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  Industry Profile




Industry Profile: Alexander Ljung

— By Larry LeBlanc (CelebrityAccess MediaWire)

This week In the Hot Seat with Larry LeBlanc: Alexander Ljung, Co-founder/CEO, SoundCloud.

British-born hobby-hacker Alexander Ljung was raised in Sweden, and now lives and works in Berlin as the co-founder/CEO of SoundCloud.

SoundCloud, launched there in 2007, is one of the world's fastest-growing audio platforms with more than 1.7 million registered users.

It employs 28 people.

The service provides tools for musicians, producers and others to share and collaborate on the web. Some 85 apps have been built on top of the platform, allowing SoundCloud users to connect their accounts to creations across a multitude of applications and websites.

SoundCloud has been described as ďFlickr for music,Ē since it enables users -- including Sonic Youth, Moby, and Beck -- to share their music or sound files without format restrictions.

The origins of SoundCloud are modest. It was developed by Ljung, 28, and its co-founder as well as the firmís technology officer, Sweden-born Eric Wahlforss, 30, primarily to enable music professionals to share music with each other.

The pair, who have backgrounds connected to music, had been annoyed that whenever people collaborated on music online, it wasnít possible to get immediate feedback.

Their simple idea evolved into an all-encompassing publishing tool, that provides a quick and efficient way for music professionals to exchange the music they are working on in private settings; allowing for easy collaboration and communication prior to a public release.

With SoundCloud, music professionals can send and receive large amounts of tracks without cluttering their email inbox, having to make use of generic file sending services or managing their own server.

For instance, an artist can make music on their desktop, and they can save it directly to their SoundCloud account. Then, they can use that track when they go to a website and just import it directly from their SoundCloud account. The website doesnít retain the original audio or software because it accesses the SoundCloud platform.

SoundCloudís music or audio files can be embedded practically anywhere online, and have no file-size limit. SoundCloud allows fans and others to comment on specific parts of a recording, and allows artists or labels to share songs publicly or only with specific contacts.

Basic SoundCloud is free to use. Four premium accounts, available for different fees, remove restrictions on how many songs can be uploaded and how many contacts a user can have.

Ljung has a Master of Science degree in Media Technology with a major in Human Computer Interaction from the Royal Institute of Technology in Stockholm. He also studied marketing and business development at the Stockholm School of Economics.

While in university, Ljung and Wahlforss collaborated on a joint Masterís Thesis that evolved into a book ďTrustmojo,Ē centered on web-trust.

How many registered users does SoundCloud have?

We are at about 1.7 million.

Are the bulk of users artists and labels?

Yeah, definitely. We have quite a wide definition of that (group). We look at the whole group as creators. Most are people that are creating audio tracks themselves. Some of them are managers or a label that is very close to the original creator. A lot (of what is being sent) is music, but not all of it is music. There are some crazy applications for audio books, and there are some people doing voice blogging and things like that. That is more niche, but it is there.

How cool is it having Sonic Youth, Moby, and Beck using SoundCloud?

Yeah, there are a bunch of really cool artists there. (The service) keeps popping up with new ones (celebrity artists) which is exciting.

You seem very busy right now.

It has been extra (busy) at this point. I have been traveling to the U.S. a lot. We are about to set up an office in San Francisco, so we are at this really fun point. We are going to expand the office a little bit, and expand what we are doing a bit. So Iíve been traveling back-and-forth (to San Francisco), trying to run everything smoothly here (in Berlin) while being out of the office a lot.

When will the San Francisco office be operational?

Weíre hoping in the next two months or so weíll have something there. Itís fairly small to begin with. We will have two of our guys move over. Then, Iím going to split my time 50/50 between Berlin and San Francisco.

Are you setting up an office in San Francisco because itís close to Silicon Valley?

Yeah. It is really for the techs there and all of the web companies. Part of SoundCloud is that it is an online platform with open APIs (application programming interfaces,) which means that other people building web technology and web products can use SoundCloud as a platform for their products as well. Part of us being in San Francisco is to get closer to other web technology companies there and make sure that they get integrated with SoundCloud, so our users can use all of the different services from one single place.

[Silicon Valley, in the southern part of the San Francisco Bay Area, is home to many of the world's largest technology companies including Apple, Google, Facebook, HP, Intel, Cisco, eBay, Adobe, Agilent, Oracle, Yahoo, Netflix, and EA.]

How have users found out about SoundCloud?

Thatís a good question. We still havenít done any advertising or anything like that. Thereís been no real marketing around it. I think there are two things to it. One is that we started from our feeling that there was really something lacking on the creatorsí side. We knew that there were a lot of creators out there. I think that when some people started to see (the service), they felt really connected to the service. I think people got really passionate about it early on. People are very passionate about (the service) and they want other people to see it as well.

The second part was that, in essence, one of the main Ďuse casesí is that you use SoundCloud for sharing tracks with other people. So you are uploading your tracks and then sharing them with other people.

The service makes it very easy to get the word out to other people about itself.

It is a viral and an organic growth; it is more from the users themselves. I think that (our growth is) partly because we make it that simple for them, and partly because users are really passionate about it.

How many apps are available on SoundCloud?

It has about 85 apps. SoundCloud is an open API that anybody can use. When somebody builds something like that for SoundCloud, it increases the value proposition of SoundCloud for our users as well. It makes it a more engaging experience for users. It is more value for them to keep using SoundCloud.

It is with the four premium accounts that SoundCloud makes money?

Yes. You can think of it as a tool set. Itís a software tool set where we have a free service that brings in a lot of users to try out the product. Then, a certain sub-set of those users, they are going to want the power edition of the service. They are going to upgrade to one of the premium accounts, with all of the features. Then they pay for the software as they use it. They can pay on a monthly or yearly basis. If they decide that itís not worth it anymore, they can quit at any time.

What are the differences between the premium accounts?

The differences are mainly based on four features. One is the amount of details around the statistics of a track. How much insight you get into what is happening. The second one is how many different widget formats you have. So, itís the richness of how you can express yourself across the web. The third one is on how deeply engaged you can get with the community on the site. The fourth one is the amount of minutes of uploads you have.

You measure in minutes?

Itís easier to measure in megabytes but that doesnít make as much sense for the user. They call it beats per minute for a reason. Not beats for megabyte. So we just present minutes to the user; that makes more sense in a music context.

How much money did you launch SoundCloud with?

We really didnít have any money at the time. We came out of university; we had a little bit of extra money from consulting work we had done. We rented a small apartment here (in Berlin) and got a tiny office space. Then, we got some (air) flight tickets for two or three friends from Sweden to join us for the summer. That was pretty much it; it wasnít fancier than that. I have a lot of pictures of us sitting in our really bare office. We built our own desks, and as the heating wasn't working, we have gloves on with cut out fingers so we could still type.

Not even IKEA furniture?

No. We just took some junk we found in the yard and built some furniture. We had a stereo there. I bought this second hand stereo for 20 Euros which we used for awhile. We were coming out of university so we were used to living on a very low budget. It wasnít much of a problem.

Soon after its launch, you received funding from a small group of private investors.

Yes, we did. Here in Berlin, we got some early angel investors. Then in 2009, we closed a deal for equity based investment from a London-based capital firm called Doughty Hanson Tech Ventures.

In 2007, you and Eric set up SoundCloud in Berlin on a weekís notice.

Yeah. It was a really crazy time. But, it was fun. Eric and I had gone around to a couple of cities in Europe to see if it made sense for us to start up in some other place other than Stockholm. We had a really great day in Berlin. We got back home, and thought, ďLetís just move over.Ē

Eric already spoke German.

Yes. He had a little bit at the time. Now, his German is quite good. We have a real international team so we speak mostly English at the office.

Howís your German?

To be honest, it is terrible. Iím not quite getting there.

Whatís the benefit of SoundCloud being in Berlin?

There are a few things. There is something special in the city. There is a lot of art and a lot of creativity, and people who are very experimental and progressive about their art. That exists on the technology side as well. There are a lot of really great progressive new technologists here as well. That intersection is interesting for us. Progressive art and progressive technology really fit what we are trying to do. This is a real great atmosphere to be in.

Then, what we realized later on was that, compared to other European cities, Berlin is a really cheap city to be in as well. You can have people who live in a real amazing city, that donít necessarily need that much money to do it. So, we can run the company in a really cheap way.

How difficult was it establishing SoundCloud in Berlin?

(Laughing) Deutsche Telekom is worst in the world. Itís funny, but with our old office we had to struggle so much to get the internet connection there. It was an old building, but still. It was crazy. Finally, we got some Deutsche Telekom guys to come around. They installed an internet connection that was basically a single wire hanging from the window of the office, and down the front of the building. It was open, anybody could have cut it off. That was our whole internet connection as a web start up.

Did you have Wi-Fi?

We had a Wi-Fi router plugged onto that. All of the computers were going through that tiny wire hanging out the front of the building. It didnít make me feel very enthusiastic about Deutsche Telekom.

What are users looking for at SoundCloud?

Itís a bit of everything. The common thread through, is that people are looking to share sounds in one way or another. It can mean that I want to share only with you because we are collaborating and I want to get some feedback on something. It might mean that I am sharing an unfinished work with a larger set of the community on the site to get some input or some ideas from people. Or that I want to share it with a wider set of web users, maybe for a promotional purpose or something like that.

With its ability to be embedded anywhere, SoundCloud is, in fact, a hub.

Exactly. We wanted to make it really straightforward for someone that is creating sound and music to utilize all of these different applications. No matter if it is a desktop application for making music or an on-line site for promoting. We want them to use all of these things seamlessly and inter-changeably. So we are trying to build this layer in between that can connect to all of these different things. Ultimately, it allows the users to use their sounds wherever they want.

To date, the use of music on the internet has focused on consumption.

Yeah, exactly. We were quite different from the beginning. I think what we were doing was not so interesting from a bigger perspective, because what we were really saying was that weíre not going to build something for the consumers. There were already enough people focusing on consumers. We really want to focus on the creators and the different needs that they have.

The consumer field for music on the internet is overcrowded with so many technology and content competitors.

Exactly. I respect that they are all trying to focus on how to get a certain amount of tracks available, and in different ways, for consumers. It is a really interesting problem, but there are already a lot of great people trying to solve that. Sometimes, there have been ambitious (consumer-related) things that people were trying to build, but they were never executed very well.

Whereas, we saw that there was much less activity, and definitely less things from a tech perspective happening on the creatorsí side. We wanted to bring our knowledge of great web technology and put that in the hands of the creators.

You wanted SoundCloud to specifically service creators?

But we wanted a broader set of creators. We have very high-end professional users, but we also have people that are just starting to create different types of sounds. It may not even be music, sometimes it might be audio clips or people doing talk radio or stuff like that. We really wanted to provide tools that would work for a bunch of different kinds of creators.

Both Eric and you have been involved in music and sounds for years.

I used to be a sound designer in a post production studio, I did sound and music for TV and did some feature films. There was also quite a bit of advertising (work). Eric has released music under his artist name, Forss. He released an album (ďSoulhackĒ) and has toured around. We both have had backgrounds that were deeply involved in creating different types of sounds.

Berlin is one of the great music cities.

Yes. We listen to a lot of different music. We are very much into electronic music, and Berlin is definitely a good city for that. One of the things that drew us here was the very experimental attitude toward music here. People trying out all kinds of crazy sounds.

You two arenít music industry people. You are both tekkies, really.

To a certain degree, definitely. We are both kind of nerdy guys. Eric, obviously, has music as an artist. He has been more in the music industry, but more on the artist side of things. I have come into it more from creating sounds and music for TV. But we are more from the tech side I would say.

Look at your degrees in media technology, and marketing and business development. Not too much music there.

Not so much. We were mostly doing (music) on the side. Even though with media technology, I was focusing on human computer and direction. It was technology focused; we were building some installations where people could experiment with music and physical space. There was always this mix between media, music and technology. I think that we are both into technology, but we are always trying to apply it in more creative areas.

Did you and Eric meet in university?

We did. We had heard about each other from different friends. The first time that we met was in one of the computer labs at the Royal Institute of Technology. The reasons that we started talking was that we were the only two guys there with Apple laptops. We were both trying to synchronize the schoolís calendar feed with Macintoshís iCal application.

You two collaborated on ďTrustmojoĒ as a the joint Masterís Thesis that became a book on web-trust.

That was one of the first bigger projects that we did together after we met up. We started doing a bunch of different projects. We tried to get overlapping courses and stuff like that, so we would do different projects together. We tried to do projects that had some point to them, outside of a university context. We were sort of using university as a framework for doing projects that we wanted to do. We built some different inter-active installations and stuff like that. The thesis was the first of the bigger projects that we did together. We moved to San Francisco for a while to interview people building social software there. I started reading a lot of sociology as we started writing the book.

[Wahlforss has a Master of Science degree in Industrial Economics with a major in software engineering from the Royal Institute of Technology in Stockholm. He spent three years studying economics at the Stockholm School of Economics. He has been involved with the web on almost every level, as an interface designer and programmer, interaction designer and strategist.]

Did the strategy for SoundCloud develop during that period?

It wasnít so directly linked but some of the ideas, and some of the design principals came out of that and influenced a lot of what we ended up building. The book was about sociology and social software, how people interact with each other on the web. It had nothing to do with sound or music. But when we started building SoundCloud we applied a lot of the things that we had learned from the book on how to design spaces online for where people could be social.

We are probably not even out of the starting gate in terms of the potential of the internet.

Exactly, and there is still so much stuff missing. For us, in the beginning, it really was (about) a personal thing that we were missing. We wanted to be able to send files back-and-forth to people and (be able to) comment on them while we were working on them.

Even MySpace is more a social network than a provider of music.

Itís a mainstream social network. As photographers, we really loved how Flickr worked, and how it was focused on the creators of photos. There are social elements to it, but (the platform is) around the actual photos themselves and it is more for the people who take photos. We really wanted to have something like that for sound and music as well.

Flickr is like Twitter for photographers.

Yes, there are certainly similarities. A friend of ours wrote this really great article about how above a context, people need some kind of object to be social around. He talks about throwing a beach ball out into the audience and everyone starts passing it around and talking to each other. The ball sort of becomes an object that they are social around. In Flickr, thatís obviously the photos. In Twitter it is the status update itself. In our case, itís the sound.

The sound and the ability to comment and interact with the sound.

Yes.

The interaction is an important aspect of SoundCloud. With music downloads on the internet, thereís generally no emotional attachment to what is being downloaded.

Thatís true. As soon you download something you have lost the connection to the original source right away. Whereas, if you actually keep the source online and advise and direct around it there, you build up this social context and a lot of interesting information around the track that you can aggregate over time as well.

Having the creator discuss how they created the track isÖ

That stuff is amazing. I have seen some producers put in very detailed info about what they are doing behind the scenes. That stuff is just great. Both to listen to and to watch. To actually play a track and look at those comments while they appear is a really cool experience.

Artists and producers are also using SoundCloud to collaborate with others.

Yes. People use it to send tracks back-and-forth all over the world.

How is the sound quality on SoundCloud?

We have tried to optimize for scenarios of people wanting full quality and also having something faster and more accessible. We allow people to upload (files) in just about any quality. While we save the original uploaded file on the service, we then create a smaller file that we use for streaming online. The user always has access to the original track if they need to download it and work more on it. They can always get the original file.

In effect, they control the master.

Yes, they have the (high quality) master stored but they have this (lower quality) online streaming. It is one of those things that you donít see on the site or you donít notice. But the thing is, that you can put just about any kind of file into it, and it will work with it. We have done a lot of things to make sure that nothing unexpected disrupts the user flow. No strange error messages etc.

What security measures are there?

As far as people being able to set up their private tracks while collaborating on things, there are pretty high measures of security on that. Itís not military great, but it is as close as they get.

The creators control the distribution.

Exactly. I think thatís a really big deal. People can put things up and they can see the statistics of what actually happens with it in different context. They have a lot of control over what has been put up.

Are there rights issues involved?

We are providing a service for creators. When a creator wants to upload stuff, they give a representation that they have the rights to do what they are going to do with the tracks. We have to rely on them being professional enough about only doing the stuff that they are allowed to do. We have a very fast system of being able to take down things in case somebody doesnít have the rights.

The creators as rights holders are, in effect, granting you an exemption.

Yes, but they only have to give us enough (permission) for them to use the service. As soon as they remove their tracks, no rights stay with us. It is completely in the hands of the owner. We are a temporary service for them. It should be (seen as a tool) in which they have control and they can back out at anytime. Like software that you are making the music in. You are putting your music in there, but you should never be giving any rights to that tool. It is just tool that you are using.

At this point, SoundCloud only supports audio. Will you provide a platform for video at some point.

There is no VideoCloud planned. Even though it would be fun to do, we think that there is just so much more to do on the audio side; and there are so many millions of people out there creating audio. So, we really want to focus on getting all that.

At some point will SoundCloud develop hardware?

That would be fun. But, like with video, thereís so much to do with what we have now. It would be really fun though. We did an experiment where we had a MIDI controller that we could send sounds to SoundCloud with. It was done as a hack on the weekend. Itís a very cool feeling where you have a hardware item hooked up to the web. But, we have no immediate plans for video.

Thereís great stuff out there for people that take photos; and thereís some pretty good stuff for video as well. What we are really looking at is what is good for sound.

As a fan, is there any artist youíd like to use SoundCloud?

(Laughing) Well, if Bjork would sign up for her own account, I would definitely stalk her.

Larry LeBlanc is widely recognized as one of the leading music industry journalists in the world. Before joining CelebrityAccess in 2008 as senior editor, he was the Canadian bureau chief of Billboard from 1991-2007 and Canadian editor of Record World from 1970-89. He was also a co-founder of the late Canadian music trade, The Record. He has been quoted on music industry issues in hundreds of publications including Time, Forbes, the London Times and the New York Times.


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