Spotify App Soundrop Tunes Into First Investment: $3M From Spotify Lead Backer Northzone

Spotify’s move last year to open its platform to other apps has created more stickiness for its streamed music services. Now, one of the startups based around that idea has found some traction of its own: Oslo-based Soundrop, which creates “listening rooms” and social jukebox-style service for Spotify users (think Turntable.fm here), has picked up its first round of investment, $3 million from Northzone, one of Spotify’s own leading backers.

Soundrop is a relatively young company: it had been bootstrapped before the Northzone investment and only went live in January 2012, but has already seen the creation of thousands of listening rooms and tracks played. Inge Sandvik, the CEO and co-founder, says that the new funds will be used to develop its product and to “execute on its road map.” As we’ve noted before, that plan involves expanding its own catalog of listening rooms and users — at the moment 7,000 rooms and counting, with some 60 million songs and 3.3 million listening sessions logged. It is also developing commercial services in partnership with labels, venues and more.

“If Twitter can make a billion dollars on placement of tweets, will we also be able to make money on helping artists and labels reach out to their fans,” he says.

That has seen the company already partner with labels like Universal Music, where one room for dance music DJs Sebastian Ingrosso & Alesso picked up 28 million OTS users (a traffic metric standing for “opportunities to see”) after heavy marketing from both Universal and Spotify. Other official listening rooms have been created for Carrie Underwood, Kelly Clarkson, The Fray, The Smiths, Iron Maiden, Carl Cox, Sigur Rós, One Direction and others.

Soundrop is also hiring. “We need more hands on deck,” Sandvik told us. It’s added a designer and front-end developers to its small staff. And it is now setting up offices in Berlin and Stockholm, to work more closely with Spotify, as well as ramping up elsewhere. “We have a lot of business coming up now with the labels in New York and London,” he says.

Other future plans involve more activity on mobile. Sandvik did not specify what that might mean, but it could involve people being able to find “music rooms” based on their physical location, something that the company has had in the planning. (When describing the idea to us in April, Sandvik said the idea was twofold: to let users listen to music from other locations, and to extend the market of legally played music to public places.)

Another will likely be developing more sophisticated algorithms for its service as it continues to grow. Although Soundrop was created in part to help with discoverability in Spotify, it could be facing discovery problems of its own as its service continues to grow. “Where there is a lot of content, is there also challenges with discovery,” admits Sandvik. “This is why our full focus is on enabling a much stronger recommendation and discovery in Soundrop.” He notes that the most recent version of Soundrop’s app features and filters rooms and there will be more improvements coming.

Other developments will see Soundrop making the mechanics of the service more reliable: Sandvik notes that in April the company had to move all of its servers from the cloud to dedicated services because of “too much instability” — “we needed to have more control over the hardware.” There have also been some security issues with users on corporate networks’ antivirus protections. Since implementing fixes for these, “We have had a steady traffic increase are now ready go go faster,” says Sandvik.

Sandvik says that the decision to go with Northzone came after several other VCs came knocking — it is continuing to develop its relationships with those VCs and is currently under NDAs with several of them.

Soundrop chose to go with Northzone, he says, based on its track record with Spotify and wider strategy to invest in the digital music — a sign of how Soundrop might evolve its service beyond Spotify in the future. The company has evaluated, but has yet to offer its listening rooms on any other streaming platforms apart from Spotify’s.

As part of the deal, Torleif Ahlsand from Northzone becomes chairman of the board of Soundrop. “We’re big believers in services that are social and scalable by design, and on top of it are helping enrich the music ecosystem,” Ahlsand noted in a statement. “Soundrop builds brand value and consumption opportunities for artists and labels, whilst creating a more fun listening experience for the consumer.”