Kobalt’s publishing business is enjoying a purple patch.
Earlier this month, Billboard revealed that the tech-driven company, which allows songwriters to keep hold of their copyrights, was the third biggest publisher in Q3 based on Top 100 US radio hits.
Claiming a 13.98% market share, Kobalt was less than four points behind Warner/Chappell (No.2) and actually 0.67% ahead of Universal Music Publishing Group (No.4).
We can probably guess what these competitors think about Kobalt – but do you know what Kobalt thinks about them?
It thinks it can help them be better.
The man tasked with convincing these and other publishers that Kobalt is just as much their friend as their rival is Laurent Hubert – the exec who recently joined Willard Ahdritz’s company after helping establish Bertelsmann’s BMG in North America.
Hubert is running Kobalt’s newly-formed B2B rights management platform division.
His job: to prove to fellow publishers, big and small, that developing their own systems is a fool’s errand, and that tapping into Kobalt’s white label administration tech will free up crucial time, cash and resource.
In truth, this is more of a renewed push from Kobalt than a revolution: the business already partners with more than 500 publishing companies, including Chris Blackwell’s Blue Mountain Music.
“I’m thrilled that our new white label platform will be able to deliver that same uplift with total transparency to other publishers.”
Willard Ahdritz, Kobalt
CEO Willard Ahdritz says Hubert’s division can deliver an “enormous uplift in revenue” for clients.
“I believe that every creator should be able to benefit from what we’ve built, whether they are signed directly to Kobalt or not,” says Ahdritz.
“I’m thrilled that our new white label platform will be able to deliver that same uplift with total transparency to other publishers and content owners around the world.”
MBW caught up with Hubert to ask quite how he’s going to persuade his fellow publishers – including his former employer – to go into business with Kobalt when the company is simultaneously eating into their market performance…
What’s going on? It looked at one point like you were kissing goodbye to the music industry…
[Laughs] Well… I’ve always looked at Kobalt as an interesting play.
Kobalt came onto the market nearly 15 years ago with a vision and a mission. They bought to the industry a lot of things that are here to stay – the notions of transparency, accountability and the idea that technology is a positive enabler in our business.
As you know, the music industry has famously suffered from technological innovation; technology has been blamed for a lot of challenges. Kobalt has used technology to do the opposite: to bring transparency to artists and to bring a sense of scale to the music business.
“from a systems perspective, one has to be able to manage a much larger volume of data for a much smaller share of income.”
I’d also experienced at BMG and other companies that we are in the midst of a significant transformation in music consumption, and that’s led to an explosion of data.
How do you harness that data and make it useful? That’s critical, and has been magnified by the fact that 30 years ago, the vast majority of your [publishing] catalogue was not a split catalogue. Now it seems most of the top frontline songs are split [songwriter] copyrights.
So from a systems perspective, one has to be able to manage a much larger volume of data for a much smaller share of income. If you don’t create efficiency around that that, you will inevitably make your business far more challenging to manage than it needs to be.
Tell us more about this white label platform. Who do you want as clients? Can you really envisage a day where a major publisher signs up?
That’s ambitious, but I genuinely do believe Kobalt can be a solution [for publishers] regardless of size – whether you’re a major or an independent.
Should we as an industry start thinking on a global scale with a single, pure solution when it comes to managing systems and data? I can tell you from all the conversations I’ve had during all the years I’ve been in the industry before joining Kobalt, everyone is struggling with their own system.
“everyone is struggling with their own system.”
Whether they’re using Counterpoint or a bespoke system they’ve developed they’re all facing challenges. Plus, typically the rate of development of those systems is far behind the rate of change of the industry. So you’re always trying to fill that gap.
On a very simple level, if you are willing to think differently you may consider using [Kobalt’s] system instead of spending the Capex to develop one, with all the inherent risk. As we know, a large number of IT projects fail.
Streamlining your organization is a very real benefit, even before we get to the uplift of income clients see at Kobalt. There is a big opportunity there.
It’s no secret that some publishers – potentially your ex-employer – sees Kobalt as a rival and even a threat. The Google ventures stake has caused much discussion. On the other hand, most people admit they have respect for the technology it uses. How do you convince someone to stop fearing Kobalt and start seeing them as a potential partner?
That’s a very good question – and it’s the exact question I asked Willard when I was [considering] a move to Kobalt.
I always saw the opportunity on the technology side, but from my perspective at BMG I always saw Kobalt as a disruptor.
I said to Willard: “We have to understand there is a side of Kobalt’s future that is not about competing, it’s about enabling others. That’s a pivot that I think is important for the company.”
“the benefit of a streamlined system far outweighs the competitive pressure Kobalt has put on the marketplace.”
I understand the publishing community very well; I’ve worked with most of the independents or had conversations with them on the board of NMPA or ASCAP.
I want to be the voice who will explain the rationale behind the benefit [of working with Kobalt].
Because at the end of the day the benefit of a streamlined system far outweighs the competitive pressure Kobalt has put on the marketplace.
I don’t want people to think Kobalt is purely a competitor. That’s not the case. Kobalt is a company that can enhance value for all copyrights, regardless of who owns them. I firmly believe that.
I’m a major publisher who has built their own system. I understand this all makes sense economically, but I don’t feel right about giving Kobalt all of my data. what would you say to convince me?
When people give all their financial data to their bank or insurance companies, I don’t see a tremendous difference between Kobalt and those examples. And think about the PROs: is your data any safer at the collection societies?
We have to get real here. We are in a world where data is really important, but most importantly management of data is critical.
“We have to get real here. We are in a world where data is really important, but most importantly management of data is critical.”
When you look at other industries that are very data-intensive – whether insurance, travel, banking – the matter of confidentiality has been resolved long ago.
I’m not suggesting that the perception [of Kobalt amongst it competitors] is an issue – you’re right to raise that.
But again, the economics can be very compelling – and there are ways to manage to reduce the tension and explain how we can work with you in a way where data integrity and data confidentiality is not compromised.
What does these mean for AMRA, the digital collection society launched by Kobalt last year?
Obviously AMRA is run separately from Kobalt, but we are thinking in the context of a B2B offering [to a publisher] how AMRA would fit.
Putting myself in the shoes of an independent or even a major: is there a way to offer an end-to-end [publishing administration and collection] solution and reduce the number of intermediaries when it comes to ex-US digital licensing? AMRA could help us provide that solution.
We are thinking internally about how we do it, but we’re very cognizant of the important of the separation of business.
A cruel question I’m afraid: Will you be speaking to your previous employers about using Kobalt’s technological solution?
I’ll be speaking to everyone, and I hope they will at least consider this when they look at the savings on their Capex.
Most of the majors have invested heavily in their systems, but I’m not so sure that the outcome of that investment is really what they expected: they’re still not meeting the [quality of] the Kobalt platform.
Kobalt is, in my view, three to five years ahead of the competition.
“Most of the majors have invested heavily in their systems, but I’m not so sure that the outcome of that investment is really what they expected: they’re still not meeting the [quality of] the Kobalt platform.”
It doesn’t make a lot of sense to keep expanding resources and capital in an area that could be delivered at a higher quality point without the complexities of managing it yourself.
You reduce that Capex, you can reallocate resources to what really creates value: creative services, marketing services or investing in a new business division.
Where will your investment dollar and your overhead dollar yield the greatest return? I’d like to think there are rational arguments for why the Kobalt option should be considered.
What about the future? Is this strategy going to move beyond music?
Our focus is music but it’s true we see a need elsewhere; what’s happening in music right now is happening in video, video games and may other digital distribution platforms.
The ability to harness the licensing, collection and distribution of those royalties is a common issue. Certainly in the long-term, I firmly believe there is an opportunity there.
But I want to make sure we build on Kobalt’s strengths, and right now that’s the music business.Music Business Worldwide