The world’s investment banks may be salivating over the prospect of Vivendi selling a stake in Universal Music Group – but that’s not the only major financial story about to hit the global music industry.
MBW has today verified that Kobalt Music Group (KMG) is in the process of raising the largest funding round in its history.
The raise is taking place at KMG – which owns Kobalt Music Publishing, Kobalt Neighbouring Rights, recorded music operation AWAL and collection society AMRA. It is separate to Kobalt Capital, which is an acquisitive fund managed by KMG.
Kobalt is now talking to investment banks to pull together the funding, MBW’s sources tell us.
Kobalt’s largest raise to date came in 2017, when it absorbed $89m across two investment rounds – one for $75m led by Hearst Entertainment and a further $14m from Section 32, the US-based venture capital fund created by Bill Maris, who was formerly head of Google Ventures.
That fact alone suggests the new raise could well be in excess of $100m.
Google Ventures itself invested in Kobalt in 2015, leading a $60m investment into the company.
Kobalt Music Group Founder & CEO Willard Ahdritz confirmed today that his firm was raising money when contacted by MBW, but would not be drawn on a figure.
He explained that Kobalt was particularly keen to accelerate the growth of recorded music distribution and services platform AWAL – which, he said, is on course to turn over approximately $100m in Kobalt’s current financial year (to end of June 2019). The firm’s overall music operation is expected to post revenues comfortably in excess of half a billion dollars during this period.
Ahdritz said that the new investment will also be used to grow Kobalt’s presence in all verticals in music, including publishing, plus global songwriter collections (via AMRA) and neighbouring rights collections (via KNR).
“We are building the leading centralized global technology platform to best service a fast-growing digital music industry,” said Ahdritz. “Streaming is driving an amazing shift in revenue distribution, creating a large new market segment of artists not being served by the major labels.”
“Streaming is driving an amazing shift in revenue distribution, creating a large new market segment of artists not being served by the major labels.”
Willard Ahdritz, Kobalt Music Group (pictured)
Ahdritz commented that AWAL was keen to challenge the major record companies, whose industry power, he said, was based on “a legacy system designed around high-cost service for a limited number of artists”.
Following the announcement last year a $150m investment from Kobalt in AWAL, the recorded music company acquired respected radio promotion company In2une last summer.
AWAL also grabbed headlines in November after signing a global deal with New York-based Glassnote Records, whose recorded music catalog includes the likes of Mumford & Sons, Phoenix, CHVRCHES, Childish Gambino, The Strumbellas and Jade Bird.
In addition to its label partners, AWAL works with independent artists including Lauv, R3hab, Rex Orange County and Vérité.Music Business Worldwide