For most of its history since being founded in 2001, Audio Network has been a high-quality production-music library for the TV, advertising and film industries.
The UK-headquartered company has built up a catalogue of more than 119k tracks to which it owns 100% of the rights, paying their composers upfront fees plus performance royalties.
With customers including the BBC, MTV, Endemol and NBC, it’s a good business. In its last financial year, which ended on 30 June 2016, Audio Network’s turnover rose 16% to £20.5m, with the company recording a post-tax profit of £5.1m.
“We wanted to create music at the absolute highest standard. We are one of Abbey Road’s biggest clients: there are not many other independent music companies recording there as much as we are,” says global head of music Ali Johnson.
“It’s more than 45 days a year: we’re there nearly every week recording with orchestras. That’s been the hallmark of our approach: we’re accessible and affordable, but we didn’t want that to mean cheaply-made music.”
In 2013, New York-based private equity firm Stripes Group acquired a 27% stake in Audio Network, while in 2016 the company appointed former Studiocanal executive Robb Smith as its new CEO, and former Meredith Corporation exec Mary-Liz McDonald as its general manager for North America.
Both were significant hires from the traditional media world who also ‘got’ digital – McDonald headed Meredith’s expansion into digital and branded video, and was previously on the launch team of MCN Iconic TV.
Both moves – as well as the recruitment of former Last.fm and Samsung executive Matthew Hawn as head of product and customer experience – point to Audio Network’s plans for expansion both geographically (particularly the US) and to capitalise on the explosion of video production for YouTube and other online services.
“Stripes said ‘we think this is a bigger business than what you currently are’. It’s an account-managed business about one-to-one sales with production companies, but what’s exciting to me is watching digital video explode like desktop publishing did ,” Hawn tells Music Ally.
“Almost anyone can now shoot high-quality video on their phone in 4k, and edit it in Final Cut Pro or Premiere. Before you needed really expensive cameras and gear. You’ve now got these amazing high-resolution tools that everybody can use, much in the same way that desktop publishing changed print. Publishing to YouTube or Facebook or Snapchat is immediate.”
Audio Network’s big growth has come from expanding its core TV and advertising business, particularly outside the UK, where selling music for digital and broadcast advertising with agencies is its fastest-growing customer segment.
The company also worked early with digital media companies like Vice and Tastemade, and has built on those partnerships as those companies’ businesses have grown – for example, Vice now has a range of verticals, shows airing on HBO, and its own Viceland TV channel rolling out globally.
Alongside all this, Audio Network has also rolled out a self-service e-commerce model aimed at online-video creators, including YouTubers with audiences in the hundreds of thousands or even millions, as well as small businesses and startups making product and corporate videos.
These individual creators can pay as little as £29 for a non-branded video sync licence that is cleared for global use, while the businesses can pay as low as £69 for a ‘professional’ licence. These models co-exist with Audio Network’s existing pricing for TV production companies and advertising agencies, which can include annual agreements that include music sourcing support.
The latter clients still account for more than 70% of Audio Network’s revenues, but the new waters of the creator / e-commerce business are showing promise.
“The people who are doing 10,000 to 100,000 [YouTube subscribers]: they’re not making a lot of money yet, but they’re doing it full-time and they’re getting into influencer conversations [with brands] and flirting with MCNs,” says Hawn. “There’s a real business in this right now, and we have new licenses for them that can easily expand to our more traditional licenses as they grow and need more complex rights.”
Hawn knows the labels world: he spent 12 years working at Universal Music and Sony Music in digital distribution and direct-to-consumer roles, before jumping to Last.fm as VP of product, then Samsung to shake up its media and services platform in Europe.
“I was frustrated when I left Last.fm and Samsung, and in both of those roles I was watching us hit the wall of licensing from the labels and publishers, as everyone does. And I was wondering, where is the innovation happening now?” he says.
“And the innovation is happening in sync and video production. It turns out that music is great at selling things other than itself. And productions need high-quality, emotionally resonant music.“
But high-quality music is also being pitched to Audio Network’s traditional customers from the TV/ads/film industries – if not really its new clients in the YouTube world – by labels, who have their own sync departments.
Hawn thinks (as he would be expected to do, given his current role) that the labels can still be “hamstrung” by the fact that sync is not often their first priority, while also suggesting that they are more geared up for the bigger, more expensive sync deals, pricing themselves out of contention for smaller productions and online-video creators.
There’s another way that Audio Network is starting to compete with labels though: it is releasing music direct to services like Spotify and Apple Music, including playing a label-like role for a handful of emerging artists.
It has released three EPs for British singer/songwriter Tom Rosenthal, for example, with his track ‘Go Solo’ bagging 12.1m Spotify streams partly thanks to its use in a popular German film. Electronic artist Alex Arcoleo’s recent ‘Radiance’ track had enough momentum to appear in Spotify’s UK Viral 50 chart, meanwhile.
Johnson explains that this started with Audio Network’s clients asking it for more artist-driven songs as well as orchestral tracks. That spurred the company to hire an A&R team to find the necessary talent.
“They’re going out now to find up-and-coming and established artists to work with and make great, artist-driven music. We’re not trying to turn Audio Network into a record company, necessarily, but it’s about putting authentic music out there,” says Johnson.
This generally only suits entirely-independent artists due to the rights required by Audio Network, although Hawn says that some musicians have begun “carving out” the right to make production-music outside their label and publishing deals.
Still, with artists making original music for Audio Network, releasing it on streaming services was a logical next step according to Johnson.
“We’re seeing some real success there. It’s about the relevancy: if we’re doing real artists’ music, it should be in the places where people go to discover music,” he says.
“It’s helping our customers understand that it’s the real deal: if it’s on Spotify, it’s the real deal, not just contrived production music. And music supervisors especially don’t just come directly to us: they go to the playlist discovery options they have, so it’s really important that we’re putting music out in those places.”
Johnson stresses that Audio Network’s priority remains on creating music for commercial use, and that releasing to Spotify and other services is “just a bonus”, but thinks there’s a big opportunity. As does Hawn:
“Our music supervision team are A&Rs, they’re not messing around. And they’re not going to sign you to a deal where you owe money before you’ve even started your contract,” he says.
“We’ll pay you up front for the performance right, and when we sell you’ll get a cheque. And we’re selling the shit out of these songs! If you’re a musician that wants to keep working and developing your career, we offer something very solid as an additional revenue stream.”
“These guys aren’t getting rock-star levels of money, but then neither are the rock stars any more. I know a lot of musicians for whom sync is a big part of their career… This isn’t wallpaper, this is someone’s real music, this is someone’s passion. And the quality is there.”
As Audio Network expands the number of online-video stars (like Zoella – above) tapping its library for pre-cleared music, it also throws up the intriguing dynamic of a platform (YouTube) that’s taking considerable flak from the labels world for its ‘value gap’, emerging as a (potentially) significant new revenue stream for the composers and artists working on production music.
“I like being part of an ethical company. I believe that people who make things should get paid for what they do. I don’t believe we have to have a zero-sum game where musicians and their music are just ‘added-value’ for the big technology companies. I didn’t believe that at the record companies or at Last.fm, and I don’t believe it now,” says Hawn.
“I was there when we saw the analogue dollars become digital dimes. I don’t think that exchange was fair: Apple did really well to sell tons of shiny white boxes [iPods], and they built the App Store on top of that momentum. YouTube did it with music videos. There is a value exchange that’s not right there.”
“Are some artists being discovered because of YouTube? Absolutely. Are they reaching more people? Sure. But that doesn’t begin to dent how much these multi-billion dollar market-cap companies have used music to do that. There’s got to be a better way.”
As Audio Network sets its sights on more growth, there are two threats to its ambitions. First: that the traditional music rightsholders will retool their own sync businesses and also go after the burgeoning online-video creators.
And second, the emergence – although it is still very early days – of companies like Jukedeck and Melodrive with artificial intelligence (AI) music composition tools. At Music Ally’s recent AI Music event with the BPI, it was suggested that production music libraries might be the first disruptees of these startups.
Hawn takes both threats seriously, while suggesting that each has flaws.
“I’m not worried about the labels because they haven’t yet untangled their rights complexities. I’ve heard them talk about it before, but no one’s willing to do it,” he says.
“I can see how independents could do this. And in fact, I would love to have them call us and say ‘look, let’s talk, how can you work with us if you can really say that you control worldwide rights?’ But I don’t see how the big [label] corporations can do this: it’s really difficult for them.”
Johnson agrees. “Clearly we’re in competition with the major companies which have their own production libraries. But there’s no reason we can’t be working with smaller labels to give their artists opportunities,” he says.
And AI music? As a Brian Eno fan, Hawn has been following the evolution of ‘generative’ music for some time, but suggests that algorithmic composition is less an existential threat for Audio Network, and more a potential tool to use.
“How is this any different from an instrument? It’s not really: it’s an instrument, and you need to be skilled to make it work well. You have to start with good seeds for these algorithms, otherwise it’s garbage in, garbage out,” he says.
“I’m very curious. Do I think we might acquire someone like that? Possibly. But I don’t think of them as a composing source, I think of them as an instrument: in the hands of one of our composers, that may be interesting.”
“My fear is that this is more of a toy than it is a real thing. If someone’s in an editing suite having to make 15 different cuts of something in a hurry, do they want to be playing with an algorithm to figure out how to get some music out of it? No, they’re going to call somebody up and say ‘I want a track for this particular thing’.”
But he also brings the discussion back to musicianship, and the question of whether AI music will truly be able to capture the “roughness” of human composition and playing – quoting Leonard Cohen in the process.
“The crack in things is where the light comes in! I think there’a lot to be said about that dirt, the grit in the machine. Musicians have always added grit to something. The most perfect musicians are rarely the most interesting,” he says.
“Those metal guitar guys who do note-perfect solos? I’m impressed technically, but I don’t feel the soul in that. But right now these [AI] things feel like instruments to me, and not necessarily bad ones. Less of a threat, and more something I wonder about how we could use this.”