a specific gap in the market: they aimed to make it easier and less legally risky to add music to digital media. It’s fun to think about, but 11 years ago, the digital music market was still about downloads, and most (95%) of them were illegal. This report of IFPI Even at that time, streaming was not mentioned as a concept.

And for the epidemic occasion, there was also no clear, existential market to provide easy music to use, and easy to buy it under license conditions.

“At this time, there was an epidemic and about a restriction-free experience for creators,” said Victor Angleson, partner and investment advisor at EQT Partners. “This was one of the big pain points for user-generated content, and this is true from the beginning. Epidemic Sound controls 100% of the rights in its library. “

Fast forward to today, and the opportunity is less about providing easy licenses, which now seem to be table bets, but more directly address a larger demand.

In a world where video has proved extremely popular with consumers – Cisco first an estimate That video accounted for about 80% of all Internet traffic in 2020, but with those numbers dating back to pre-pandemic, I wouldn’t be surprised if it was more – it also prolific as a medium for creators Has been done. Unexpectedly, many companies have emerged to provide creators with the tools to produce and distribute their video content, and this includes providing them with music.

This has led to a fairly crowded market for soundtracking platforms. Other people’s choice in the same area includes The artwork (Which also provides a list of images and videos; also Raised money last year), Excited, And a little break.

The platforms themselves provide music tools to creators, casual and otherwise, and which have gone far beyond Youtube.

On TikTok, the tracks themselves go viral and become Ear mites whole night. And it is interesting that Snap last year took a step that explained how it could take a role for itself in the music production and broadcast market. Last year, it Silently acquired an app named Voisy, Which lets people overlay and edit their melodies and vocals over a selection of beats, and then share those creations.

Within all of this, the epidemic is more than just a simple platform for exchange, however.

In addition to operating its own platform, Pandemic also partners with other platforms where people are creating content, such as Adobe, Canva, Getty and Lightricks, which as part of their one-stop shops Pandemic Let’s offer music streams.

And “brain” is also behind the creation of the epidemic. It tracks which music is used the most, and then how that music plays with the audience, creating a gradual picture of the global market’s musical tastes – a music graph, as it were – information. Is that it in turn uses to help sort music, matches it better with those looking for it, and helps encourage musicians to create further tracks to meet demand.

“Because we collect data and because music leaves a footprint, we can see that there is a very big question for metal lullabies, for example,” Hoglegund said. “We can commission more of that kind of track, and it will be lifted.”

The growth of Spotify, and the huge investment made in music streaming by Apple, Google, Facebook and others, shows how the physical music business has declined, but listening to music is not much, only one last year The trend, where concerts were canceled and virtual streaming replaced them.

Pandemic is an interesting model for all of this, not focusing on the label and deals with the world of Billy and Beyoncé, but the creators have a very long tail that has no such deals in their landmarks. Can.

While companies such as Spotify have drawn their attention to building brands as monetization platforms for artists, that was part of the equation for the epidemic to begin with.

Music creatives receive an advance payment for each track epidemic purchases, with payments varying depending on the track. It splits revenue from streaming platforms where music can be played later.

The company says that the average musician can earn thousands of dollars per year, with a select few making hundreds of dollars per year. “It’s mass distribution and access,” he said.

And some develop on their own, not anonymously as a video producer. Eye, Cospie and Loving Caliber are three that have crossed into their own stardom, so the difference between what Epidemic Sound is doing for musicians and what a stage choice is, say, Spotify or YouTube is not as wide As much as you can think of. (It also points to some very clear and formidable competitors – or acquaintances or partners – down the line.)

Combined with its size and growth, it is this engine that has helped the epidemic sound to develop in a very crowded market.

“It’s a data business at the end of the day,” said Korngold at Blackstone Growth.