X5 Music Group is a Stockholm-based music startup that is helping to rethink the way labels package and release albums digitally. X5 licenses classical music catalogs and creates attractively-priced digital albums that appeal to a younger demographic.
X5’s business model is so promising that it lured Scott Ambrose Reilly, a digital music executive with years of experience licensing music as the head of Amazon’s MP3 Store, to lead their U.S. operations in a new New York office.
Reilly says it’s the “digital potential” that attracted him to join X5’s team.
“All the way back in 1995-96, when I was first doing digital promotions and downloads with bands, all the ways you thought [digital] might change the industry in the way that content was created – distribution changed – but a lot of the other things haven’t really come to fruition.”
X5 was founded in 2003, and soon the founders started packaging content specifically for the digital marketplace, with a focus on the classical music genre. In May 2008, X5 released a compilation album entitled The 50 Most Essential Pieces of Classical Music for $9.99 and the album has spent time at to the top of the iTunes classical music chart. Reilly says the reason he and other X5 executives believe the model has worked is because it’s attracting new fans to classical music. “We don’t think we sold a lot of classical music to a lot of classical fans,” says Reilly.
X5’s three founders each had backgrounds as songwriters and producers in Sweden and had dabbled in the ringtone business. They decided early on that the new company’s model would be exclusively digital. “As soon as they made that decision,” says Reilly, “the future was all growth and innovation, which is exciting.”
One thing X5 hopes to help reshape is the music industry status quo around album releases.
“The business model that we’re still living under is the LP vinyl business model that got created at the end of the ’60s,” says Reilly. “An artist needs to not be married to that as the end-all-be-all of how people engage with their music.”
That means rethinking album lead times and street dates, and even the length of albums. Reilly says all of these things are still tied to physical world, instead of being packaged with digital-first in mind.
But aren’t even the most innovative artists still nostalgia buffs for the heyday of the music industry? When a fan bought their favorite group’s new record at the local record shop and took it home? What about the days when you pulled the record out of the sleeve and gently dropped the needle on fresh vinyl, then sat down and rolled a joint on the LP sleeve and… just listened.
“It’s hard to know how it evolves,” says Reilly about the business of releasing new music. “Is every Tuesday the structure that still makes sense? What artists should be thinking about is how do people listen to their music? You can’t change that. Customers are going to buy their music the way they choose to. Your fans and the customer have to lead that discussion. The artists have to go to where the customers are already listening to music.”
Now X5 will try to apply their model to music outside the classical genre. They recently struck a deal with Nashville-based Sun Records, home to the early Sam Phillips Memphis rock and roll recordings of Johnny Cash, Jerry Lee Lewis, and Carl Perkins.
“Sun has done a good job of creating packages that service the Sun aficionados,” says Reilly. “What we want to do is create albums that will appeal to people who know who Johnny Cash is but don’t have any in their collection. Who maybe have never heard of Roscoe Gordon or only know Charlie Rich from his two mega hits that their parents used to listen to.”
As for branching out into new genres, Reilly, who was calling on potential clients in London when we spoke by Skype, says, “There’s a lot to learn and there’s a lot of opportunity.”
One side of the business that X5 has a clear grasp of is bringing classical music to new fans. In November, they will release a 24-track compilation called The Greatest Video Game Music, with the themes from “007: Blood Stone” and the popular app game “Angry Birds” performed by the London Philharmonic Orchestra.
“We think we’ve brought a lot of young people into classical music. We’re thinking: how do we take that even further?” asks Reilly. “Video games. There are great songs in video games.”