‘Music is Okay?!’: Interview with Eric Wahlforss from SoundCloud

Our new event series checkdisout for PSFK readers in Germany is quickly approaching. The first installment, ‘Music is Okay?!‘, will take place on November 20 in Hamburg. It will tackle current topics surrounding the state of digital music culture. The premiere event will take a close look at the status of digital music, 10 years after the introduction of music-sharing service Napster, apart from the major labels’ mourning and lack of creativity.

To kick things off, we interviewed Eric Wahlforss from Berlin-based startup SoundCloud, a new music sharing and distribution platform. SoundCloud is aimed mainly at music professionals who want to share their tracks and mixes with like minded musicians or for promotional purposes. The site is an alternative to sometimes frustrating services like Yousendit and offers a convenient way to share music files.

Eric, when we invited panelists for checkdisout, we asked everyone for a quote. Yours was: “Context is the new cover. We need to work much more on the experience of finding and discussing new music.”“ Could you explain a bit more?

I wrote that very quickly, as always you just throw something in, but that sort of summarizes a bit about the stuff that Alex, my Co-Founder, and I were recently lecturing about- context being more important than content in this next wave of online distribution music situation that we are in. The licensing part of the problem is sort of being sorted out and the next challenge is to provide something that not only makes all the music available to the users but also available in an interesting way. And that’s really where our focus is, to make that happen.

On that same conference, a good friend of mine who now works for Google, did a company called jaiku. He has this idea called nodal points, where I think e.g. SoundCloud is very much based on this notion that you have a certain stream of stuff that comes through your perception and then some of that stuff is interesting to you and it’s sort of that social network that gives you the content in a very convenient way, content that might interest you. So that was the point: Social discovery, and not only recommendation systems, but other ways of finding new music is going to be an interesting challenge.

Do you also think about curation and compilation, the editorial aspect?

Editorial not so much from my side, because I am very much a technology person so I think the big solutions might not be only editorial. But it’s a sort of curation by your social network, it’s a curation that is facilitated by technology.

It seems the music industry is still mourning over sales numbers and the demise of the industry. What opportunities to innovate, build new products and concepts in this field do you see?

(Laughs) About the mourning on revenues: I just came back from London where I attended the Music Tank, sort of sessions where they invite people and talk about the music industry, there was this one guy who runs this company where they try to basically monetize Peer to Peer in certain ways.One of the things that he was saying was that if you could get something like 2 Dollars a month from people who get their music in P2P and you would do that for the customers of the big ISPs that would be much more revenue than the labels are getting from all the combined downloads and physical sales today.

I saw some recent numbers on downloads, and this figure is going up really fast. Paid downloads are something like 4 Billion Dollars now. Which is a significant amount. Of course the numbers of physical sales are going down but the potential is still there to sort of stop focussing on the downloads and actually look at the other 99% of the users that don’t want to download music, look at what their needs are and try to tap that resource. Look at e.g. subscription models. That’s basically a problem where a solution seems to be around the corner. There are definitely opportunities because people are listening to music more than ever. So there are opportunities to monetize.

Ad-based streaming and subscription models and hardware cross subsidised are basically the three models that are interesting for the mainstream consumer. I think this should be much more explored.

What are the most interesting concepts and products in the field of digital music from your perspective at the moment? (Apart from SoundCloud of course!)

Many of these big issues have been on the table for like ten years now and there still haven’t been nice solutions for them. For example Spotify, the Swedish company, that is showing that the proper implementation of a nice idea can be very powerful.

We’ve had similar ambitions around for a while but noone has come around and done it in a nice way, like really got the good licenses, really got the client right and the streaming right, you know executed well. I just think it’s embarrassing on the whole and really weird that noone has done this earlier than now. I think in terms of the real innovation it’s harder for me to say something. I think there are services like blip.fm where I don’t think it is particularly interesting in itself, but the combination of nodal points if you will, the attention stream, recommendation facilitites and then a good way of experiencing streamed music is interesting. Last.fm I think still is one of the more innovative consumer platforms. What we are doing is interesting because we are bringing the consumers, not only the Pros, further into the loop of that whole relationship fan and artist, sort of blurring this disctinction further, making the lifecycle or the lifecycle of a release more interesting and dynamic and maybe more open.

That’s also interesting from the consumer side potentially in a way. And then generally, Social Network distribution is something that is interesting I think. That social networks are turning into these modern radio channels basically, where people tune into their social network and the context that’s in there. They are not just listening to the music isolated in itself.

From a musician’s point of view- what really excites you about the possibilities for music creating and collaboration in 2009 and what is a total downer for you?

For me it’s of course more exciting than ever because I am making electronic music and I was always much more fond of the internet as a distribution mechanism than CDs or something like that. And also given that I got most of my revenues from my music actually from sync rights for films and TV series I feel that for me it’s not a threat at all, it’s much more a potential and about building a solid fanbase and being able to control all the interest, I mean all these users who actually come to me, all those people who sign up for a newsletter or add me as a friend on a social network. The key is to be actually able to do something with that and use that network that is automatically building up around you as an artist. If you manage to do that I think there is only good things about the new from my perspective. At least from where I’m coming from.

Some last words to the Majors?

Actually it’s funny, because right now I am working with a major label and also at the same time with an Indie-Label. It’s very interesting because we are trying to do the same thing and it’s very interesting to see how inefficient and backward thinking the major label is. We have this one guy in the major label who is sort of an infiltrator who tries to bring up all these new ideas but he keeps getting thrown back. So he has to always defend why they should do this and do that to the executive level. It’s taking about five times longer for them to achieve half of what the Indie label achieves with one person. What everybody has been saying for the last five years that the major labels are really slow, they are backwards thinking, they don’t like to take risks and at the same time they don’t really want to innovate.

You know it’s this old lesson from this marketing guy, this famous text called marketing myopia, where he is talking about. You know: they are in the music business and not in the business of selling records. That’s what they have to realise. It’s really about that. You know railroad companies got displaced by trucking companies because they didn’t realise they were in the transportation business. They should really look at the broader landscape. What other things can you do in music? Not only selling CDs, not only breaking tracks on the radio. I mean, they are trying it, but it’s problematic of course.

You know, if there would be a major executive standing in front of me I am not sure what I would say. I would probably not say so much. (Laughs) Because I am too much of a web nerd and too little of a music industry person to say something important. But it’s very important that they look much more into new technologies and start really embracing these technologies.

Thanks, Eric!



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