Epidemic Sound’s Oscar Höglund on the future of the music industry

Epidemic Sound's Origin and Core Model

• Founded 15 years ago by Oskar Haugland to "soundtrack the internet" as it transitioned from text to video-centric platforms.
• Operates as a B2B SaaS subscription platform providing royalty-free music to content creators, with a catalog covering approximately 20% of all YouTube content.
• Reaches 2.5 billion people daily, serving hundreds of thousands of customers ranging from individual creators (e.g., MrBeast, PewDiePie) to major corporations (e.g., Netflix, Fortune 500 companies).
• Differentiates itself by acquiring 100% of IP rights for all tracks in its catalog, eliminating the "tragedy of the commons" caused by multiple stakeholders with veto rights in the traditional music industry.

Financial Structure and Artist Economics

• Employs a 50/50 revenue split between the platform and artists on royalty income generated from streaming platforms (Spotify, Apple, etc.), contrasting sharply with the traditional industry standard where artists receive only 10–15% after labels and publishers take 80–85%.
• Generates a gross margin of 92% by avoiding traditional licensing complexities and leveraging a unified rights ownership model.
• Created a "flywheel" effect where content creators drive massive distribution, generating data signals that lead to increased artist remuneration and further artist acquisition.

Artificial Intelligence and the Creator Economy

• Macro Impact: AI is expected to expand the Total Addressable Market (TAM) by lowering barriers to content creation and increasing efficacy across the entire creator economy.
• Strategic Advantage: Epidemic Sound leverages three key AI ingredients:
  • Data: Ownership of the world's largest depository of unencumbered, high-quality music IP (words, stems, vocals) which legacy rights holders cannot fully utilize due to fragmented ownership.
  • LLM Access: Utilization of accessible Large Language Models and skilled workforces for fine-tuning.
  • Reinforcement Learning: Daily feedback loops from 2.5 billion interactions to train models on user preference (e.g., skips, engagement).
• Application Priority: The company prioritizes "recommendation" and "adaptation" over pure generative music to solve immediate creator pain points:
  • Recommendation: AI analyzes billions of data points to suggest specific tracks that historically perform well with specific video contexts (e.g., specific audience demographics or content length).
  • Adaptation: AI tools automatically adapt full-length tracks to specific video durations (e.g., 15-second TikTok clips) without requiring manual audio engineering.

Industry Trends and Future Outlook

• Content Renaissance: The last 3–5 years are characterized as a renaissance for storytelling, with innovation in both short-form and long-form content formats.
• Format Convergence: Short-form platforms are introducing long-form content, while long-form platforms are adopting short-form, and Western ad-driven models are merging with Eastern fan-commerce models.
• Democratization of Production: While distribution was democratized by smartphones and social platforms, AI is now expected to democratize production, significantly altering the ratio of viewers to creators.
• Challenges: The industry faces ongoing concerns regarding intellectual property guardrails, child safety, hate speech, and the potential for reduced attention spans due to content abundance.
• Market Sentiment: Haugland maintains a "hardcore optimistic" view, expecting the sector to solve these challenges while continuing to grow.