Spotify Offshoot Targets New Streaming Market: Restaurants and Stores
Pity the poor McDonald’s (MCD) worker who has to hear an earworm like Justin Timberlake’s “I’m Lovin’ It” on the restaurant’s public address system several times each shift.
Even if someone likes a song, constantly hearing it would make anyone cranky—and that could hurt customer service. But it could also annoy customers themselves.
A Swedish startup with Spotify lineage and funding, Soundtrack Your Brand, thinks this problem has created an untapped market opportunity: offering music streaming to restaurants and stores so they don’t have to play the same old handful of CDs over and over, and these establishments can adapt a playlist to the day of the week, time of day, and local market of a given store.
Soundtrack Your Brand, which just launched in the United States, says its service lets such businesses personalize in-store playlists remotely and manage them across multiple locations. The company also posits this service would motivate workers, and down the road, it could help managers learn which songs played at a given time and under what circumstances spurs spending.
Hard as it is to believe in 2016, most national retailers and restaurants are going about this in an antiquated way. They still ship physical CDs to stores every few weeks. Those giants, which try to manipulate consumer behavior with music, are also missing out on a potential trove of data. (A notable exception is Starbucks Coffee (SBUX), which in January said it had lined up with Spotify to launch a new digital music offering.)
“Retail hasn’t really been digitized yet,” Andreas Liffgarden, former global head of business development at Spotify and co-founder of Soundtrack Your Brand, told Fortune. “We’ve hit the sweet spot when retail is trying to transform itself.” Spotify is one of Soundtrack Your Brand’s investors, along with Wellington Partners and Northzone, that have invested $20 million.
The technology, for which stores pay a monthly fee per site, has been deployed at 60% of McDonald’s (MCD) 220 stores in Sweden for just over a year now. Soundtrack Your Brand has created a 500-track playlist, ensuring a poor worker would only have to hear a loathed song ever two or three days. The service also means that McDonald’s can play upbeat music for Friday and Saturday evenings, when teens pour into the store, or more family friendly music on Sundays. Soundtrack Your Brand’s algorithms can also adjust playlists to reflect the growing or waning popularity of a song.
Soundtrack Your Brand recently won a highly coveted, so-called “global hunting license” from McDonald’s headquarters that gives it the right to approach franchises globally as a “preferred supplier.” More than 90% of McDonald’s 35,000 restaurants worldwide are franchised, so that means a lot of door knocking. Still, beyond getting a foot in at the largest restaurant chain in the world, this also allows Soundtrack Your Brand to prove whether its tech works and is worthwhile. Soundtrack Your Brand says it is running pilots with some of the largest McDonald’s franchisees globally.
The launch comes at a time McDonald’s CEO Steve Easterbrook has made it a top priority to turn the burger chain into a “modern” restaurant, including catching up on the tech front. Indeed, McDonald’s is rolling out self-order kiosks, table service, and a mobile app. A McDonald’s representative did not respond to a request for comment about the Soundtrack Your Brand service.
More broadly, retailers are also going all in with tech. Target (TGT) has poured billions into e-commerce and has begun testing things like robots to take inventory. Wal-Mart (WMT) is rolling out its mobile payments app nationally this spring. Some of the luxury players are playing around with smart fitting rooms. Thus, Soundtrack Your Brand is betting store chains, which are on the hunt for much more data about shopper habits, will bring tech to such a consumer-facing part of shopping experience as in-store music.
“CDs can’t react to data,” says Soundtrack Your Brand CEO and co-founder Ola Sars, a former COO of Beats Music, now owned by Apple (AAPL). “When you measure music’s impact on consumers, you can run data in parallel to that.”
So that means you can see if certain songs at certain times a day send customers out the door, or on the contrary, get them to open their wallets wider and change your playlist accordingly. That, of course, will mean retailers and restaurants have to ramp up their tech so Soundtrack Your Brand can interact with point-of-sale systems—something that is not a given if one considers their late adopter status in so many aspects of tech.
Soundtrack Your Brand has done a few small tests with the likes of Nike (NKE), Starbucks, and Tag Heuer in Sweden. The company also has designs on the hotel industry. (We could all use a break from all Kenny G, all the time in some hotel chain’s lobbies.)
The most immediate benefit of the service, Sars and Liffgarden, say is happier workers. In-store music is no joke. At least year’s annual meeting with workers, Wal-Mart’s brass elicited the biggest applause from the 15,000 employees when it announced it would stop playing CD’s from headquarters (Celine Dion on constant repeat was a particularly sore spot) and let each store choose its music.
Some 317.2 billion songs streamed in 2015, nearly double the 164.5 billion total in 2014, according to Nielsen Music, with very little of that going to businesses. When you think of how stores have always tried to use music to stoke spending, it seems the moment is ripe for retail and fast food. At least that’s what SYB is betting on.
“Business-to-business could be the next big growth area because obviously things need to change there,” Sars said.