How This Guy Built A $72 Million/Year Business Selling Music
Hey! Shamus here, and welcome to another edition of MBIT, a newsletter (and podcast) sharing the stories of world-class entrepreneurs to inspire the next generation. Now, onto Epidemic Sound!
Founder Oscar Högund shares the story:
“Prior to going into TV production, I was very much a numbers guy. I worked at BBC as a management consultant and was everything but creative. But when I looked at my boss I realized that I didn't want to have their life. So, I quit and went on a soul-searching excursion. I met with tons of companies and eventually met with this TV production company called Zodiac. I always loved storytelling, so I thought, ‘Why not join?’
Little did I know that that would be one of the best decisions in my entire career.
I found myself different from everyone else in the room. I was the numbers guy in the creative industry, which was super rare.
I went from enjoying working to absolutely falling in love with my work making TV shows and doing video production.
But we found a problem.
It was really difficult finding music, adding music, paying for it, and licensing it. There were no tools. As a result, people were using less music rather than more.
That was the starting point, where [my co-founders and I] came to the insight that we wanted to soundtrack the internet.”
How did that lead to the development of Epidemic Sound?
“It was a multi-step process. First, it came down to trust because the traditional music industry hinged around representation. What that means is as a songwriter or as an artist, you would create a piece of content, and you wouldn't be willing to sell that to anyone. Instead, you would have a record label, a publisher, a neighboring rights organization, and a manager, and everyone would hold shares of the revenue.
That would then generate royalties years down the line, assuming that all the forms had been filled out correctly.
This is where we had our first big challenge. We placed this massive contrarian bet because we reached out to music creators and said, ‘Hey, we have a better way of distributing your content. If we were allowed to acquire all of the rights to your music, we could invest hundreds and millions of dollars to build out the cultural infrastructure needed to soundtrack the internet.’
All of these commercial entities are terrified of using music because if you don’t have all the rights, you can get sued. And thousands of companies have been and gone under as a result.
So, in the early days, it was a lot about explaining who we were and what we stood for.
Unlike others, we had no publishers, and there were no middlemen to feed. So we could take all the revenue and share it 50/50.”
How were partnerships so essential to building out the Epidemic platform?
“You're absolutely absolutely right, Shamus. It's been part of our playbook from day one, and it's basically how we've done everything. Before deciding to try and soundtrack the internet, we said, ‘We need to start somewhere.’
That starting point was broadcasters because they were super dominant at the time and were very prolific storytellers.
We thought, ‘If we build a product good enough for them, the impact we can have when we release that music across the entire internet is going to be surreal. So let's start there.’
There were basically 50 prolific production companies that made all the hit shows. When we dug down even further into the value chain, we saw on top of them were five prolific broadcasters who commissioned all of the shows from the 50 production companies who, in turn, hired 5,000 producers.
And we went, ‘Ah! What if we partner with the broadcasters? It's much better for them from a commercial perspective and from a creative perspective.’
And so we did. We partnered with the broadcasters. They encouraged all the production companies to start using Epidemic Sound, which is how we got our first 5,000 beta testers for our product, and off we went.”
Have a productive week!
Founder & Host of MBIT