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Inside Haulix, the MN-based tech startup that's fighting music piracy

Haulix founder Matt Brown

Haulix founder Matt Brown Gina Reis

In 2001, Matt Brown was a web developer with a stubborn death-metal habit.

Back then, he supplemented his cubicle hours by running MetalReview.com, a blog where he’d review CDs and interview headbangers in corpse paint. It was a prolific hobby, but it was only that until the Great Recession struck.

Laid off from his consulting job, the Winona-born Brown turned to Metal Review full-time. He didn’t see a career in blogging, but he sensed there was money in his overstuffed mailbox. In 2007, he’d had the notion to create a digital music distribution site, and he even launched a pilot application called Leak Secure. With no other passions to pursue and a P.O. box overflowing with CDs and press releases, Brown arrived at an idea.

“I was going to the P.O. box on a weekly basis, and packages full of promotional CDs would literally fall out,” he says. “Every week, I was entering hundreds of these into our system so that our writers could listen to the music and write about it, and I was like, ‘Wow, there’s gotta be a better way of doing this. Why not have someone upload the music to a central place once and then invite people to come download it?’”

The successor to Leak Secure was christened Haulix. It started in 2009 as just Brown and a software developer he solicited on Craigslist, but now Haulix is a preferred international distribution resource for folks in the music biz. The company boasts roughly 1,000 clients, including SideOneDummy Records, eOne Music Group, and fellow Minnesota enterprise Rhymesayers Entertainment. Each month, Haulix blasts out more than 2 million emails to worldwide media outlets from its downtown Minneapolis office.

Haulix’s most seductive feature is its digital watermarking service. Record labels and self-distributed artists send thousands of advance copies to various tastemakers — journalists, bloggers, radio pros, podcasters, etc. If the songs get leaked to the internet, it can torpedo a band’s album cycle. So services like Haulix can be integral to protecting small-scale business. That’s why Lance King, owner of St. Paul indie-metal label Nightmare Records, switched to Haulix back in 2012.

“Anti-piracy is really important before a release date more than ever,” he says. “[Digital distribution] has the ability to be extremely exploited, to the point where it crushes an album’s survivability, or worse, the band’s financial prospects. Physical distribution and product cost a lot of money to make, so if you undermine the value of that before the street date by everyone having a digital copy of it, you shoot yourself in the foot.”

The watermarking works by embedding inaudible bits of data into songs. These create “fingerprints” that are unique to each recipient. If an album is uploaded to a file-sharing service, Haulix can help musicians track the source of the leak, providing a name, location, IP address, and even the time of piracy. This allows the senders to blacklist offenders, and Haulix will even issue automatic takedown notices to help stem future transgressions. Though pirates have ways of evading many forms of watermarking, Haulix’s method is so robust it can actually be tracked in copies that have been recorded off speakers and uploaded as new MP3 files.

While secure file distribution has been the backbone of Haulix’s success, it’s not necessarily the blueprint for its future. The company released its latest version Monday — its third major revision to the platform — and there was no major update to the watermarking technology.

Instead, Brown and his team focused on making it easier to put together press releases and send them out alongside the promotional music. Publicists typically use services like Constant Contact or Campaign Monitor to create a press release, then they’ll send out music files separately through Haulix. With his latest update, Brown is touting a “one-stop-shop” for global distribution.

“[Piracy] is still a huge problem. It’s doubled since 2008, and it’s set to double between now and 2020,” he says. “We used to think the most important thing was the watermarking, but we’ve realized that it’s more than that. [Users] want a system that’s really easy to use to send out their promo invitations and their press releases.”

Haulix now operates like a sales/marketing suite similar to Salesforce or HubSpot. It allows users to not only send out press releases and promo material, but also to accurately track how people open the emails, interact with the files, and click the links. Brown estimates the new version will double or triple his firm’s monthly email output, which should help make Haulix a more recognizable name in the music industry.

“It’s not just a new coat of paint,” Brown says. “We have a full reporting system. Every mailing [clients] do will be organized as a campaign, and it’ll track all the opens and the clicks, and they’ll see pie graphs of who has actually opened and consumed the music, and they can easily send out reminder emails.”

For an indie label, this can mean the difference between contracting a marketing firm or hiring a full-time press department and doing the work themselves. That’s why Haulix has been so valuable to Nightmare Records.

When King started Nightmare in 1990, there were only a handful of glossy magazines and radio stations to mail physical promo to. It was expensive but doable. Now, with the glut of viable blogs, podcasts, and websites springing onto the internet, King couldn’t even afford the postage. Nor would he be able to bankroll the full-time marketer to manage the accounts.

“You can set up a really great promo in literally 10 minutes if you have the elements ready,” King says of Haulix. “It makes life even easier to promote things, and that’s what technology is all about. Anyone can use it, and that helps even the playing field a little bit.”

Though it’s still much smaller than industry leaders the likes of CD Baby, TuneCore, and ReverbNation, which number their customers in the millions, Haulix has an advantage in feeling as independent as the clients it serves. Six years after its inception, it still lists just six employees, only two of them full-time, and their modus operandi is built totally off feedback from fellow bootstrappers like King.

That’s why, instead of fleeing for the startup haven of Silicon Valley, Brown decided to anchor Haulix in Minneapolis — a city where self-sufficiency is a cardinal virtue among musicians and labels.

“There’s a trend that, if you want to start a ‘cool’ tech company, you’ve gotta be on the West Coast,” Brown says. “But I’m proud that we’re able to stay here. I was able to bootstrap this company that started with $800 to $1,000. We didn’t have to take any investor money, and we’ve built up a really nice, profitable company. Aside from the snow, this is an all right place to be.”