Digital natives: Phonofile at the forefront of streaming’s future

Earlier this year, Norwegian digital music distribution company Phonofile expanded their operations overseas, opening an office in the United Kingdom. Their history is already relatively long.


Photo: Zoe Cormier

Founded in 1999, Phonofile has gradually evolved and grown with the digital music market, as listener habits have moved from physical to digital. With over a thousand independent labels from across the world on their roster, they deliver music to a variety of platforms and stores such as Spotify, Apple Music, Deezer, Google Play, Tidal and Beatport.

To look at the reasons behind this move and the challenges and opportunities that streaming and digital music presents to artists, labels and similar organisations, we spoke to their Marketing Manager, Trond Tornes.

“Phonofile has been working in the digital area of music before it even started, so it’s been a fun journey for us going from nothing and zero to quite extensive revenue over the years,” Tornes explains.  As well as building stronger relationships with clients and helping to export Norwegian acts, tapping into the UK’s status as music hub makes perfect business sense.  “We think that we have something to bring to the table, because we have different experiences and different music,” he says. “We think that being on the ground doing that will give us a little advantage. We know that we have a lot to learn from the UK in terms of how they produce media and music, how they make context around the music and how everything is made into a cultural product. It’s very inspiring,” he adds.

Phonofile is one of just a number of companies that are examples of what has been called Norway’s “digital consumer culture”.  Norway is renowned as one of the world’s leading consumers of digital media, as the results of the 2014 POLARIS Digital Music Survey show.  Even among their high-consuming Nordic neighbours, the Norwegians are ahead. The survey found that 36% of Norwegian music customers say they are willing to pay for music, compared to just 13% of Finns. Norwegians also spend more on digital music (£16.65 per month) than their Scandinavian neighbours.

The reasons for the spread of legal digital music in Norway are down to a combination of factors. There has also been a significant reduction in piracy in this time, with just 4% of Norwegians under 30 still using file-sharing websites for pirated music.

A small population of five million combined with a “highly technologized” society and broadband penetration were factors Tornes believes were key in piracy’s decline.  “It was the right time for the music market because it was damaged really badly and something new came along. It took advantage of what people expected from how to get music,” he says. He cites Spotify as a “shining example” of a product that changed the market and moved it away from piracy.

Although the conditions in Norway helped lead to an impressive take-up of legal streaming and digital music platforms, the UK is a slightly different prospect. The extent of consumption of digital media in Norway is not the same as in the UK, but it is heading in the same direction.

A survey in July 2015 by the UK’s Intellectual Property Office found that although one in five UK internet users still accessed content illegally, there was a 10% increase in the number of consumers accessing content through legal services like Spotify. The economic importance of so-called superfast broadband to the digital economy and economy in general is significant. This is something that the government have recognised. The November 2015 spending review included a commitment to continuing the £1.7bn investment into the superfast broadband programme, which aims to ensure access to it is available to 95% of premises by 2017.

But do these national differences present any challenges for Phonofile’s UK office? Perhaps a few, but Tornes believes any problems can be overcome by experience and knowledge. Plus, the commitment and development of superfast broadband services across the UK gives Phonofile an opportunity and shows why the timing is right.

“It’s a different society in many ways but there are signs that streaming is there to stay in the UK, so we believe it’s a good approach to offer something for the consumer,” he says. “For us it’s very logical move to make. When we speak to people on the store side they really look forward to having us there. That’s been a very pleasant experience.”