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Search for Dear Daughter wherever you

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get your BBC podcasts. Hello,

1:13

I'm Maddy Savage and welcome

1:15

to Business Daily from Stockholm.

1:18

Sweden's had a global reputation for

1:20

music ever since super group ABBA

1:23

won Eurovision exactly 50 years

1:25

ago. But over the last

1:27

few decades its capital has also made

1:30

a big name for itself within Music

1:32

Tech. Streaming sites Spotify

1:34

and Soundcloud were both founded

1:36

here and I'm not

1:38

far from Spotify's waterfront headquarters a

1:40

very shiny building with huge glass

1:43

windows and a rooftop bar overlooking

1:45

the city's medieval old town. In

1:48

today's programme we're meeting some of the

1:51

newer music tech companies from Stockholm that

1:53

are making a global impact. We're looking

1:55

to have about 300,000 users on our

1:57

platform within three

2:00

years. But yeah, there is competition. Companies

2:02

doing a lot of cool things at

2:04

the same time. We'll also dig into

2:06

some of the reasons Stockholm has become

2:08

one of Europe's biggest hubs for music

2:11

tech, despite having a population of just

2:13

a million people. And we'll hear about

2:15

some of the challenges facing the industry.

2:18

Everyone listens to music, so investors think that

2:20

it's pretty fun. But on the other hand,

2:23

people tend to move to more safe

2:26

investments in more difficult times.

2:28

That's all coming up in today's Business Daily

2:30

from the BBC World Service. We're

2:37

starting a few blocks away from Spotify,

2:40

at a start-up that's disrupting the

2:42

way new artists are discovered. Hi.

2:47

Hey, Maddie. Welcome to

2:49

our humble temporary abode. This

2:51

is the Snafu Record global

2:53

headquarters. It's Ankit Desai, the

2:56

CEO and co-founder of the company, which

2:58

just moved into a shared office at

3:00

a co-working space called Alma. The

3:03

barista bar, parquet flooring and leather

3:05

chairs give you a sense this

3:07

start-up isn't on a shoestring budget.

3:10

So Snafu Records is the first AI-enabled

3:14

music label in the world. I set

3:16

it up because I saw that

3:18

70% of all the music

3:20

consumption in the world was between the

3:23

three major labels, Universal Music, Warner Music

3:25

and Sony. Even at that time

3:27

in 2019 when we started the company, they accounted for

3:29

less than 1% of all the new music that was

3:31

coming out in the world. So

3:33

the idea was maybe we can have an algorithm

3:36

that listens to all the music in the world

3:38

and find those undervalued artists and give them a

3:40

platform to shine. So how did

3:42

you create that platform? The very,

3:45

very first version was super

3:47

rudimentary. I basically

3:50

made a program that scanned through all

3:52

the new music Friday

3:55

playlists on Spotify. So every

3:57

Friday there's a playlist with all the new music coming out in the

3:59

world. world and then we would track how

4:01

they grew the following week. These

4:06

days the algorithm includes data

4:08

from Instagram, Facebook, TikTok,

4:10

YouTube, SoundCloud tracking millions

4:12

of songs each week. And

4:15

we look at the behavior patterns

4:17

of those of the people listening

4:19

to those artists so we

4:21

look at how many

4:23

people found the song and after they found

4:25

the song how many people came back to

4:27

listen again. When they talk about the artist

4:29

how passionate are the words that they use.

4:32

We also look at the structure of the

4:34

song so essentially we built an algorithm that

4:36

incorporates all of these things and then is

4:38

able to predict if an

4:40

artist is quote-unquote undervalued

4:42

or not and try

4:45

to find those diamonds in the rough. And

4:48

so if you find an artist that based

4:50

on all of this analysis you think can

4:52

go far what happens next? We will

4:54

reach out to the artist to their manager or

4:57

directly to the artist themselves and we'll say hey

4:59

you know we think that we could help you

5:01

amplify your music and your voice and your and

5:03

your talents. You know why don't you partner up

5:06

with Nafu we'll buy some of your rights and

5:09

together we'll split the profits when

5:11

you increase. And the

5:13

profit splitting is 50-50 is that right?

5:16

That's correct. So a traditional record

5:18

label will take anywhere between 80

5:20

to 85 percent of the profits

5:25

so already it's a much better deal that

5:27

the artist gets when they join Nafu and

5:30

the reason we're able to do that is

5:32

because we're only digital we don't need to

5:34

have the cost of having offices in 65

5:36

different countries we can run everything from Stockholm

5:39

and we can run global campaigns across Latin

5:41

America, Africa, India and so on and that

5:43

allows us to save money which we then

5:46

pass on to the artist. In

5:48

2024 the record company has over 150 artists from around

5:53

the world on its books. One

5:55

of the most successful is an American called

5:57

I Am Not Shane who just

5:59

reached hundred million streams. Unkit

6:04

says he knows bigger record labels are starting

6:06

to invest in their own AI tools too,

6:09

but he's confident his start-up offers

6:11

something different. I think

6:13

what the big labels suffer from sometimes

6:16

is just general big company problems. There's

6:19

always internal politics or they're generally

6:21

slow-moving, or most artists at

6:23

a very early stage are not big enough

6:25

for the labels to even pay attention to

6:27

at that point. And those are

6:30

all opportunities for a newer, smaller, more

6:32

disruptive player like Snafu, because that's exactly

6:34

the market that we go after. Even

6:36

though AI is

6:39

growing across the board in tech and

6:41

in music, you've still had skeptics arguing,

6:44

well, if this is a record label

6:46

driven by AI, doesn't that mean that

6:49

algorithms are deciding what people listen

6:51

to, taking away the organic process

6:54

of discovering artists? How

6:56

do you respond to those critics? A

6:58

future in which AI has

7:00

some hand in what we make and

7:02

also what we listen to is inevitable.

7:05

And I think also being creatives ourselves, we saw

7:07

it as our responsibility to, okay, well, we might

7:09

as well get there first and do

7:11

it in a responsible way. And most

7:14

of our technical

7:16

focus is on AI finding

7:19

great human creators, rather than

7:21

AI can maybe make other

7:23

AI music, and I think that's just a good... Five

7:29

years after launching, Snafu records isn't

7:31

yet feasible, but it has

7:33

some big name investors, including Agnetta

7:35

Felskock, the actual Agnetta from ABBA,

7:38

and it raised another $7 million

7:40

last year. That's

7:42

impressive at a time when the jittery global

7:45

economy is impacting a lot of startup funding,

7:48

something we'll hear more about later. I

7:54

haven't actually been able to find any

7:56

figures directly comparing the value of music

7:58

tech scenes across Europe. Europe, but

8:01

I'm just scrolling through a list by Seedtable,

8:03

a platform that tracks the fastest growing companies

8:05

in the region. And it

8:07

lists 69 music and audio start-ups to watch or

8:09

work for in 2024, and 13 of them are

8:14

in Stockholm, more than any other city

8:16

in relation to population size. And

8:20

according to Swedish business news site Dorgen's

8:22

industry, there are a handful of music

8:24

tech start-ups worth at least a billion

8:27

krona, around $100 million or more, that

8:29

aren't yet listed on the stock exchange.

8:32

These include Epidemic Sound, a platform

8:34

for write-free music for content creators,

8:37

and Sound Industries, recently renamed Marshall Group,

8:39

which is an audio tech and design

8:41

business. My

8:46

name is Sarah Herlin, and I'm

8:48

the founder of the community and

8:50

organisation Stockholm Music City. We are

8:53

community builders, where we bring the

8:55

music and tech industry closer to

8:58

each other. Sarah and

9:00

her team organise events for entrepreneurs,

9:02

musicians and ambassadors, and she's

9:04

one of those people you see at almost

9:07

every meet-up in Stockholm, and who seems

9:09

to know everyone. So I wanted

9:11

to pick her brains about why the Swedish

9:13

capital punches above its weight in music tech,

9:16

and she took me to a shiny new café

9:18

in co-working space. We

9:20

are sitting in the node today.

9:24

It's not even a year old, it's a hub

9:27

for studios and for

9:29

producers. Right, literally

9:31

you can't get more central

9:34

in Stockholm City, just across

9:36

from where we are sitting is

9:38

the housing feature and

9:40

the national theatre. It's

9:42

also just metres from the Avicii

9:44

Experience, an interactive museum which opened

9:46

in 2022 to

9:49

celebrate one of Sweden's most successful DJs,

9:51

the late Tim Bergling. The

9:54

company behind that, Pop House, also

9:56

recently created Abba Vuj, a popular

9:58

high tech studio. stage show in

10:01

London performed by Avatar versions of

10:03

the super group. Sarah

10:05

believes Stockholm's strong music tech scene has

10:08

got a lot to do with Sweden's

10:10

musical legacy. I'm certainly to

10:12

Sweden on the map and also because

10:15

from that we built bands

10:17

like Prokfrej and

10:19

the Cardigans and enormous amounts of

10:22

bands. And then there's

10:24

definitely always been a connection

10:26

between the music

10:29

industry and the Swedish music wonder

10:31

and tech. The studios,

10:33

the innovation that's coming from how

10:36

you're recording. And to me

10:38

a lot stems in that. Sarah

10:41

also points out that Sweden's population

10:43

has been highly tech savvy for

10:45

decades, partly thanks to tax breaks

10:47

on home hardware in the 1990s

10:50

and early widespread adoption of broadband.

10:53

Plus there's free public education

10:55

giving Swedish pupils easy access

10:57

to both computers and musical

10:59

instruments. And she says

11:01

the music tech scene also benefits from

11:04

a culture of collaboration. If

11:06

you realise someone else is doing the same

11:08

thing you contact each other and see how

11:11

can we do this together. And that often

11:13

means that they all succeed instead of nobody

11:16

succeeding. A

11:22

couple of kilometres away on Kuntolmen

11:24

Island, the word collaboration also

11:26

keeps coming up when I meet Emily

11:28

Olsen. She's the co-founder of

11:31

a music tech startup focused on crowdfunding

11:33

which has created a lot of buzz

11:35

in the media here. So

11:37

Card is a platform where artists

11:39

can get their product funding with

11:41

the help from fans. So

11:44

you can basically see it as the

11:46

fans record label where the artists share

11:48

their revenues with their fans rather than

11:51

an actual record label. And

11:53

then we use all these

11:55

fans that invest in the music to help

11:57

market the music and get the word out.

11:59

there to encourage people to add it to

12:02

their playlist and share it with their friends

12:05

and use the fans as a

12:07

digital marketing team. Emily worked

12:09

in a lot of different industries

12:11

before joining the company. Hospitality, debt

12:13

collection, transport, but she says the

12:15

music tech scene has a much

12:17

stronger sense of community. Since it's

12:19

a tiny industry you obviously you

12:21

run into these people all the

12:23

time and you're friends with everyone

12:25

and people are very

12:27

keen on exchanging ideas and helping

12:30

each other. So do you think Stockholm

12:32

size has something to do with this

12:34

then? If you were in a

12:36

bigger city like London or LA things

12:39

would simply be more spread out, there are more

12:41

people. Yeah it's definitely a

12:44

part of that, that everyone is kind of in

12:46

the same area all the time definitely

12:49

yeah. But

12:52

Stockholm does have its rivals. Berlin

12:54

and London have long had thriving

12:56

music tech scenes and cities including

12:59

Milan, Barcelona and Paris are gaining

13:01

a reputation as new hubs for

13:03

the industry. We're looking to have

13:05

about 300,000 users on our platform

13:08

within three years but

13:10

yeah there is competition. One

13:12

of the biggest challenges is

13:14

to keep up with everything

13:16

that is especially with

13:18

AI. It's really a race

13:20

I would say with a lot of companies

13:23

doing a lot of cool things at the

13:25

same time. Like Snuffu

13:27

Records, Co-Write has also raised

13:29

capital from some high-profile investors

13:32

but it still isn't profitable. Emily

13:35

says the company's hoping to change that

13:37

with a new subscription tool on the

13:39

platform which launches later this year. It's

13:42

designed to support musicians and other

13:44

content creators with setting and tracking

13:46

goals and to help

13:48

with other essential parts of their businesses

13:51

like writing press releases or pitching. But

13:54

Co-Write still needs more cash. Yeah

13:56

I mean we are about

13:59

to raise money. again and people are

14:01

talking about and writing about how hard it

14:03

is to raise money at the moment and

14:05

it's always been hard and probably

14:07

a little bit more now. I think

14:11

companies have a bit

14:13

more to prove, a bit earlier than they

14:15

had before. So we're humble but

14:17

ready to go out there. Recording

14:22

in progress. Hey Emil, how are

14:24

you doing today? Doing good

14:26

today. How are you, Marif? I'm alright. We're not

14:29

far away from each other in Stockholm but

14:31

it's been one of those busy days where

14:33

we're taking this meeting digitally. Always

14:35

most efficient. Emil

14:38

Viedhagen is a journalist for Break It,

14:40

Sweden's biggest tech and start-up news site.

14:42

So he's got a close eye on

14:45

how robust Stockholm's music tech scene really

14:47

is. Pretty much all of

14:49

the tech companies are trying to become

14:51

profitable and pretty much everyone says that

14:53

they will be profitable within a year

14:55

or two but we still see a

14:57

lot of start-up stealing to do soon.

15:00

What you can say is these companies are still

15:02

going on, trying different things, see

15:04

what works. They don't

15:06

have a super big revenue yet but

15:10

yeah, we could be on to something. How

15:13

tricky is it for music tech start-ups

15:15

to get investment at the moment compared

15:18

to other sectors in the

15:21

start-up and tech ecosystem in

15:23

Stockholm? In one way more easy

15:25

and one way more difficult, I would say, everyone

15:28

listens to music. So I

15:31

would say that investors think that it's pretty

15:33

fun to try something in music, invest a

15:35

bit of your money. If they don't really

15:37

care, if they lose

15:39

a small amount, they can afford it. It's

15:42

more fun than a developer tool.

15:45

But on the other hand, people

15:47

tend to move to more safe

15:50

investments in more difficult times and

15:53

music tech companies in general

15:55

aren't producing profits. Not even

15:57

Spotify, really. That's a super.

16:00

established. Taking

16:04

a closer look at that, Spotify reported a loss

16:06

of around 75 million euros, or 80 million dollars,

16:10

in the final quarter of 2023. But

16:13

it's a complicated picture. That result was

16:15

better than expected, and the company saw

16:17

a 4% increase in

16:19

subscribers, despite putting prices up for

16:22

its premium service. Yet

16:24

this all came in a year when

16:26

the company axed a number of high-profile

16:28

podcasts, scaled back its podcast division, and

16:30

cut around 1,500 jobs.

16:33

Here's what the CEO, Daniel Ek,

16:35

told the BBC's technology editor, Zoe

16:37

Kleinman, in September. We

16:40

thought new innovation was needed to

16:42

happen here. We thought we

16:45

can come in and offer a

16:47

great experience that both makes consumers

16:49

very happy and allows new creators

16:51

new avenues. And the truth of

16:53

the matter is, some of it

16:55

has worked, some of it

16:57

hasn't. We're learning from those we

16:59

wish all the ones we didn't

17:01

renew with the best of success that

17:03

they can have going forward. That was very

17:06

diplomatic. I'm getting

17:08

better and better at it. I

17:11

also had a lot of questions for Sweden's

17:13

biggest music tech company, but it

17:15

turned down my request for an interview. I

17:19

would say that the big problem is

17:21

you have to find a way to

17:23

make people wanting to pay

17:25

for music. Today, they aren't really willing

17:27

to pay more than 10

17:29

euros or 10 pounds a month for

17:32

music. You have to kind of find

17:35

more in your pockets from your consumers

17:37

that you are aiming for, or finding

17:39

businesses to pay for music that have

17:41

a bit more money in general. Well,

17:47

I'm back in Stockholm City Centre now where

17:49

there's a lot of commuters with their headphones

17:51

in. There are clearly

17:53

ongoing challenges for music tech startups

17:55

here in the Swedish capital, but

17:57

also plenty of companies hungry to this web.

18:00

how we discover, fund, market and share

18:02

what we listen to. So

18:05

we'd often have a reputation for being humble

18:07

and not bragging about their success, but

18:09

I felt a real sense of pride here

18:12

that Stockholm deserves its reputation as a hub

18:14

for music tech. That's

18:17

it for now. For Meet Maddie Savage, to

18:19

hear more from Business Daily, check the BBC

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