Cloud

SourceAudio solves major music industry problem with cloud licensing (exclusive)

Since the advent of broadband, the barriers to selling music on the Web have quickly evaporated. But the area of music licensing, an annoying splinter in the music industry’s foot, is still sluggish and inefficient.

Enter SourceAudio, a stealth startup in Los Angeles that is using the power of the cloud and web technologies to make music licensing a quick and nearly painless process. Using a Software-as-a-Service (SaaS) setup where all music and documents are hosted and delivered via the cloud, the company eliminates the time-consuming process of finding the right person to license a song or sound effect, talking to lawyers and faxing documents.

“There isn’t a lot of technology centered around music licensing, but we think that should change,” Andrew Harding, SourceAudio’s VP of product, told VentureBeat. “With our system you can buy and use music quickly instead of the old methods that can take days. With our system licenses get done in real time, the purchase is made, the documents are delivered automatically and the music is cleared for use.”

SourceAudio has thus far partnered with more than 70 music and effects companies and hosts a collection of nearly 1.6 million tracks that can be accessed from individual company pages. (See the example below for a custom company page.) The company claims this collection is the largest database of music on the Internet available for licensing, and Harding expects more than 2 million tracks to be hosted on the network by year’s end. The network supports tracks in .mp3, .aiff, and .wav formats.

Some of SourceAudio’s bigger partners include Premiere Networks, which syndicates most of the top radio shows in the country like Glenn Beck, Jim Rome, Sean Hannity, and Leo Laporte; and Cutting Edge Film Scores, which created the score for the Oscar-winning film The King’s Speech.

“Ideally, we’d like to partner with all music buyers and all music sellers to make this process easy,” Harding said. “We’re in talks with several major broadcast networks and music labels, but we can’t mention any specific names right now.”

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The company generates revenues with a combination of hosting music tracks and taking a small cut of each licensing deal. Pricing to be part of the SourceAudio network increases as your company hosts more tracks. For example, hosting between 1 and 499 tracks costs $99 a month, while hosting between 250,000 and 499,999 tracks costs $999 a month. Ideally, if you were a record company with an extensive catalog, you could steadily add tracks to be licensed and move up the scale of pricing. SourceAudio additionally takes a 7 to 10 percent cut of each transaction, a rate that Harding says is fair for making the process work.

SourceAudio was founded in 2007, but it’s making waves now thanks to the team more seriously focusing on selling the product and strong word of mouth. “We spent a lot of time signing up the first 10 to 15 clients, but most of the rest came from word of mouth,” Harding said. “They heard about our way to make this process work and were excited to do business with us.”

Harding thinks one reason the company is finally picking up traction is because music and media companies are finally embracing digital solutions — streaming services like Spotify and MOG and cloud services like iTunes Match show that the labels are finally willing to give the web a real chance. Sites like YouTube and Vimeo have also recently shown an interest in licensing as well with music store partnerships. At BillBoard’s insistence, SourceAudio will be making its first big push this month at the BillBoard FutureSound conference in San Francisco.

SourceAudio currently has just five employees, but it’s a tightly knit and experienced team. The company is led by CEO and co-founder Geoff Grotz, who created GameTrailers.com, which was sold to MTV Networks in 2005. SourceAudio VP of Technology Ryan Cramer also comes from the GameTrailers.com family and was a lead programmer. And on top of being SourceAudio’s VP of product, Harding is also VP of product development at MTV Networks. The company is self-funded at present, with the majority of funding provided by Grotz.

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