June 7, 2017:Midemlab 2017 pitches: music discovery and distribution startups (#midem)

This year’s Midemlab startups contest is showcasing 20 impressive music/tech startups at the Midem conference in Cannes. The second pitch session focused on the music distribution and discovery category.

Execs from Disco, Atmosphere, Yokee Music, Diggers Factory and Truelinked pitched to a panel of judges including Ultimate Music China’s TC Pan; Warner Music’s John Rees; GreyFire Impact’s Danielle Kayembe; and Sacem’s Anthony Rival. Music Ally’s CEO Paul Brindley hosted the session.

Truelinked

Truelinked CEO Sune Hjerrild used to be an international freelance opera-singer. He said that 83.8% of professional classical musicians do not trust their agents to provide the right jobs, even though they take a fee of between 15% and 20% on bookings. Truelinked wants to cut out that middleman, helping artistic directors hire musicians directly.

He described Truelinked as a “procial network… our mission is to create a transparent industry and give back power to the people who perform and produce classical music… to become the Google of performing arts”. An artistic director can create a new production on Truelinked’s platform, and then browse potential performers, invite them to audition, and ultimately hire them.

Truelinked takes a fee of 6% on bookings, undercutting that traditional agent’s fee. “We expect a rapid growth within the next 18 months,” said Hjerrild. “In the future, we see the new artist economy.” It wants to help artists create fans and followers, and find sponsors and crowdfunders for local arts projects among other features.

“The community is actually the focus: the community and the connections between people,” said Hjerrild. “It’s not the old-fashioned agency model… That’s not working.” For now the platform is in English, but Truelinked is also planning to develop tools in other languages. “We know that people are ready and there’s a need for it out there,” he concluded. “The young people certainly don’t want to be stuck and handcuffed by agencies.”

Truelinked

Diggers Factory CEO Alexis Castiel was next to pitch, talking about the vinyl revival in the music industry. It’s trying to solve the problems of forecasting vinyl demand; the high production costs; the fragmented market; and the lack of a distribution solution for smaller artists and labels making less than 300 records at once.

Diggers Factory is an on-demand platform for vinyl records that allows artists and labels to produce their vinyls without any money, or any risk,” said Castiel. They create a project, share it with their community, and then fans can pre-order the records – with Diggers Factory then handling the production and shipping, with partners.

Campaigns can be run with as little as 50 pre-orders. “Diggers Factory isn’t here to destroy the current distribution network. On the contrary, we are willing to work with the current distribution players,” he added. It already has customers in 41 countries and artists of 15 nationalities. In its first year, it has produced 30 projects, including a Bob Sinclar record that sold 300 copies, and a Japanese artist’s red-vinyl release that sold 62 copies.

Diggers Factory is also trying to revive “beautiful archives”, having already worked on re-releases for Ray Charles and Serge Gainsbourg. “We are a community of vinyl lovers that want to rethink the vinyl industry, and optimise the vinyl distribution network,” said Castiel.

Diggers Factory was created as a social network: you can follow your friends and artists, and you get a notification for example when your friend buys a project. The goal is not to buy once and then never come back. The idea is to tell people ‘come back every week and see what’s the new projects’… We are a platform for every kind of people who like vinyl!”

Yokee Music co-founder Ariel Yaloz explained that his 18-strong company has generated more than 80m downloads of its apps, having raised $1.1m of funding, and stayed profitable since its earliest days. Those apps include Yokee Karaoke, Yokee Guitar and Yokee Piano – a portfolio similar to US firm Smule, in that they help people to sing or play along to favourite songs.

Two million users are joining our service every month, and 600,000 songs are being played daily,” said Yaloz. “We are strongly believing in the freemium model. Singing and playing should always be free to everybody, but we limit some of the features to VIP members… 85% of the revenues of the company are from recurring subscriptions, and 15% are from ads.”

Yokee has a wide net of deals with music publishers and collecting societies already, added Yaloz. “Copyright is very important for us,” he said. Four years in, Yokee has 10 million active monthly users. “The 80m downloads are all organic. It’s not like we did an aggressive marketing campaign or bought those users,” he added.

A fun note: since being chosen as a finalist for Midemlab, Yokee has been acquired by a much larger firm: Canadian entertainment company Stingray Digital, although Yaloz declined to disclose the price. “We’re happy, the investors are happy!” he grinned. What are the plans for expansion of apps? “We plan to launch additional apps,” he confirmed.

Atmosphere

Atmosphere CEO Rolf Dröge was next to pitch, starting with the challenge: “Background music is shit!” In retailers and restaurants, often. So Atmosphere is trying to help those businesses provide better music, including curating playlists and handling the licensing.

The company is as much a consultancy: working to understand clients’ brands, and connecting them to “a personal curator with a similar music taste: this curator will handpick the music every month“. Those curators aren’t in-house staff at Atmosphere: they’re tastemakers chosen from around the world, with the ambition of creating an open platform.

Atmosphere also provides the software and hardware to play music in-store. Customers pay a monthly subscription per venue, with curators “picking their own price” with Atmosphere taking a cut. It launched in the first quarter, and is already operating in 125 business locations in nine countries.

This market is huge: shops and restaurants are everywhere… The goal this year is to grow to 1,000 venues,” he said, citing London and Berlin as expansion prospects. Dröge was asked how the curation works. The key is in matching the businesses to curators with similar tastes. “They don’t really have to think of the business itself that they have to curate for,” he said of the playlisters. They’re curating with their own tastes, in other words.

Disco founder Karl Richter explained his company’s business to conclude. The Australian startup is trying to solve some of the headaches for music-industry people using Dropbox, Box and similar cloud-storage services for managing and transferring music files.

It’s been in beta for just over a year, with a drag’n’drop interface to transfer files, leaving a “breadcrumb trail” that will help users quickly find music files, even within a large catalogue. The aim is fast collaboration between teams – including with people who aren’t using Disco.

“It can be used for all sorts of people in the music industry,” he said. There are more than 200 companies already using the platform, including labels, publishers and managers. 12 months in, 3m copyrights are stored on the platform, generating more than 215k plays a month, and 50% of its monthly active users log in daily. “This is sticky and there’s a lot of love for it,” said Richter.

The average customer spends $80 per month on Disco’s software-as-a-service model, he added. Disco has started with small and medium businesses, but individual musicians “right through to multinationals” are using it. “We’re thinking about redoing the pipes for the music industry, and creating an enterprise platform that can be used by everyone,” he said.

The company hopes there are tens of thousands of potential customers here. Disco is working hard on security to ensure that files can’t leak, stressed Richter. This far the startup is completely bootstrapped, with a team of eight people. “For the next 12 months it’s really about growth. We’ve had a 15% month-on-month increase, and the aim is getting to around 1,000 companies by this time next year.”

This year’s Midemlab winners will be announced later today.

Music Ally’s Midem 2017 coverage is supported this year by Music is GREAT, the British government’s campaign to promote UK music exports.

The UK and British Music are represented through the British Music at Midem stand, with the Department for International Trade joining forces with music industry associations AIM (Association of Independent Music), BPI (British Phonographic Industry), MPA (Music Publishers Association), PPL (Phonographic Performance Limited) and PRS for Music.

Together, they will support over 150 UK music businesses and member delegates as they seek to pick up on the latest trends, connect with international companies, sign deals and develop trading and export opportunities.

Stuart Dredge
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