March 3rd, 2022

Pär Almqvist – Tracklib [CEO]

In the last few years, Tracklib has emerged as one of the premier music tech companies in Stockholm alongside the likes of Spotify and Soundcloud. Described as a record store for sampling, they offer up thousands of records in multi-track form for producers and beatmakers, minus the hassle of going through traditional sample clearance. The company CEO, Pär Almqvist, was kind enough to jump on a call with me to explain the company’s history and their work to bring sampling to the masses.

– Hi Pär. Pleasure to be speaking with you. I see you have a background in design, digital development and running energy companies in India. What about those experiences allowed you to become CEO of a music tech company?

I often say that once you’ve worked on energy solutions in rural India, you’re now ready to take on the challenge of music rights (laughs). Being CEO of Tracklib allowed me to combine all my past experiences into one role. Building energy companies in India taught me about managing complex systems, whilst digital marketing and design taught me how to build products from scratch. Being CEO of Tracklib involves solving a big problem for the benefit of many people, so my past work was the perfect bootcamp for this position.

– I learnt about Tracklib from an Erick Sermon interview where he talked about his work with you guys. How did that partnership with Erick come about?

After starting the company in 2014, we asked ourselves which sampling pioneers would be ideal to help us with our mission. On that shortlist we had names like Prince Paul and Erick Sermon, and that’s why we reached out to them.

We spoke to Prince Paul first; his insights helped in shaping the service and he had a lot of opinions on what kind of music we should onboard. Eric was also a big help; he was very vocal about what Tracklib meant to him as a producer. That kind of support really helped us, and EPMD even performed at our launch party.

Another person who really helped us was Deborah Mannis-Gardner, also known as the Queen of Sample Clearance. She does a lot of traditional clearance for music and film and recently won a Grammy for her work on The Defiant Ones. Many of the songs used in the series contained samples that had to be re-cleared and she handled all of that. She’s also been a supporter of Tracklib and helped as an advisor because she knows more than anyone how complex the clearance process is.

– Tracklib as a company was created in 2014 but didn’t debut as a service until 2018. Why the four-year gap between creation and launching?

There were many things that had to be done first, both in terms of creating the platform and communicating with rightsholders like labels and publishers. We had to learn how to build a music production service rather than a streaming one. We also had to figure out the right commercial and legal framework, as well as have the global music industry get on board with our business model. So it was a much bigger undertaking than we realized when we started in 2014.

– I see. But why would the music industry be skeptical towards Tracklib when we’ve seen the success of other music tech companies like Spotify and Epidemic Sound?

Epidemic Sound is outside of the traditional music industry, so they don’t depend on the typical business models for success. But if you look at Spotify, their success didn’t happen in a month or a year – it took several years for them to find acceptance. So one of the bigger challenges for any startup is to overcome the existing mindset, and the music industry hasn’t been the quickest to adopt new ideas even after Spotify and other DSPs were accepted. Basically, most people don’t want to get on board until they see a new model already working.

– It’s been said that Spotify took forever to gain traction because they had to negotiate with major labels for their catalog and ownership in the platform. Did Tracklib have a similar experience where the labels would only cooperate if the terms were in their favor?

Tracklib provides a different offering than a DSP. Streaming services often require the labels to deliver their whole catalog – we don’t ask for that. We basically said to the labels, “You have a lot of music, but we don’t need all of it. Let’s just start with the material that’s interesting to music producers “. So we have more of an ongoing partnership with the labels than a traditional DSP does.

Whatever push-back we got varied between rightsholders, so our journey has been different than Spotify’s, but we share the challenge of having a completely new business model, and the rightsholders have to assess if that works for them.

– When it comes to rightsholders, you have artists, labels and publishing companies. Which of those was harder to convince to get on board?

Each of them had their own concerns. Because our model is new, we had a lot of explaining to do regardless of whether we spoke to a major label, an estate or an artist who owned their rights. Some might be used to licensing and others hardly do it all; some understand sampling and others don’t; some understood our model instantly and others took half a decade of talks. So I wouldn’t say the labels were more complicated.

By talking to different rightsholders, we eventually realized that the most complex side of music rights is the publishing part since they require registration with different PROs. So we spent a lot of time making it easier for artists to get registered because we don’t want them to treat publishing as an afterthought. It’s not uncommon for musicians to register their work months or years after a song comes out, if at all, causing them to lose out on a lot of revenue. So our support team is built to guide artists on how to do the right registrations.

– That sounds great. In terms of funding, what kind of money was required to set up Tracklib and get things going? 

Building our own businesses in the past allowed Tracklib’s founders to have good relationships with private investors, so we were able to secure seed money and subsequent funding to grow the company. We’ve been a privately funded venture thus far, and we’re fortunate to have investors who see both the commercial and creative value of what we do. Our last funding round closed in July 2021 at $12.2 million. Being privately held, I can’t disclose the specific number we got in our seed round, though it was in the slim hundreds of thousands.

When it comes to raising money, I’ve learned that you need the right type of funding for the stage of maturity you’re at. Too much money too early is really dangerous for a company, but too little money won’t let you survive either. So as you move from R&D and first launch to the startup and scale-up phase, each stage is very different in its demands on the size of investment needed.

– What’s your biggest cost as a business?

The biggest part of any budget often goes to the staff and marketing, and that’s what it is for us. One of the early mistakes I made in building companies is thinking that if we build it, the customers would come. What I’ve learnt now is that you might be super innovative with how you address a problem, but your idea won’t be a homerun just because of that. You also have to invest in marketing and understand how to reach people.

– When do you think Tracklib will start turning a profit?

We’re not far off. At this point it’s more about growth, raising awareness and making the platform available to as many people as possible. But we expect to see profitability in the next two to three years.

– Since Tracklib is now a success story, has your work become easier in terms of striking deals with rightsholders?

Things are certainly different now that we’ve proven ourselves. Tracklib has shown it can be used to generate a hit, as seen with J Cole’s “Middle Child” that went 6x Platinum. We’ve also shown rightsholders that we can provide them a meaningful income. Some of the labels who joined us are seeing Tracklib become one of their top ten revenue sources, even surpassing physical and digital sales. So our model is working – we generate revenue, we manage rights, and A-list artists are using us as a tool in their work. All of that is causing rightsholders to reach out to us instead of the other way around.

– In what ways did the press from “Middle Child” help you?

We’ve had our other marketing efforts reach a lot of people, but “Middle Child” has been the biggest song that received the most artist support; it really helped us get on the map. Massive props to everyone at Dreamville for being so supportive of Tracklib. It’s been our biggest story in terms of notable releases. Genius did a beat breakdown with T-Minus and that made a lot of people aware of us also.

– Media coverage from 2018 said you had 100,000 tracks in your library. How were you able to launch with so much music? Was it material from the public domain?

Some of those numbers were incorrect. The library was smaller than 100,000 tracks when we launched, but we now have well over 200,000 recordings, though some aren’t available on the website yet.

Most of our launch library came from labels and publishers in the US, UK and Sweden. We managed to get recordings from the ones that understood sampling culture and wanted to facilitate that part of the music industry.

Regarding public domain material, we did start off with some classical music that didn’t have any publishing rights, but it still had recording rights.

– How are you able to onboard new music if the rightsholders decide to charge large amounts of money upfront? I’d imagine that certain artist estates would ask for such things.

Paying money to onboard music isn’t part of our model. Streaming services tend to do that when they ask for a whole catalog, but that model doesn’t work for us because all music consists of two copyrights: publishing and recording. In order for us to even get one song on our platform, we have to interface with all the different people and companies who own a piece of the copyrights, making it a complex clearance process. Also, we’re not pursuing the hits from the biggest artists because those aren’t what producers necessarily want to sample. So we avoid the complexities typically associated with that.

The value we offer our rightsholders is in making the licensing process simple for them. It’s common for a master recording to be owned by multiple companies whilst the publishing is owned by several other parties. Our job is to link all of those together so rightsholders don’t have to deal with that complexity. If you look at a streaming service, they take a standardized approach of filling in some data about the master recording and publishing, but nothing beyond the basics. In our case, we do a lot of work to combine all the different rights plus we have to add metadata like BPM and song key so the song is searchable on our website. So behind every track is a lot of work to make it available, and all of that facilitates things for rightsholders.

– But you do have some well-known artists like Isaac Hayes in your catalog. I believe you’ve made available 23 of his unreleased recordings. How did that come about?

We worked directly with Isaac Hayes III who we met at the AC3 conference in Atlanta. He’s a producer himself so he understood sampling, and forming that relationship enabled us to bring his father’s music onto our platform.

– What other high-profile artists have you onboarded in recent times?

We have large parts of Bob James’ catalog, who’s the second most sampled artist after James Brown. It was big for us to bring him in and his music has been extremely well-received.

We also have the Philly Groove catalog that T-Minus sampled from to make “Middle Child”. The collection was digitized by Drexel University into multi-tracks and we managed to license it from the rightsholders, including previously unreleased studio takes of their songs. So that’s another great addition to our collection.

– Erick Sermon said you own the rights to Honeydrippers “Impeach The President“. Is that true?

We have big parts of the catalog that included “Impeach The President”, but since it’s such a heavily sampled track, we were only able to keep it for a limited period of time. It’s no longer available on Tracklib, unfortunately.

– How do you source your music? Do you have an in-house team of A&Rs for that?

Yes, we have an in-house team of around 10 people who search all over for amazing music, which is why we’ve been able to license stuff from places like Brazil, China and India. I’ve often described it as industrial scale crate digging (laughs).

– Since you have over 200,000 tracks, I’m guessing your team can’t listen to everything that’s onboarded? Especially since your business model relies on growing the catalog?

We might not listen to every track from beginning to end but we’re very bespoke. We do a lot of analysis on what to bring in because even a single track requires a lot of rights clearances. So we need to be selective.

– I believe you signed a licensing deal with BMG two years ago. Have you onboarded any of their catalog yet?

It took some time to get that deal going, so our talks only started in the second half of last year, but we’ll finally start adding a big part of their library a month from now. We spent a long time looking at which parts to start with and we expect to get the larger deliveries uploaded in the summertime.

– Are you pursuing licensing deals with other big companies? 

We are. We’re in hundreds of parallel discussions with rightsholders all over the world, which includes unknown indie labels, underground artists and some of the largest music companies in the world. Our target list is enormous, so we have our work cut out for us.

– Has there been any interest in onboarding library music?

We only bring in library music that’s been released and has its publishing registered with a PRO. So we onboarded the Cavendish library a year and half ago, and Frank Duke’s Kingsway library is on Tracklib also. We’re going after similar ones as we speak.

– Can you talk about how Tracklib’s revenue model works for rightsholders? How do they make money for sharing their music with you?

Rightsholders get revenue from Tracklib in three ways: subscriptions, licensing fees and royalties. We have three types of subscriptions: Essential, Standard and Pro. We share majority of that money with the artists, labels and publishers who own the rights to the music. The license fee is the money a producer pays for releasing music made with our catalog, and most of that also goes to the rightsholders. Finally, rightsholders also receive splits on the revenue generated from the music, which includes a fixed percentage of sales and streams.

– But at 200,000 tracks, isn’t the size of your library so big that most of the music won’t end up being sampled?

If you look at the usage data from streaming services, the amount of music that gets listened to is less than 10% of the total. There’s actually a service called Forgotify dedicated to the songs that never got streamed on Spotify (laughs). On Tracklib, we have a 50% usage rate across our whole library on any given day whether the music gets listened to in our player or downloaded. So we have a very high level of engagement.

– What media usage does your license fee cover for songs that sample from your catalog?

Our most common sample license costs $50, and that lets you commercially exploit a recording from our catalog in perpetuity, worldwide. That sort of license is usable with over 90% of our catalog.

– Does that include sync for film and video games too?

Yes, it does. The sync rights for games and film are included more than 90% of the time. So if you create a song with Tracklib and get a sync request from Netflix, you can license it to them provided you share part of your revenue with us so we can pay the rightsholders.

– I’ve read that you paid out about $500,000 in royalties in 2019. Is that referring to the money paid out from the master recording side or the publishing side?

The publishing revenues take care of themselves as long as artists and music producers are properly registered with the PRO, which is something we ensure they do. When it comes to streaming revenue for the master recordings, we have a setup with many distributors where if an artist uses our licenses, the royalties are automatically paid to us and we then pay the rightsholders. An example of that is “Repost” by Soundcloud, and we have a similar setup with Amuse and Distrokid.

– But wasn’t your business model different a few years ago? Didn’t producers pay a flat fee of $1.99 or ¢99 to download a track?

Yes, that’s true. We did a lot of talking to our users and rightsholders and learned that it’d be good for everyone if we shifted to a subscription model, which has proven successful for us. The majority of our users have appreciated the shift, as well as the addition of the $5.99 Essential Plan that most people can access.

– Other than onboarding other people’s music, do you ever commission original music to be made just for Tracklib?

Our current focus is on previously released music, although the unreleased Isaac Hayes and Philly Groove material were exceptions. Our focus isn’t to get all of the world’s songs on Tracklib, but to build a unique selection of music that works for our users.

– What was the thought behind your Collections albums? Are those curated playlists?

Yes, exactly. Some are curated by our users and others by our curation team. Others are Producer Collections where we ask popular artists to select their favorites from our catalog. People like Just Blaze and Sarah The Illstrumentalist have contributed to those, and we have our own thematic collections on things like space-age or Jamaican music.

– Are the Producer Collections commissioned or are they done collaboratively?

Some were submitted and some were commissioned, so it varies.

– What would it take for someone like Dr Dre to put together one?

Give it a year or two (laughs).

– When it comes to digitizing tape reels and vinyl for your catalog, do you guys have any involvement in that?

Some rightsholders have already done their own digitizing, but in certain cases we help out with that. We’ve selectively offered to get involved with digitizing when we come across reel-to-reels with amazing music. That said, we don’t have an audio rig ourselves, so our partners handle any digitizing we need done. If the tapes are too brittle to play, we know of facilities that’ll bake them until they’re warm enough. After that, we might only have one or two chances to play it back before the tape is lost.

Some labels have invested in doing their own digitizing, which is what happened with the Philly Groove catalog done by Drexel University. But in other cases it’s impossible if the multi-tracks don’t exist any more.

– You onboard music from all over the world. Has that created any issues in terms of territory restrictions for your users?

We always strive to obtain global licenses, but we do have some regional restrictions. So if you’re located in certain territories, you won’t see the tracks that have been blocked there. But that only applies to a small minority of our catalog.

– What countries outside of the US have you licensed from the most?

China, Brazil and Japan are places that pop up a lot.

– Who came up with the idea for the beat-making contests you’ve been hosting?

I think that idea came from the marketing team. I give a lot of credit to our CMO, Per Stenius, for that. The purpose was to facilitate the connection between talented but lesser-known producers and Tracklib as a platform.

– How did the one with 9th Wonder go?

It was a pleasure to work with 9th Wonder. He’s a pioneering producer in sample-based music and we formed that relationship early on. When we started Tracklib, we had a long list of people we wanted to work with and he was on there. So once we partnered with Bob James, we connected the two of them.

– Do you know how many songs have been made with Tracklib in total? 

We have well over 1500 songs released that were made with samples from our platform.

– Thanks for talking to me Pär. So what’s coming up next for Tracklib in 2022?

We’re really focused on four things: continuing to build our catalog, give as many people the possibility to access Tracklib, build out new website features beyond just sampling, and work more with other companies to make music creation and destitution easier. We also have some interesting catalogs coming in, so keep an eye out for that.

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