'There Will be Drastic Changes to Come in Music Creation': Output Raises $46M to Change How Music is Made
Oct 22 2020
- L.A.-based Output, a bootstrapped business founded in 2013 to help musicians overcome writer's block, announced its first ever fundraise, of $45 million from Summit Partners.
- The company serves a range of musicians from hobbyists to professionals, providing them a library of loops and samples that they can then manipulate into unique songs of their own.
- Immediate plans are to nearly double its staff and expand its product platform, with future goals of leading the evolution of digital music production.
Gregg Lehrman was no stranger to music composition. He had worked under world-famous composers such as Hans Zimmer writing music for film and TV and had produced big projects with BMG music publishing. But after setting out on his own, he found himself suffering from writer's block.
So, he said, "I made a piece of software for myself, as a music-maker — with no intention of starting a company."
<p>Lehrman's tool, however, ultimately became a music-tech company called <a href="https://output.com" rel="noopener noreferrer" target="_blank">Output</a>. Based in L.A.'s Chinatown district, its mission is to help people start making music. </p><p>Seven years after it was created, Output has agreed to its first ever fundraise: a $45 million minority-stake investment from Summit Partners. </p><p>"I think there will be drastic changes to come in music creation," Lehrman said, "and we want to be at the forefront of it." </p><p>His investors agree. </p><p>"We believe Output has the potential to reinvent the digital music production market," said Andrew Collins, managing director at Summit and lead investor on the deal. Collins will now join Output's board. </p><p>"The holy grail in digital music-making is to make it super easy for musicians to find content that they like and then make it sound unique to them, and that's exactly what Output does," Collins told dot.LA. </p><p>The list of artists and projects that have used Output is impressive: Kanye West, Coldplay, Justin Bieber and Rihanna among them, as well as the soundtracks to "Game of Thrones," "Stranger Things" and "Black Panther."</p><p>The company broke $1 million in its first year with no advertising, Lehrman said: "just a viral video and a good product." That first product line – which included digital instruments and effects – was software geared toward professional musicians, who purchase it for an upfront fee.</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNDU2MjYxMS9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTY0ODA2MTk1Nn0.ez695VAfdiWMBPUFHory8cfkG7UKwuP6H6xwxjJh9eI/image.jpg?width=980" id="ca6d9" class="rm-shortcode" data-rm-shortcode-id="40f7ba1d62064604d613adb535781d6a" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-photo-credit" placeholder="Add Photo Credit...">Courtesy of Output</small></p><p>In 2018, the company added a software-as-a-service (SaaS) product, called Arcade, which became particularly popular among musical hobbyists and digital-music newcomers. For a $10 monthly subscription, users receive access to thousands of loops and samples created by Output, which they can then manipulate and turn into their own unique tracks.<br></p><p>Most customers today use Arcade in conjunction with a digital audio workspace like Logic, Ableton or ProTools. Songwriters, whether professional or amateur, can set their rhythm and key, pull from Output's library of sonic building blocks and mold them like musical clay. Users can also upload and work with their own digital audio files. </p><p>Over time, Output has seen both its user base and its revenue streams shift away from the pros – which Lehrman said is a customer base with a natural limit – and toward hobbyists and digital-production newcomers.</p><p>Arcade, its SaaS product, has seen a 300% increase in monthly recurring revenue over the past 12 months. In just two years, it's grown to generate about 60% of Output's income. </p><p>"In the world of SaaS, it is incredibly rare to see both exceptional growth and capital efficiency." Collins said. "You don't see SaaS software growing this fast, profitably, fully bootstrapped. There's not a lot of those out there."</p><p class="shortcode-media shortcode-media-youtube">
<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="0058d901c4b625d279b384a338e60ce0"><iframe type="lazy-iframe" data-runner-src="https://www.youtube.com/embed/gSpDqkikaKg?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span>
<small class="image-media media-caption" placeholder="Add Photo Caption...">ARCADE by Output - Walkthrough</small>
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<a href="https://www.youtube.com/watch?v=gSpDqkikaKg" target="_blank">www.youtube.com</a>
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</p><p>As the popularity of Arcade has grown, Output's user base has shifted to about one-third professional musicians, one-fourth digital-music newcomers, and the rest hobbyists who are "really into making [digital] music."<br></p><p>Collins also likes the market tailwinds that Output is riding — namely, the democratization of music ideation and distribution. Output enables musicians to create new sounds, while platforms like Spotify and Soundcloud allow anyone to publish their tunes with just a few clicks. </p><p>The company's technology stack is a combination of digital signal processing (DSP) algorithms written in C++ and some machine learning. "We're going to see that continue to expand," Lehrman said. </p><p>Output also has a line of furniture and hardware products designed to help music-makers build out their home studios. It is currently working with <a href="https://barefootsound.com" rel="noopener noreferrer" target="_blank">Barefoot Sound</a> – which Lehrman called "the Rolls Royce of speakers" – to manufacture a new speaker line. </p><p>With its new cash, Output plans to grow its staff, which currently numbers about 60. "We'll grow to north of 100," Lehrman said. </p><p>It will also build out its product offering, adding new tools to Arcade like digital instruments and expanding its mobile capabilities.</p><p class="shortcode-media shortcode-media-rebelmouse-image image-crop-16x9">
<img type="lazy-image" data-runner-src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNDU2MjYxNS9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTY2MTE4MTU2M30.YEw7CRFzIHjvdiSpcHkt28nGzaS6n7SmmYL9Pig51lQ/image.jpg?width=1245&coordinates=292%2C724%2C1%2C40&height=700" id="8f293" class="rm-shortcode" data-rm-shortcode-id="2fd561899f2712747047ae0395de0b36" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-caption" placeholder="Add Photo Caption...">Output founder Gregg Lehrman has worked under world-famous composers such as Hans Zimmer writing music for film and TV.</small><small class="image-media media-photo-credit" placeholder="Add Photo Credit...">Courtesy of Output</small></p><p>"We feel strongly we can build a unified ecosystem that once you're in, you're familiar with everything," Lehrman said. "You don't have to learn 100 different applications; it can do 100 different things but you won't feel lost."<br></p><p>Collins pointed to several competitors, including <a href="https://splice.com" rel="noopener noreferrer" target="_blank">Splice</a>, <a href="https://www.landr.com" rel="noopener noreferrer" target="_blank">LANDR</a>, <a href="https://www.izotope.com" rel="noopener noreferrer" target="_blank">iZotope</a> and <a href="https://www.native-instruments.com/en/" rel="noopener noreferrer" target="_blank">Native Instruments</a>, but noted that "nobody else has integrated a very robust curated library of content – sounds, loops, well-organized beats – that musicians can pull from and pull into a workflow engine (the software) and manipulate those sounds to create something that is completely unique." </p><p>Lehrman and Collins separately emphasized the Output team's passion for music. 50 of the 60 employees today make music on a daily basis, Lehrman said. </p><p><a href="https://www.summitpartners.com" rel="noopener noreferrer" target="_blank">Summit</a> primarily focuses on founder-led bootstrapped companies, which it provides with on-demand services like marketing and engineering. </p><p>"Management sets the agenda," Collins said. </p><p>For Lehrman, that'll be to further leverage technology: not to create music itself, but to help people create, just like it helped him overcome his own writer's block those years ago.</p><ul class="ee-ul"></ul><p>"From the first product to the last product," he said, "it's been about helping people be creative."</p>
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Grammy-winning record producer Jaycen Joshua was in the middle of working on Ricky Martin's newest release, "Pausa," when the Puerto Rican superstar decided to change course.
"He sent me this song that was done in this technique and said 'Jaycen, I want to do this but I want it to be bigger'," Joshua told dot.LA.
The track Martin sent employed a spatial audio technique that renders sounds into more dimensions than the typical stereo format.
<p>Alongside computer scientist and electrical engineer Michael Seaberg, Joshua – who boasts over 60 number one hits including Beyoncé's "Single Ladies" and "Despacito" by Luis Fonsi and Justin Bieber – searched for ways to get Martin what he wanted. </p><p>"You can't say no to Ricky," Joshua said. "He's one of the nicest human beings ever." </p><p>But they couldn't quite find it. So they developed it themselves. </p><p>The new technique can be heard in Martin's re-release of "Pausa," dubbed the "<a href="https://smarturl.it/PAUSA-OAAV" rel="noopener noreferrer" target="_blank">headphone mix</a>." </p><p>"We struck gold, and called Ricky immediately. He came to the studio and heard what we came up with and his mind was blown," Joshua said.</p><p>The effort resulted in the formation of Martin Music Lab Inc., and the development of a <a href="https://uspto.report/company/Martin-Music-Lab-Inc" rel="noopener noreferrer" target="_blank">patent-pending immersive audio technique</a> the startup calls Orbital Audio. </p><p>"This whole thing came about because of being cooped up at home during the pandemic," said Martin. "I was going out of my mind and what usually helps in those instances is music. I always say that music heals and that's the idea with Orbital Audio."</p><p>The technique builds upon earlier audio innovations, giving users a multidimensional listening experience accessible through headphones. For example, a song's vocals may sound as if they are slowly circling a listener's head, backed by a distant-sounding electric guitar far ahead and to the left, as a whispered voice comes in from behind. </p><p>Although the team believes it has achieved a breakthrough in a technology that has in one form or another <a href="https://www.vice.com/en/article/pgka5z/why-are-we-still-listening-to-music-in-two-dimensions" rel="noopener noreferrer" target="_blank">been around</a> <a href="https://hookeaudio.com/blog/music/best-binaural-albums/" rel="noopener noreferrer" target="_blank">for quite some time</a>, that remains to be seen. Just this year, <a href="https://www.youtube.com/watch?v=O5ooPGEiXkg" rel="noopener noreferrer" target="_blank">a Billie Eilish track</a> recorded with "8D" technology made the rounds to great fanfare among audiophiles. </p><p>Audio technologist and entrepreneur Sharooz Raoofi told dot.LA he found the Eilish track to be "sonically much more impressive" than the "Pausa" Orbital Audio recordings. </p><p>To be fair, Orbital's team said the version that is currently available was rushed to re-release because Martin, whom Joshua described as "very spiritual," wanted it out by the end of July as he "felt it was pivotal to release for the transfer of energy to the masses." Joshua says the technology has since improved. </p><p>The pending patents do not list many details, but after listening to the "Pausa" recordings, Raoofi surmises that the team has created digital signal processing technology that enables it to create "audio illusions." </p><p>"It's a neat way of mixing and adds a fun dimension to listening to music on headphones," Raoofi said. "But if there is little beyond this, I don't believe it's truly innovative." </p><p>There may yet be something beyond, however. Seaberg noted that one big improvement to the tech since the "Pausa" re-release has been to increase the volume threshold the technology can reach, which he said "is very important in perceptual audio because the ear naturally thinks that louder is better." </p><p>Joshua said the company has made special efforts to ensure that listeners need not own specific hardware or software — such as expensive headsets or stereo systems —that might put the technology out of reach for some. </p><p>"Ricky wanted a kid in Colombia walking barefoot with the headphones he found to be able to hear it," Joshua said. </p><p>"This to me is like the evolution from black-and-white TV to color and I want everyone to be able to experience it," Martin added.</p><p>The company will provide a "concierge service" to work with artists who want to use the technology. Tapping their extensive industry connections, Martin and Joshua have plans to work with several other artists, including A$AP Rocky, Bad Bunny and Rosalia. Joshua and Seaberg are excited by the creative output that could result from planning upfront to use Orbital Audio, rather than retroactively applying it as they did with "Pausa". </p><p>The L.A.-based startup has ten employees and plans to grow, Joshua said. It has "already turned down multiple offers to sell the technology" and is "in talks with several VC firms" to raise funding. It plans to generate revenue through royalty-based agreements with artists and potentially an upfront fee. </p><p>The team currently works out of Joshua's studio in North Hollywood but, he said, "[we're] looking for spots and places where we can expand immediately." </p><p>Though music is the beachhead application, the company hopes to expand into other areas.</p><p>"What we've created here can be beneficial for everything ranging from music to gaming to sports to health care," Martin aid.</p><p>"Imagine meditating and hearing the Tibetan mountains around you and having 100 monks chanting around you at the same time," Joshua said. </p><p>Quite a departure from "Livin' La Vida Loca" and "She Bangs."</p>
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Podcasters using Spotify's podcast-creation tool Anchor, which the company acquired in early 2019, can now include songs from Spotify's extensive library in their podcasts. Just as artists receive royalties on their music streams, so too will they get paid for songs that appear in Spotify podcasts.
<p>In addition to potentially helping artists earn a bigger royalty paycheck and offering podcasters new creative tools, the move also appears to be aimed at establishing Spotify as a go-to podcasting platform. The company is leveraging its existing licenses with rights holders such as record labels and publishers to give Anchor creators the new functionality. </p><p>Spotify subscribers will be able to hear the full tracks included in podcasts. Those using the free, ad-supported version will only hear a 30-second teaser. That, however, is the listening threshold at which royalty payments are triggered, so artists will benefit either way. </p><p>Podcasters using the tool can still use Anchor's sponsorship program to generate income through host-read ads, but the show must include at least 10 minutes of talking.</p><p>The feature will roll out in the U.S., U.K., Canada, Australia and New Zealand before potentially expanding elsewhere. As part of the release, Spotify has released seven shows that use the new format, including "Conspiracy Theories: Music Edition" and "60 Songs That Explain the 90s." </p>
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