Having already interviewed Epidemic Sound, I decided that Artlist would be a good follow-up since the Israeli music tech company has risen the ranks of royalty-free music providers in recent years. In contrast to much of their competition, however, they also offer royalty-free sound effects and stock film footage as part of their services, among other things. I got on the phone with their Head of Music, Ori Winokur, to discuss the company’s origins, its business model, and how they built themselves into a major player.
– Hi Ori. Glad to be speaking with you. Before starting at Artlist, you appear to have been a music producer for 20 years. Can you elaborate on your background?
Sure. I’ve been into music since I was a toddler, and my parents said I used to pinpoint records before I could even speak. I grew up in Jerusalem and started playing the saxophone at the age of ten, but moved on to guitars and bass after a few years. Aspiring to be a rockstar was typical of a kid in the 90s, so I spent a lot of time writing music and playing in bands. I had a brief period after high school of studying jazz in New York at The New School, but things started to click when I became a sound engineer back in Jerusalem, which in turn led me to work as a producer. I was very lucky to produce one of our most successful emerging artists at the time called Asaf Avidan. His album was called “The Reckoning” and went #1 in Europe for a whole summer. It kicked off my producer career and since then I’ve also been a tour manager, band manager and worked in distribution. So my music career has been varied.
– How many albums did you work on during your 20-year production career?
I never really counted, but I’ve probably been involved in over 300 records in my indie career. I opened a studio in Tel Aviv that was quite successful for seven years. It was called The Slick Studio and became a hub for most of the indie scene in Israel where I was lucky to produce a lot of standout indie artists and international breakthroughs, like Lola Marsh.
– Why did The Slick Studio close down?
Partly because of bureaucracy issues with the municipality of Tel Aviv, but I was also so involved with Artlist that it took me out of the studio for long periods. So I took it as a sign to let it go, even though it had been a great place for seven years.
– What specifically allowed you to pivot from being a studio owner to working at Artlist?
About three and a half years ago when Artlist was in its early stages, the founders approached me about establishing what came to be Artlist Original, our in-house music production team. As we saw with Netflix, it makes sense for platforms with a strong culture and large user-base to create their own content. Artlist wanted to go in that direction and approached me about it, so I joined the company in January 2019.
To be honest, I was planning to open my own record label prior to working at Artlist, but I was so impressed by the things happening here that I transferred my idea into Artlist Original. We had some resources in place, but I pretty much built our music production infrastructure from scratch, which includes a digital distribution arm and publishing entity. I pulled in many of my old colleagues to work with me and we’re now a global label and publisher on the same level as a major. We’re also growing quite rapidly and recently crossed the 300-employee mark. I started as employee #41, and today I’m Head of Music with nearly 40 employees under my wing.
– Great to hear. So did you transition straight from running Artlist Original to becoming Head of Music?
I ran Artlist Original for two and a half years before getting promoted to Head of Music in 2021. I was actually Head of both Music and Original for 6 months, which covered five different departments (laughs).
As head of Artlist Original, my job was to help upscale our production and distribution infrastructure. We were able to do that five times in only two months. I now work solely as the Head of Music, where I’m in charge of everything inside our music departments, and I’m also the main contact between my teams and upper management.
– You mentioned running various departments. Can you break down what some of them are and what they do?
The music and Original’s departments have an A&R team that signs talent for the catalog and an audio team that handles all the engineering, mixing and mastering from one of the best studios in Tel Aviv. We also have a media team that’s in charge of how the music is published to our customers. We also have the Label Service department that handles digital distribution and copyright management. So it’s an A-Z music operation, and overseeing it entails a lot of different things. I could be giving feedback on a song in one moment, and talking to our AI guys about music algorithms the next. After that I might have to speak with our CSO about business development. So my day varies a lot.
– Coming from the indie music scene, what was the most unexpected thing you had to adjust to at Artlist?
As an indie producer, I imagined that production music was something trivial that played in the background of films, TV shows and commercials, so my initial impression was that Artlist only produced music in line with that. But since video content developed so rapidly in the 2010s, alongside the rise of bedroom music production, the media landscape expanded dramatically. The creator culture opened up doors so any kind of genre can now be synced to a video, and Arlist’s purpose is to match the right songs to the right video, irrespective of genre. We produce Indian music and trap music in the same day, and all of it gets used by our subscribers. We also have a lot of hit records that find success outside of the Artlist ecosystem. So accepting the new reality about production music was one of the bigger adjustments I had to make.
– Do you know the story behind how Artlist was founded?
Yes. When I joined Artlist, it was a small yet successful company that had been profitable since its second week of business, largely because of how precise their business model was. It was founded by four people – one of our co-CEOs, Ira Belsky, was an indie video creator who made content for YouTube and private customers. He was having licensing problems due to repeated copyright strikes from YouTube, and soon ran into two guys from the music production world called Assaf Ayalon and Eyal Raz. Assaf had a lot of unreleased music and asked Ira if he knew any sync libraries to license them to, and Ira suggested they start their own using a new subscription model. So they joined forces with Itzik Elbaz, one of our co-CEO’s with a vast technology background, and that’s what happened
For the business model, our founders took inspiration from streaming services where customers pay for a subscription instead of the music itself. So Artlist would provide a universal sync license and build themselves up as a platform for video creators in search of music.
The quality of our music is, in my opinion, the best in the industry. Artlist feels and looks more like Spotify than any other licensing platform, and all our music is sourced from independent artists looking to build their careers. So it’s not sourced as background music, and the quality is so high that it sees a lot of success in the wider music world. For example, once certain music is discovered on our platform, it receives millions of streams without any promotion from us at all.
– Wait, Artlist was profitable in its second week after launching? Can you explain that more?
Successful startups are the ones who move with precision, even if their steps are very small. They do that by addressing real problems in the marketplace, which is what Artlist did. Seven years ago, millions of video creators were already experiencing music licensing issues, yet all of the royalty-free music companies had a model where you had to pay per track, even if it was only $1. As you can imagine, tracks that sell for $1 are likely to sound like $1-tracks quality-wise. So it was hard to find good music at an affordable price, especially for YouTubers with no budget. These are people who set up their channels in hope of becoming online stars, but they had a long way to go before making money. There were also lots of small-budget creators making content for local businesses, such as wedding photographers. They had problems uploading their customer’s videos to YouTube because they’d get blocked for using famous songs. So people needed a better solution and we provided that.
When we launched the first Artlist site, Ira our CEO would take note of how many subscribers were signing up. He kept track on a sheet of paper that he thought would take forever to fill up. A week later, he’d run out of space and he had to start a new page (laughs).
– Since Artlist has done well from the very beginning, can you share any examples of the success stories you’ve seen?
Sure. One of the first records I produced at Artlist was a piano sonata called “Ballerina” by Yehezkel Raz. We released it without much promotion, and two days later it ended up in a video for Ryan Reynolds‘ Bottle Cap Challenge where it had amassed 15 million views. The track wasn’t on Shazam and Yehezkel wasn’t credited in the video, but he started getting multiple messages on Facebook from people who’d heard his music. They probably found his name on Artlist since the song was on our front page. I remember him telling me, “I never released music that reached 15 million people in two days… “. That’s when a lightbulb went off in my head that Artlist was on to something. Our customers were basically the new generation of tastemakers – just like radio influenced yesterday’s music consumption, video creators have that role today.
It took us a lot of work, but we built a full distribution pipeline for our music and “Ballerina” now has over 3 million streams on Spotify. It still gets used in a lot of new videos that drive more people to our service.
– But how did Ryan Reynolds get the track?
I believe the track was on our home page, so he just downloaded it as a subscriber. That’s what most of the big companies do, and to tell you the truth, any notable brand you can think of has an Artlist subscription.
– Given that Artlist is only a few years old, how have you been able to secure big brand clients like Nike, Mercedes and Netflix?
It just happened. We didn’t do anything to onboard those brands. I think it resulted from our quality of music because those companies are looking for specific stuff that they were able to find on Artlist. I was approached two years ago by an HBO-related production company who said, “We found some great music on your website, and we normally don’t use online subscriptions for music, but your stuff was so good we had to get it “.
– That’s a great story. So when Artlist first launched, do you know how many songs were in the original catalog?
The initial catalog was launched with about 700 songs that were recorded by Assaf, Eyal, and some of their friends. But Artlist isn’t about quantity; we have 21,000 songs after seven years of being in business, which is less than the number of tracks released on streaming platforms per day.
– I’ve heard people use the word “micro-licensing” when it comes to royalty-free music. Can you elaborate on what that idea means?
Sure. If you look at the history of licensing since the 50s, the entire system of music and video was dominated by big companies like Sony, Universal and Warner. So if Sony needed a song for their film, they’d just license it from one of their publishing subsidiaries. Rarely would big companies turn elsewhere for their sync needs. A famous exception is when Nike paid $500,000 in 1988 to use “Revolution” by The Beatles for one of their commercials. It was one of the biggest licensing deals at the time. Additionally, publishing companies were used to specific legal models, which is why films and TV shows required different licenses for local and international broadcasts. But broadcasting became global with the digital revolution; YouTube is by far the biggest broadcaster in the world, so media consumption isn’t determined by territory anymore. Also, today’s content creators are developing smaller projects that earn less income, so micro-licensing refers to small uses by regular people rather than big corporations or Hollywood productions.
Another development worth mentioning was the movement from exclusivity to non-exclusivity. When Nike licensed “Revolution”, they probably stopped anyone else from using it; nobody cares about that anymore because so much content is being released. It’s actually the opposite – if Nike releases an ad with an Artlist track, they like to see that other companies use it because it points to a trend.
– Speaking of sync, is it true that Artlist was the first platform to offer sync licensing for video by way of a subscription?
Yes, I believe we were. Artlist’s model has been one of our main contributions to the industry, and our competitors quickly adopted the same approach. They previously used a direct license model where you paid different prices per track, but they quickly added a subscription model after we debuted our service.
It’s possible that Epidemic Sound had a subscription option just for YouTube usage, but no-one had a universal plan that covered all video uses.
– Got it. And you’re currently one of the fastest growing companies in Israel?
Yes, I believe we’re actually the fastest-growing company in Israel, and we might be the fastest-growing in the music content creation industry. Artlist really developed in the last two years as we’ve expanded into new asset types. For example, we have a website for high-quality stock footage that was launched in 2019. It’s called Artgrid, and it’s also subscription-driven.
We also added a sound effects library in 2020, and in the past year we acquired two companies. One is called Motion Array, which is a marketplace for video creators that offers multiple assets from plugins to templates, skins and fonts. Our most recent acquisition is FXHome, which is a UK-based company that created an amazing video editor. So we’re expanding from just content to include media tools, in order to have as wide a solution as possible for our user’s needs.
– As you touched on, Artlist bought Motion Array in 2020, reportedly for $65 million, and acquired FXHome last year. What was the rationale behind those acquisitions?
FXHome is our most recent acquisition from six months ago and marks our entry into software tools. We were exclusively focused on media assets prior to acquiring them, but we’re becoming a one-stop shop for content creators by providing them with both assets and tools.
Motion Array is a two-way marketplace, so it’s different than Artlist’s subscription model. The creators make assets that they upload on their own and get paid when users download them.
– How did the sound effects library come about?
That was launched two years ago and is based on buying sound effects packs from external creators, though we’ve started making our own recently.
– Given the success of Artlist, what does the rest of the Israeli music tech scene look like? Are there other companies experiencing similar success as yours?
– And are all your operations based out of Tel Aviv?
We’re very global in terms of our filmmakers and artists, but when it comes to employees, we’re all from Israel, with the exception of FXHome and Motion Array, which are UK and US-based respectively.
– Artlist has a very striking visual aesthetic, and your music interface makes browsing quite easy. Who designed that?
I think the first design was done by Ira. Most of our creative work is now done in-house, so the website was designed as a tool that makes music discovery for video easy. We’re also doing a lot with music analysis and curation work that ties back to the website’s back end, which is a very important part of the site’s search engine.
– The 2020 pandemic was a difficult time for many, but companies doing business online saw a rise in their usage since many people were stuck at home. Was that the case for Artlist?
We did experience a spike in our usage, though the highest growth was seen on the stock footage side. I suspect that people who couldn’t leave the house to film still needed footage to do their work, so they turned to us.
If you ask the local musicians here, many of them were stuck without work when the pandemic hit, and Artlist basically saved most of them – we gave them work when there was no work, and were happy to be able to do that.
– Since you mentioned Artgrid, I wanted to ask how you got all the stock footage for that? Was it developed in-house?
Yes it was. Most of what you see on there is our own in-house footage, though we also source some from external filmmakers at times, in which case royalties are paid when someone uses their material. Artgrid is very similar to Artlist in terms of business model and content creation.
– In 2020, Artlist raised $48 million from investors like KKR and Elephant Partners. Is there anything unique about the Israeli capital markets that’s helped you have larger funding rounds than your competitors?
I don’t think it has to do with us being in Israel; it’s more about us being a bootstrap company. We were profitable in our second week, which is very rare for any kind of startup, so we didn’t have to chase funding and we were already established financially and operationally. The purpose of raising money was so we could expand at a quicker pace. Most startups have a seed plus second round before they even launch a product, never mind being profitable. With us, we launched at the right time with a solution for a specific problem. So where success happens, more success follows.
– I learned a lot about the royalty-free music business from talking to Epidemic Sound, a company that Artlist is frequently compared to, so I’d like to examine that further. What would you say is the key difference between the two of you?
Our businesses are similar, but with a big difference: we both pay an upfront fee to own the copyrights of the music we onboard, but in contrast to Epidemic Sound, we also do a 50-50 split on streaming and publishing revenue. This means we actually manage our copyrights, whilst Epidemic Sound has chosen to avoid PROs altogether. It’s something I insisted on when we restructured our business model because I wanted a win-win situation for both Artlist and our artists, and I think we succeeded. We currently have songs with thousands of placements in audio-visual media, which has resulted in a lot of broadcasting royalties, so our artists are very happy with this model.
– So contrary to Epidemic Sound, your artists can be signed to PROs?
Not only that, but we encourage them to do so and we handle all the copyright administration and collection in an effective way. Copyrights are very complex, so we’re building a publishing infrastructure that’s similar to the major label ones.
– Does Artlist work with musicians who aren’t signed to your Original label?
Yes, we do. We have a parallel model for non-signed artists where we pay them royalties each time their tracks are sourced from our website. We have a high rate per download when compared to streaming services, and to be honest, there’s people making quite a bit of money from that, especially when compared to our competitors. We have an artist from New Jersey who bought a house after one year of working with Artlist as a non-signed artist. He even posted a picture on social media thanking us. But I want to stress that working with non-signed artists is all about curation, which is why we turn down about 97% of music that’s submitted to us.
– I’ve heard that Artlist Original has around 300 artists on its roster. Is that correct, and can you describe how the label operates?
Yes it is, though we’re signing more artists as we speak. But we have about 300 signees on Artlist Original, and 700 on our external model, all of which allows us to produce 1000+ songs a year, and do at least one new release everyday.
For our signed artists, it all starts with a brief that we send them, after which our content team follows the entire process as a co-producer. We then handle all the distribution and copyright registration in order to pay out artists for their future revenues.
– Are your signed artists able to release their music on other platforms?
If the music is released on Artist Original, then it’s exclusive to us. But we don’t tie up our artists in long-term commitments, meaning they’re free to exploit their success with us to build their careers elsewhere. As an example, our most successful Original track from 2019 was “Howling at the Moon” by D Fine Us. It blew up on Artlist and then across the Internet with multiple viral videos and organic streams. Soon after being released, D Fine Us was contacted by a famous publishing company called Zinc Music and signed to an exclusive publishing deal with them. So ironically, we can’t work with him anymore even though his success with us led to the deal. But we’re happy for him, and we have a lot of those stories.
– Epidemic Sound offers multiple subscription licenses depending on whether a user is an individual, a business or has a custom need, whereas Artlist has a universal license that covers all use cases. Why did you guys take that approach?
Exclusively offering a universal license was how we started off, but things are changing. We just launched a monthly Personal Plan that’s similar to Epidemic’s cheapest subscription. Ours is for usage on social media, and we adopted it for people who don’t need a universal license or a full year’s worth of royalty-free music.
– With Epidemic Sound, customers can use any downloaded music for the duration of your subscription, whereas Artlist lets you use your music even after the subscription has expired. Is that still the case?
That’s true with the universal license, but not with the new Personal Plan. The latter limits the use of music to the subscription period, which is the tradeoff we settled on. So if you’re a fast creator and you need music immediately, you can use the Personal Plan and unsubscribe after a month. But if you’re a long-term user who downloads music to use months later, then we still have the Pro subscription.
– To conclude with Epidemic Sound comparisons, their player has a “Stems” function that lets people remove sounds from the recording. You guys have a “Remix” function instead. Why the difference?
We want things to be as simple as possible for the user, and we felt that “Stems” made things more complicated. If you’re a professional musician or video editor, then you might already have experience working with stems and syncing them to video, but the majority of our users don’t know how to work with that. So we’re aiming for the heart of our user base, not the periphery. Additionally, Epidemic Sound don’t do copyright management, so it’s easier for them to offer stems, which essentially allows people to create new versions of the song. From a copyright perspective, it’s hard to monitor things like that on a large scale, and it can create confusion on whether to collect royalties on the original song or the one that’s had stems removed.
– But how would you even know if someone uses your music after their subscription has expired?
With content ID, it’s definitely possible to track the usage of our music, although this is exclusive to YouTube. They’re still the only platform that creates a connection between the licensor and licensee so the former can control what happens with their music. But that’s starting to change as the technology for tracking online music usage is improving.
– Publishing royalties are still collected in an old-school way by the major labels, but there’s a modern way to do it by using things like audio fingerprinting and database management. Can you talk about that?
Sure. The traditional copyright world is geographically oriented, with a PRO per territory that has exclusive rights to collect publishing royalties in that region. They’re also supposed to catalog information about the artist, their music and its usage. Unfortunately, this oftentimes doesn’t happen correctly, and a lot of money gets left on the table because the process isn’t efficient. So Artlist is building an infrastructure that uses audio fingerprinting to find every broadcast that occurs with our music. Once we’ve matched the song to our database, we approach the relevant PRO to have our royalties collected.
We’re living in a global media world, so the territory-based model becomes less relevant once technology offers us better solutions. YouTube has shown the future in many ways; their content ID is still the most sophisticated and well-developed copyright management system on the planet. But what’s lacking is a central database – one global entity that can centralize all the world’s music. The way things are now, a PRO might register a copyright in one format whilst another PRO does it in a different format, or there could be metadata issues on songs that weren’t cataloged properly. So the world is waiting for a gold standard in copyright management. To be honest, if I wasn’t so busy working at Artlist, I’d create a start-up just to address that problem (laughs).
– Is there any new way that Artlist or your partners have tackled the issue of collecting publishing royalties?
Sure. Revelator developed a digital wallet for royalties that operates similar to how NFTs do. It’s built on a blockchain that connects directly to the PROs. In fact, it was tested two years ago with the Finnish PRO, Teostso. Revelator connected their digital wallet to Teostso’s database, did real-time scans of the radio and TV broadcasts in Finland, and paid out royalties immediately. So rightsholders would get a ping when their song was played and were credited in their digital wallet based on expected future payouts. This is a big deal for emerging artists – if they can get paid in real time, it allows them to re-invest the money into their career. In contrast, a PRO could take two years to pay royalties if an artist scores a hit today, which is the most outdated model you can imagine. So with Artlist, we manage both the recording and publishing rights, and can easily scan the masters and match them to the correct ISWC so we know immediately what royalties need to be collected. I think everything is moving in this direction and it’s what needs to happen.
– I agree. It’s quite a complicated system otherwise.
Don’t ask me why, but my team and I decided to map out the entire global network of PROs and other publishing entities – copyright types, usage types, royalties and all the territories. By the time we finished, our papers had covered the biggest table I’d ever seen. It’s such a complicated web of connections with multiple layouts and minor differences between territories. For example, in Russia they collect royalties for music used in commercials, but they don’t in Poland. So the music world needs alignment in those things, and it’ll probably happen as we move into a more Web 3.0 space.
– Thanks for talking to me Ori. It’s been a great learning experience. So what’s next for Artlist in 2022?
A lot, though most of it can’t be discussed publicly yet. For me, it’s about growing the music team; we hope to increase our operations by 50% in the near future, which is a lot of growth. We’re also growing our label and copyright management efforts. We’re expanding Originals by bringing on more artists and we’re also doing more data integration into our workflow, plus working on a lot of website features for our users.