Utopia wants to be the ‘operating system’ for the music industry, and 3 other things we learned from founder Mattias Hjelmstedt’s new interview

Since Switzerland-based Utopia Music launched in 2016, the label has been a hit with its aggressive acquisitions of businesses in the music sector.

However, in the past six months, as the company has revoked some of those purchases and made successive rounds of layoffs, many have looked at the company’s acquisitions and questioned: Is Utopia Music going What are you trying to do?

The company has established itself as a Music Big Data company, developing a proprietary music monitoring platform sometimes referred to as the Utopia Open Platform. This technology tracks songs played on radio and other TV stations around the world, and determines plays across streaming platforms, essentially trying to be a one-stop shop. best for measuring music.

It has also sought to become a music service and royalty collection platform, operating under the motto of “fair pay-per-play”.

It has long been clear that Utopia has established itself through a series of acquisitions.

In 2021, it bought the Quincy Jones-backed AI company Musimap, uses proprietary AI technology to develop emotional metadata about music for customers. This technology can be used to create playlists that match individual profiles or reflect certain genres or moods, or to search for music.

That was immediately followed by Acquiring Lyric Financial, a Nashville-based company that offers musicians advances in royalties they owe. (As it will become clear later, this is an important purchase for Utopia.)

At the time, Utopia’s takeover campaign had only just begun. Company buy soon Music industry directory ROSTR is based in the US and music data analytics platform ForTunes is based in Austria. Utopia has brought the two companies together to form the new Creator Services Business Unit, which it says will “provide creators with a comprehensive analytics platform, industry portfolio, and tools.” other marketing tools”.

It continues buy Music publisher and publishing manager based in Liverpool Music group Sentric, which Utopia converted into a new Royalties Management Service unit. Less than a month later, it buy based in the UK Absolute label servicedistributor and service provider for indie artists and labels.

During this time, the company lift up €300 million in a Series C funding round means a market cap of approx €2.5 billion – catapulted the company into a dual unicorn and one of the biggest success stories in the music business of the past decade.

In early 2022, Utopia went in an unexpected direction – it entered the physical music media game, with redemption by UK-based distributor Proper Music, giving the company a strong foothold in digital and physical music distribution.

Less than a year later, it has expanded its share in the physical music world with buy by Cinram Novum, a UK-based warehousing, fulfillment and distribution company. And most recently, the company Signed One £100 millions agreement with logistics company DP World to provide warehousing and logistics for physical media in the UK.

But at the end of 2022, things started to go sideways. That November, Utopia announced One round of layoffs is said to have affected about 20% of the employees of the company, which will be around 1,200 people at that point. Less than six months later, the company cut other 15% its workforce.

Furthermore, Utopia seems to have made buyers feel remorse for some of their purchases during that years-long shopping spree. It sold music industry directory and data platform ROSTR back to company founders, followed by discount of music publisher Sentric to France-headquarters Trust.

Amidst all this, vortex report on unpaid tax liabilities in Sweden and unpaid employees.

So what happened to this musical unicorn, and where does it go next?

in one rare interview on the Dealmakers podcast with Alejandro Cremades, Mattias Hjelmstedt, founder of Utopia, offered some hints about what’s happening with the company and its next direction.

Hjelmstedt is bring back took the position of CEO earlier this year, after Markku Mäkeläinen left the position in January.

MBW listened to Hjelmstedt’s podcast interview; Here are some highlights of what he had to say.

1. The financial world no longer rewards “super growth” companies like Utopia

It’s no secret that the financial world has been turned upside down over the past 18 months, as central banks have begun to raise interest rates in a fight against inflation that has proven to be more enduring than most expected. .

In this environment, technology companies – including music-related tech companies – are increasingly finding it difficult to raise capital.

“We went through that period of super growth. We went from 40 to 1,100 people. We have recruited a team of specialists [and came] from some of the biggest growth companies in the world. And that worked great until the world stopped rewarding it.”

Mattias Hjelmstedt, Utopian Music

“The last 20 years, and especially the last 10 years, [have] Hjelmstedt said. “Take a lot of the great companies that exist today. They went through these hyper growth scenarios, which increased their value massively. Not always from a profit standpoint, not always from a revenue standpoint – just be able to capture the market [share] by growth.

“This is how the financial world looked [for] The past 20 years, and a year ago, it all stopped… We [caught up] in a context where companies are failing because of it. You’ve even seen banks broken by it and it’s not going to stop anytime soon.”

Hjelmstedt said businesses now have to reorient themselves and consider sustainability and profitability.

“Based on experience, we went through that period of super growth,” he continued. “We went from 40 to 1,100 people. We have recruited a team of specialists [and came] from some of the biggest growth companies in the world. And that worked great until the world stopped rewarding it. We can raise capital every time with high multiples and we can also get oversubscriptions [in our funding rounds].”

Now, the company is feeling the touch of a world that is harder to reach. But even the recent restructuring “requires money, and that… is not an easy thing to do, even for us, a unicorn-level company,” notes Hjelmsted.

2. Utopia downsizing is working and reducing cash consumption by 75%

Hjelmstedt asserts that if there’s one piece of good news to be found in Utopia’s half-year sale and layoffs, it’s that the company is in control of its finances.

“We went through the life cycles that… you see in today’s tech world. We have downsized. We had to look at the activities. How many offices do we have? What is the cost? How do we operate? How do we [do] cost control?” Hjelmstedt said. “So in about six months we were able to lower [cash] burn [by] About 75% and we are still increasing sales this year [by] About 80%.”

“It has been a difficult but exciting journey, but also a bit sad because there are so many wonderful people [who were let go] But [in] Ultimately, the vision of making the world of music a better place is too important not to make all the decisions to get there.”

Mattias Hjelmstedt, Utopian Music

However, Hjelmstedt said the layoffs have made it difficult for the company.

“We have created a company with very high people value. We [couldn’t] name [ourselves] Utopia without it. And then really have to let go [of] people who are there for the vision, to be able to achieve it,” he said.

“It has been a difficult but exciting journey, but also a bit sad because there are so many wonderful people [who were let go] But [in] Ultimately, the vision of making the world of music a better place is too important not to make all the decisions to get there.”

3. Utopia wants to be the “operating system” for the music industry

So where does Utopia see itself going from here? Hjelmstedt paints a picture of a business that is rooted in every aspect of the music industry, including physical media.

“We do everything, [even] actual distribution of the music,” he said. He further stated: “We even… work about 98% out of all the physical vinyl deliveries in the UK for example, so in the UK, every single [vinyl] record you… the purchase has been delivered by Utopia.”

However, his vision for a data company that integrates global measurement of music plays and creator royalties, making the industry more efficient, remains intact.

“We work with reality [royalty collection] societies in different territories to upgrade and make them modern, so… it’s almost like an operating system for an industry,” he said.

The idea is to create systems that save time, because “when you save time, you can actually spend more time creating more things. More… music comes out and people can listen to more music, which benefits the industry as a whole.”

4. Sponsoring musicians and rights holders is a major part of Utopia’s business model

One thing Hjelmstedt highlighted in the interview was the fintech aspect of Utopia’s business model when answering a frank question from Alejandro Cremades: “How do you make money?

“We do the actual gathering [of royalties] and money distribution. We even have advancements when – this may sound crazy, but if you, for example, an American artist and you [got airplay] on radio in Germany, it can take two years for you to get paid,” says Hjelmsted.

“And even if you’re a musician and you’ve uploaded your music to a distribution platform, to Spotify, [on] Spotify’s average billing period for the system is nine months, so there’s a lot of legacy in that. … So we can realize [that a song got] play and we can actually advance money for [rights holders]. You can get your money tomorrow instead of waiting years for capital, which means you [in] control your destiny… instead of selling your assets, you can actually own them, control them and work with them.”

Utopia in 2021 redemption of Lyric Financial appears to be an important move in developing this side of the company’s business. Business specializing in in royalty advances to music rights holders, and in partnering with Utopia in 2021, Lyric Financial says it has achieved “competitive advantage, strength and optimized market positioning.” in the rapidly evolving music technology market, enabling faster payments for creator rights.”

Hjelmstedt concludes the interview with some advice drawn from Utopia’s tough combat experiences in recent months.

“The biggest piece of advice I can give everyone [is] make decisions. Operate. Don’t hesitate. Keep moving forward, because that’s what makes a company successful, and when we talk about valuation, one of the best [sayings] I have heard that, The valuation of [a company is] usually equal to the number of problems you solved to get there. And I think that’s the life of an entrepreneur.”Global Music Business