Whoah: digital accounts for 63% of Swedish music revenue, with streaming representing 90% of THAT (per @musically). Hello, future.
— Tim Quirk (@tbquirk) January 18, 2013
The short story: The digital music Swedes we canvassed attributed the country’s digital music bent to a mix of the following:
- Tax incentives for computer ownership
- Cold, darkness
- State-subsidized broadband, good infrastructure, 3G
- Download stores arrived late.
- Welfare system lets entrepreneurs continue to eat if their start-up fails.
- Lots of engineers around
- Hacker culture
- Unlimited data
- Broadband ubiquity — even in the subway
- The ’90s music boom
- Music apps are popular.
- They’re over the tipping point with music streaming, invoking social pressures.
Here are the questions I sent to various Swedes who are involved in one aspect or another of digital music:
Music Ally recently stated that “digital accounts for 63% of Swedish music revenue, with streaming representing 90% of that,” as tweeted by Tim Quirk. And of course we’ve all been hearing for years about the advanced state of digital music in Sweden. Why do you think this is happening? Are there any cultural factors at play, does it have something to do with laws or encouraging start-ups, is it something in the water, or what? Feel free to answer with absolutely anything — I am just trying to get some hints as to why this is happening.
Bonus question (if you feel like it): What is a relatively unknown app or service from Sweden that more people should know about?
Answers from our esteemed panel of digital music Swedes are presented here in the order they were received:
I think the you need to go back to the nineties to understand what is happening now. 1998 the Swedish government put forth an interesting reform called “HemPC-reformen (“Home PC reform”) http://sv.wikipedia.
During this time broadband was heavily being built nationwide, again with economic boost by the Swedish government.
Napster, The Pirate Bay and the likes of them all where huge in Sweden (I mean, really huge). It was the de facto way of getting new music to listen to. For a long while it was impossible to buy mp3s in Sweden, it took even longer until we got iTunes Music Store. Mp3 sales never took off. When Spotify first came out as public beta the hype was big and everybody wanted an account. For the first time Swedes paid for digital music on a bigger scale (wonder why 90% of digital sales are from streaming services).
The success of Swedish artists and song writers internationally is pretty astounding, after all there’s only 9 million of us. I think that’s a big reason why people see opportunities in the music industry.
The three factors combined means that Swedes have had fast access to all music in the world for long time. Probably that’s a factor for people to “see the future” and develop cool apps for it.
Also, the country has traditionally had a strong engineer’s community, with Ericsson being a leading company. Lot’s of people has started there own business after quitting or being laid off from big IT companies.
Since music is cool, making apps being the “playing Super Mario” of the 10th and being an entrepreneur the new way to getting laid (probably an easier way that trying to be a rock star?) this is what a lot of people are heading for.
I guess you can say that there’s something in the system.
When it comes to music apps I have big hopes for www.emues.com. I think the idea is brilliant. Match artist with venues on dates when neither of them have a gig, let fans show with there money (buy a ticket) that there’s demand for the artist in the specific city. If enough people buys a ticket the gig is on. Crowdfunding for live shows + collaborative consumption = I love it.
Also, www.tunaspot.com is onto something in the area of location based music.
Alex Esser, co-founder, TunaSpot
Basically, one of the important factors for swedish IT-innovations (including the music services) is the fact that 8 month out 12 it’s cold and pitch dark.
Rest of the year it rains. This of course is a bit of exaggeration, but the Nerd Culture of DIY – build your own server, build your own WordPress plugin, build your own Streaming Service by uploading your whole CD-collection (how Spotify actually started) is very strong due to the amount of hours an average young Swede spends at home either in front of the computer or (worse) in front of TV.
I remember myself and a bunch of guys spending late evenings at computer class in high school either programming Snake or playing Starcraft since the weather was shit. Much of innovation in consumer driven services happens here – just because some guy decides to spend a winter building a service that he feels is lacking – in many cases with himself as the only one originally intended user.
Second factor is the broadband and 3G connections. Maybe this goes hand in hand with the weather, but Sweden is one of the most high-speed connected countries in the World (I cc:ed my co-founder Erik whom we sometimes refer to as the walking Wikipedia to confirm these numbers). Most of the Swedes have very fast speed connections at home and in mobiles. Unlimited data in the houses, up to 5 GB / month in the phones. Meaning that streaming music (or watching videos) is in no way interrupted by bad connections or other tech issues.
Finally it’s the music heritage – with Abba, Ace of Base, Europe, Denniz Pop, Max Martin, SHM, Avicii, Robyn and so many more. Swedes are very proud of this and take the Eurovision song contest very very seriously.
Johan Lagerlöf, CEO, X5 Music Group
I think there are numerous factors combined and when there were no legal structure in place that resulted in Pirate Bay and Kazaa. When the legal structure eventually started working a number of legal alternatives started to develop. What is happening now is the result of that process.
Why here then, what are the factors?
1) Bandwidth. Sweden was very early in setting up a good infrastructure, both mobile and fixed networks that enabled the entire population to surf and use Internet services at a high bandwidth. This is partly due to that the government saw the importance of this early on but also because Ericsson, the leading mobile network manufacturer, Sony Ericsson and Nokia who had development here pushed the need for great infrastructure.
Now everybody can access live streaming of audio or video almost anywhere they are, even in the subway (which I have realized is a bit harder in for example New York) with 3G or 4G in their handsets and often 100 mbit at home.
2) Knowledge. This has always been a very technology driven community and to launch new tech startups is quite common with access to many skilled programmers.
3) Music Interest. Since the mid 90:s when Sweden had some kind of “music boom” and a lot of stars came here to record and work with swedish songwriters such as Britney Spears, Pink, NSync, Backstreet Boys, Celine Dion, One Direction, Il Divo, Lady Gaga, Ricky Martin, Bon Jovi, Katy Perry, Rihanna, Keisha and now Avicii and Swedish House Mafia the interest in music and the business around it have been big. To some extent also the Piracy made people shift behavior from buying CD:s to listen to get the music online.
4) As this is quite a small country there has always been a global approach to things, the home market is to small to make billions of dollars, you have to focus on other markets early on.
When there is a basic knowledge about how the music business work, a high consumption of music and music interest in general as well as a technology driven environment that gives a good foundation for the birth and growth of new music related companies.
To a big extent that goes for me as well (maybe I am a typical “product” of this environment : )
I started as a songwriter/producer working for Universal in studios around Stockholm, got approached by Ericsson to help them with new music services and started an entertainment-tech company. With that past experience from both music, technology and entrepreneurship, X5 Music emerged as a technology driven music company with a global focus.
1) Classify – An app on Spotify that helps you in seconds to discover the complicated world of classical music. It is now the worlds biggest community for classical music but with users who did not listen to classical music before Spotify.
1b) Not official yet: SpinnUp.com , [a] flat fee digital distribution with a social twist with hired A&Rs that help artists to succeed. Will be launched in March.
Ludvig Werner, managing director, IFPI (Svenska Gruppen)
Hard to say only one thing but obviously the Swedes love streaming and a year or two ago we maybe passed a threshold making streaming the new “format.” So as a music consumer you needed to turn to streaming if you wanted to be part of the music community.
Compare with Facebook. Once enough people are there you can’t really stay away of you want to be part of society.
The explosion of smartphones (iPhones really, at least at first) combined with high quality mobile broadband also helped push especially the young consumers back to legal music consumption. That, and the parallel launch of our local streaming service was a great combination.
Finally the new legislation (IPRED) implemented April 2009 and the debate around it, created a very high level of knowledge about copyright, money to the creator, legal alternatives etc.
Lisa Cronstedt, Head of Market and Communication, IFPI (Svenska Gruppen); Grammis project manager
Sweden has early been early adapters when it comes to technology. When a functioning service like Spotify (also Swedish) came the Swedes found it more compelling than illegal non functioning file sharing sites. They wanted to listened to music here and now.
The music apps are also something that is really popular in Sweden now.
Peter Blom, co-creator, SpotOn Radio (interview)
(Just to avoid any confusion, the remaining 37% revenue [from Music Ally's figure of 63 percent of music coming from digital] isn’t CDs. Sure there are some digital downloads there but mostly it’s concerts and merch.)
Computers were accepted quite early into Swedish society. Back in the 60s/70s mainframe computers where embraced instead of shunned, and that paved the way for schools adapting computers and then the home computer boom with the Commodore 64 in the early 80s. Back then there were a number of quite prolific Swedish cracker groups, who were hell bent on beating the ever more complicated copy protections put in place by the game companies. These kids met at copy parties to copy and show off their coding skills.
This quickly morphed into something called the demo scene where groups competed with the most bad ass audio visual programming, and this in turn spawned a number of Nordic video game companies (Remedy, Dice, Funcom, etc) and educated a bunch of kickass low level programmers (think early mobile phones, no one where better at writing really fast code. TAT, recently bought by Blackberry, comes from here as well). This culture also lay the framework for a continuing debate and discussion around the sharing of information, which became ever more pressing as more and more people started using computers and having to think about what’s right or not.
Big companies like Ericsson have also, just like Google, educated many a good engineers who then decide to go do something else.
The other part of the equation is the net. We’ve been online with high speeds for a long time. We were the first country to set up a root server for domain name registration outside of the US, we’ve had high speed xDSL for a long time. 92% of the Swedish population is online, making us the 4th in the world percentage wise. The only European country with a higher percentage is Iceland, and there’s some interesting stuff happening there as well…
When the hacker/cracker/demo scene met the internet, interesting things started to happen. Like The Pirate Bay. The people behind TPB spent lots and lots and lots of energy debating intellectual property, educating journalists on the internets and balancing the view they’d been fed by the IPO’s before. This really set the stage for Spotify happening in Sweden.
Other than that, Sweden exports a *lot* of music for its size. The city/commune(not sure what the right term is) funded musical schools helped to achieve this, but that’s another story that I’m not as knowledgeable about.
Regarding whether Sweden has laws or regulations encouraging startups, I would say no, not particularly. Also, the amount of early stage VC money floating around is miniscule. Min-is-cule. There are no Paul Grahams here, no YCombinators. On the upside, we have a welfare system that makes the worst that can happen for an entrepreneur less bad than in the US. It’s not as scary starting up a company here. At the same time, entrepreneurism isn’t as highly valued as in the US. People look at you strange if you say you want to start a company. Why? Get a good job. It’s risky. Very difficult. Most people fail. You don’t know how to do it.
You also ask if we have something in the water. To that I am instructed to respond that whatever you’ve heard is a blatant lie and you should never trust the Norwegians.
[Bonus question answer]
Flattr – trying to fix payment on the internets – non centralized and open. Very interesting, still struggling.
Bambuser – giving everyone a way of spreading their word instantly online. A very important tool for democracy.
I’m interested in companies looking to build long term value, not a quick fix and then being acquihired. For us, our overreaching company vision is a world where communication tech has helped people get closer to one another, helping us be curious instead of afraid when meeting new cultures or contexts. It’ll take some time for us to get there, but we’re in it for the long haul. Both Bambuser and Flattr have similar strong visions for a better world, which is why I mention them.
Are you Swedish, and is there some verifiable reason you would know about why digital music took off the way it did there? Send us your answer and we’ll probably add it to this list.
(Updated with Peter Blom’s response on February 11, 2013)