By now, you’ll almost certainly have seen the news that Sony Music is buying Kobalt’s label and distribution arm Awal, and its neighbouring rights division. After the initial announcement, the price paid was confirmed as $430m.
Awal will sit alongside The Orchard within Sony Music – but “enhanced by the technology and network” of its new sister distributor – with Awal boss Lonny Olinick staying in charge.
What next for Kobalt? The company pitched the news as “Kobalt strengthens music publishing business” – including traditional publishing, the Kobalt Capital investment arm, and collecting society Amra.
It’s a sharpening of focus, then, albeit an abrupt one considering how Kobalt’s senior executives have talked up Awal’s strategic importance in recent years. That said, narrowing down the business to publishing could make Kobalt itself a stronger candidate for an acquisition.
What next for Awal? Sony Music’s resources and global network are certainly powerful tools to be deployed for its artists. One initial challenge will be navigating any initial choppiness around artists and employees alike for whom Awal’s independence was a key reason for working with/for the company. The Orchard, at least, will have learned some lessons on addressing that task.
(It’s also reasonable to wonder whether the two distributors are destined for a merger in the long or even mid term, in a similar vein to the rollup of Sony Red and The Orchard in June 2017. Or perhaps Awal’s future is as more of a label brand within Sony Music – it was never just a distributor in its structure and approach. Artists With a (Major) Label perhaps…)
What next for independence, though? There’s an irony in Sony Music’s UK boss Jason Iley recently telling the UK’s parliamentary inquiry into the economics of music streaming that “if an artist does not want to sign to Sony, they have a choice, and if they wish to earn more of that revenue, they can sign to a distribution company” shortly before his firm bought one of the remaining independent distributors.
“Awal’s sale to Sony highlights the incredible value created by the independent music community as well as the continuing appetite of the majors to grow their market shares by acquisition,” was how indie body Aim’s CEO Paul Pacifico reacted yesterday.
Where that appetite leads to next is an important question, not least for the still-standalone firms (DistroKid, Ditto, SoundCloud even) eyeing the majors on one side, and the ‘super-indie’ consolidation represented by Downtown Music Holdings on the other.
Artists may have more paths to market for their music than ever before – Iley’s point at the inquiry – but the way things are going, those paths may still be the property of a fairly small (and shrinking) group of landowners. As long as the key principles of independent distribution survive – artist ownership of rights being one of the most important – this isn’t necessarily a concerning trend.
Indeed, there’s an argument to be made that as these distributors become an even more strategically important part of the majors’ businesses, those principles could exert a gravitational pull on the wider dealmaking culture within those labels, rather than fall by the wayside.