SmartSound 09/16/12

This week’s Q&A is with Kevin Klingler, CEO of SmartSound. SmartSound has created a unique, patented technology that allows the user to quickly and easily manipulate music content to better fit a visual sequence. Kevin spoke with us about their iOS app, licensing options, and SmartSound’s new partnership with Vimeo.

 

What is SmartSound and how would you explain the technology behind your product line?

SmartSound is a patented technology that allows people to create highly customized, personalized music soundtracks that fit their videos and video sequences almost instantly. The way it works is: we take real music (not MIDI) and embed it with visual information that then, through our patented process, allows the user to easily create a soundtrack to fit any kind of video. It’s unique in this way. It’s pretty much the only technology like it on the market. We’ve been in business now for nearly 17 years.

Kevin, before you co-founded SmartSound, you had extensive experience running a CAD software company and composing for Hollywood. How does this diverse background help you run a music technology company?

Well that was actually the genesis of SmartSound – I had been a composer and a music supervisor for films and TV shows, working in Hollywood. During the recession of ’92, work got a little slow and I had a chance to manage a CAD software company. First of all, that gave me some actual management experience in the software industry. Second of all, the way that CAD software worked was it automated the process of making designs (in this case, for packaging and point of purchase displays).

So, having my background in creating soundtracks for movies and TV shows, I said, “Well, why don’t we create a software that does that?” That was really the genesis of the company, and the basis for the idea. So I was really very fortunate for the opportunity.

SmartSound Technology is one of the most widely licensed audio technologies in the video industry with licenses to Adobe, Avid, Corel, Pinnacle, Sonic Solutions, Cyberlink, etc. Your recent partnership with Vimeo is getting you more mainstream exposure. Talk about how this partnership came about and what it could mean for your company and content creators.  

We debuted a technology last year at NAB that allows you to create a soundtrack right at our website.

I know I’m skipping ahead a little bit here, but this technology is precisely what Vimeo licensed from us.

We’d been working on the technology for a couple of years, on transitioning our technology to a web environment – a Cloud-based environment. We saw that it’d be a good fit with some of the video sharing sites so we approached some of them – and Vimeo was very interested. That’s how that came about. We were able to show them a prototype early on in our development process and they just really liked what they saw.

We made a deal with Vimeo right around the time we debuted the technology. They were really excited about it. The following year, when they were ready, they finally debuted it. That was earlier this year – May, I think. That was the basis for the partnership with Vimeo. We’re really excited and proud to be working with them.

It brings SmartSound to a much wider audience, which it’s really designed for. The process of creating a custom soundtrack takes a professional composer quite a bit of time to do right and do well. Or, a professional music editor to modify a piece of music to fit a scene correctly. It’s a time consuming process. We’ve basically automated that process.

The real beneficiary of that would be the consumer. Even, or especially, a consumer who really has no capacity whatsoever to do what a professional does with music. That’s why it’s such a good fit with Vimeo. They’re just great partners and we’re thrilled for the opportunity to be working with them

Now I see that you also have a variation of this on the Toolfarm website that you debuted this past June. How is this different, and how did it come about?

Yeah, it’s basically the same technology but with different licensing and a different interface than Vimeo.

But all of these – the one on our site, the one at Toolfarm, and the one at Vimeo – are all based on that Cloud-based soundtrack creation web technology. Under the hood, they’re all the same – both technology and music.

One of the opportunities we saw with Toolfarm (and that they saw) was that they have a really effective reach into the Adobe After Effects market. They’re the top refiller of tools – of add-ons and plugins – for After Effects users. That was a market we’ve always wanted to reach. SmartSound has never really reached that market because of the way our tools have worked in the past. It was a little inaccessible to them. That market does need and use music, but they typically will get it from websites. So this was an opportunity for Toolfarm to start offering the technology to their users.

In fact, Toolfarm is changing how they present the technology to their users, users of After Effects. That should be coming up pretty soon. It’s going to be a pretty significant change. We’re all excited about it.

All of these are allowing us to take the same technology and reaching different, broader markets. That’s really the opportunity we see – bringing a lot of new people into the SmartSound fold.

You also have an iOS app called Smart Soundtracker. What does it do? Does it integrate with Sonicfire Pro?

It doesn’t integrate with Sonicfire Pro. It’s designed only as a personal product for making custom music soundtracks for your personal videos that you shoot on your iPhone, iPad, or iPod Touch. It’s designed to work within the Apple iOS ecosystem, which is all self-contained. So there’s no real talking to programs outside that ecosystem.

We had to reformat some of our music and we put it in an in-app purchasing mode. We’re really excited about that. This really speaks to what I was talking about a moment ago. Now, this is not based on our Quicktracks technology – this is based on our software technology. But reformatted and repositioned for an entirely different market. And it’s a huge market. The number of people making personal movies on their cell phones and uploading them to YouTube and Facebook is much larger than the entire largest professional and semi-professional video makers group. The number of people using Sonicfire Pro, Adobe, Premiere Pro, Final Cut – that number is tiny, tiny compared to the number of people making videos on their phones. This is our way of starting to speak to that audience as well.

Do you have any plans to do an Android version?

We’re considering it. One of the challenges with the Android platform is it’s a different business model.

Right. So, are there use cases of content creators using SmartSound products alongside traditional music creation software?

We’re positive that many of our customers use both what we do along with Sound Forge or Adobe Audition or ProTools. They take soundtracks they’ve done in SmartSound and put them into ProTools or Logic and add to them. They’ll add effects, mix them with dialogue, things like that.

What are the different licensing option for your music library? I liked what you rolled out last fall with the lifetime customization option. Talk more about that if you could.

Great question, Eric. First of all, let me review the different licensing options, because we’ve really expanded on that in the last couple of years.

We’ve always sold royalty-free music. The essence of that is that you purchase a music track or an album from us and you get to use permanently – as long as you don’t breach our end-user license agreement with it – in as many projects and as many markets and as many media as you want. We have one limitation: for replication (making physical copies of a dvd, etc.) we have a 10,000-unit limit. Typical royalty-free libraries have a limit of 2,000-2,500.

Our agreement includes all of the rights: international use, broadcast use, TV/theatrical use, everything you’d want, really. You can get an unlimited license, too, for an extra charge. It just depends on the nature of your project.

We also have discount music packs. Both single-track packs and album packs. Albums come in 5-album, 10-album and 25-album packs and you have a year to redeem them. It’s really unique in the industry because yes, you do pay upfront, but you have a whole year to pick your albums. This means you can choose albums as projects come up for you. The 25-album pack especially is a great deal at $499. The music packs give you a lot of flexibility and give you a discount upfront.

Now with our Cloud-based system, we have subscription-based pricing. You can get access to our entire library online through Quicktracks – either annually ($1,995/year) or monthly ($249/month). Both unlimited downloads.

So you have a whole variety of options to make it easy. With the lifetime customization – everybody with the royalty-free libraries talks about how you get lifetime use out of the music. So we thought, wait a minute, we’ve had that all the while. With Quicktracks, once you own a SmartSound track, you can use it and customize it for the rest of your life – either on the web or with the Sonicfire Pro software. You can come back and create another customization without any additional charge.

The last decade has been a wild ride for music publishers and the music industry in general. What’s your forecast for the next five years? The next decade?

(laughs) Great question. It has been a wild ride for music publishers. Just in June, we flew to New York City to meet with EMI Music Publishing to talk about a deal, and then shortly after that they were acquired by Sony. The industry’s been consolidating like crazy. It’s been pretty tough on the bigger publishers.

I think the traditional publishers are going to continue to have some challenges. One of the things that is good for us is that we’ve been a technology music company from day one. We have the ability to change with the times with how we deliver music – with Smart Soundtracker, Quicktracks, and Sonicfire Pro before that. That’s allowed us to sustain our revenues. It’s been a little bit up and down because of the recession, but we’ve basically sustained revenues for years.

We create extra value with our technology – it’s not just the music. I think that’s also an appeal for companies like EMI who are working with us. They recognize that technology actually protects them in some ways.

The next five years? Eric, I’m not even going to try to forecast the next five years! (laughs) In this environment, five years is a lifetime. I would say, however, that we’re going to see the music landscape continue to depend more and more on technology – even at the higher levels like Universal Music, Warner Bros. Music, EMI. There will be more dependence on technology for both distribution and delivery. They’re going to have to get a lot more savvy about it.

Technology will be an even more important part of music distribution, delivery and enjoyment.

Are there any features or products that you have in the works that you can talk about?

We never do. (laughs)

(laughs)

Of course we have that but we never talk about it.

Sure, okay.

We’re not Apple, but we’re Apple-esque in the way that we don’t talk about it until it’s time to show the world.

Is there anything I didn’t ask you about that you wanted to mention?

No! You’ve done great homework digging up Smart Soundtracker and Quicktracks and the Vimeo relationship. All the cool stuff that we’re doing, you’ve highlighted. We’re really excited about these things. Smart Soundtrack and the Quicktracks Cloud-based system are both really promising and we’re really excited about being able to go into new markets through those two new channels. I think the next couple of years are going to be really exciting for us as we build more relevance in the consumer space.

I should say and make it absolutely clear that we are in development and will continue to build Sonicfire Pro. We’ve got great ideas and a roadmap for Sonicfire Pro 6. It isn’t in the works yet but it will be soon. We won’t be forsaking our current Sonicfire Pro space as we go broader into the consumer space. We’ve got some very exciting developments coming up.

Okay, great. You know, again, I’ve been telling anyone who will listen about Vimeo’s music store. It was great to see you guys get on there.

Thank you so much for that Eric, I really appreciate it. And thanks for the opportunity to talk, I’ve really enjoyed this.