Analysis

Kobalt CEO blasts ‘elitist’ concerns about music as background listening


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Kobalt CEO Willard Ahdritz delights in ruffling feathers within the music industry, so his appearance as a keynote speaker at Music Biz and Music Ally’s NY:LON Connect conference in New York promised to deliver a fair few zingers. He was interviewed by Music Ally CEO Paul Brindley.

Ahdritz talked about the founding story of Kobalt, including losing $432k in 12 months trying to build a mobile video studio. “But it was very clear the new industry was coming: the artists going straight to the fans, and managers using service providers to create a new global experience with new technology,” he said.

He returned to his past theme of transparency, and Kobalt’s aim to “maximise cash-flow” for musicians and songwriters. Something that has often seen its CEO draw deliberate comparisons with the larger, existing music publishers.

“One thing is absolutely clear: there is something called results. And Kobalt is today the most trusted brand in music. You have full transparency: all data, at source, on a global level,” he said, before citing the “hardcore loyalty” of its creators – and firing the first broadside of the session at a rival in the process. “Litigation is not Kobalt’s client-retention strategy! Think about that. Everyone can leave whenever they want…”

(Recent legal disputes involving the publishing contracts of Duran Duran and Sir Paul McCartney were, almost certainly, the reference here.)

Kobalt has moved beyond pure publishing: its AMRA collecting society gathers data from services like Spotify, Apple Music and YouTube. “Today we are getting global files from those players, matching it centrally – 100% matching on a global scale – we are sending one invoice for Spotify’s usage, for Apple’s usage, so you can imagine the efficiency of transparency on all levels.”

Ahdritz fired off some more criticism of collecting societies – “vested interests, and in my opinion collusion” – and suggested that Kobalt remains keen to fight its war of words with big publishers in public, with numbers.

“I like competition!” he said. “I like it when we have functioning democratic, bustling renaissance cities. That’s when we have exciting things happening. We have 600 music publishers on our platform now… and we are collecting 40% more [revenue] for them.”

Challenged by Brindley on whether that figure is correct, Ahdritz protested: “I never lied in my life! Not to my wife, not to my clients, and not in public… And to be honest, 50% [more revenues collected than rivals] on digital is extremely conservative numbers. The average would be 20x.”

Kobalt also has a finger in the recordings pie, through distributor AWAL and its Kobalt Music Recordings label services division. Lauv is one example of an artist breaking globally from this base, but Ahdritz is keen to see an even-bigger explosion in the middle-class (in earnings terms) of artists in the years ahead.

“Today there’s around 5,000 artists who have a commercial living out in the world, who can pay their manager and their lawyers etc. What we see, if it’s five years or seven… we are going to go to really tripling the industry. But what Kobalt is part of doing is fundamentally lowering the global costs,” he said.

“My expectation is that five years from now, we’ll go from 5,000 bands to 100,000 bands that have the second level of economics. A 20x increase… In my opinion, musically there was a lot of great music in the 1960s, the 1970s. But from a business point of view, an excitement point of view, this is probably the most exciting time.”

Ahdritz also responded to Universal Music’s Jonathan Dworkin’s concerns about music becoming an ‘and’ experience – just background material for running, cooking, driving and so on – which were expressed on the first day of NY:LON Connect.

To quickly recap Dworkin’s views:

“What does worry me is that with the ease of consumption, and with the disappearance of the UI layer and the rise of the algorithm… and the glut of content. I do worry that music is at risk of becoming an ‘and’ experience. I’m driving and I’m listening to music. I’m at the beach or gym or whatever it is, and I’m doing it. I’m worried that the consumers become less focused on the depth of the experience”

Ahdritz gave them short shrift.

“When you have some elitist people telling you what you should do or not do? Pope Francis said ‘who am I to judge?’ and I think that is a good expression here too. People did background listening to top 40. But somebody decided what they should listen to,” he said – the implication being that major labels like Universal Music had more control of that system.

“I am not concerned at all about this ‘and’ experience, or music of quality. I rather see the opposite: that we are monetising music to a significant broad platform, pushing significantly more money back into the music industry, so that people can continue to develop. We all know it takes one album, two albums, or three albums to develop.”

Couldn’t Spotify be the new gatekeeper? The streaming service was challenged at NY:LON Connect yesterday over just how democratic its playlists system is for artists, leading CMO Seth Farbman to admit that it’s “maybe more like a republic than a democracy”. But Ahdritz approves.

“In my experience: there were three majors controlling the top 40 in radio distribution. That’s a dictatorship. So to go from a dictatorship to a republic is a significant improvement! There are two billion playlists in Spotify… So for me, the tools are there, the services are there, so I think it’s great as a consumer.”

Ahdritz returned to the concerns expressed by Dworkin, representing the largest major label, about music becoming background listening.

“It is scary, the democracy isn’t it! That any plebs and idiots can go and vote. I think this is horrible! I prefer Universal deciding for me what I should listen to,” he said, with heavy sarcasm. “I think it is a great… I’m not so concerned. What is the difference? Let’s think about these elitist comments: ‘this is the right music’,” he said.

Ahdritz cited the example of someone asking Alexa to play them some sixties music. It plays you some Motown, and then you go to explore it… To think that this is dangerous? What is dangerous? That people listen to music and then maybe find something they like and drill down? ‘Oh, this is Ray Charles…’. What is absolutely important is that streaming doesn’t become radio top 40. That is the dangerous thing in my opinion. Otherwise this is beautiful for music.”

What about YouTube and the ‘value gap’? “Safe harbour needs to go. People protect their algorithms and code, but what’s wrong with our notes? Shouldn’t they be protected too?” he said. “Safe harbour needs to go.” But he stressed that with control, YouTube can become a powerful platform for musicians and songwriters, once they can take down songs and monetise the ones that stay up.

Ahdritz finished off by talking about “smart money versus stupid money” and the need for music companies to choose smart investors. “What they can bring to the table in challenging your top views, or with their network, is extremely important,” he said. “If you have an extremely good idea and a great team, you will get smart money!”

 

Stuart Dredge

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