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Kobalt Is Now A Next Generation Major Label In The Making 

Guest post by: Mark Mulligan

"Kobalt has been the poster child for the changing of the guard in the music business," writes MIDiA analyst Mark Mulligan. But it's on a path to become much more as "next-generation label... plotting a course to becoming a next generation-major." 

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By Mark Mulligan of MIDiA from his Music Industry blog 

News has emerged of Kobalt potentially looking to raise an additional $100 million of investment, following a 2017 round of $89 million and a 2015 $60-million round led by Google Ventures. Kobalt has been the poster child for the changing of the guard in the music business, helping set the industry agenda by pursuing a creators-first strategy while. 

Building an impressive roster of songwriters and artists at a scale that would have most indies salivating. But it does not have its sights set on being the leading player of the indie sector, instead playing for the big game: Kobalt is the next major label waiting to happen. 

So, what makes Kobalt so different? In some respects, nothing. Most of what Kobalt is doing has been done before, and there are others plotting a similar path right now (e.g. BMG, United Masters, Hitco). What matters is how it is executing, how well backed it is and the scale of its ambitions: 

Moving beyond masters: In the old model, artists signed away their rights in perpetuity to record labels, with nine out of ten of them permanently in debt to the label not yet having paid off their advances. The new model (i.e. label services) pursued by the likes of Kobalt, reframes the artist-label relationship, turning it one more akin to that of agency-client. In this rebalanced model artists retain long-term ownership of their copyrights and in return share responsibility of costs with their label. This approach, coupled with transparent royalty reporting, lower admin costs and continual tech innovation has enabled Kobalt to build a next-generation label business. 


Laser focus on frontline: In a label services business the entire focus is on frontline, as there isn’t any catalogue. An artist signed to such a label therefore knows that they have undivided attention. That’s the upside; the downside is that the label does not have the benefit of a highly-profitable bank of catalogue to act as the investment fund for frontline. This means that a label like Kobalt often cannot afford the same scale of marketing as a major one, which helps explain why Kobalt is looking for another $100 million. However, there is a crucial benefit of being compelled to spend carefully. 


Superstar niches: In the old model, labels would (and often still do) carpet-bomb TV, radio, print and digital with massive campaigns designed to create global, superstar brands. Now, labels can target more precisely and be selective about what channels they use. Kobalt’s business is based around making its roster superstars within their respective niches, finding a tightly-defined audience and the artists they engage with. The traditional superstar model sees an artist like a Beyoncé, Ed Sheeran or a Taylor Swift being a mass media brand with recognition across geographies and demographics. The new superstar can fly under the radar while simultaneously being hugely successful. Take the example of Kobalt’s Lauv, an artist tailor-made for the ‘Spotify-core’ generation that hardly registers as a global brand, yet has two billion audio streams, half a billion YouTube views and 26 million monthly listeners on Spotify. By contrast, heavily-backed Stormzy has just three million monthly Spotify listeners. 


Deep tech connections: The recent WMG / Spotify spat illustrates the tensions that can exist between labels and tech companies. Kobalt has long focused on building close relationships with tech companies, including but not limited to streaming services. This positioning comes easier to a company that arguably owes more to its technology roots than it does its music roots. The early backing of Google Ventures plays a role too, though with some negative connotations; some rights holders fear that this in fact reflects Google using Kobalt as a proxy for a broader ambition of disrupting the traditional copyright regime. 
A highly structured organisation: One of the key differences between many independent labels and the majors is that the latter have a much more structured organizational set up, with large teams of deep specialisation. This is the benefit of having large-scale revenues, but it is also a manifestation of ideology. Most independents focus their teams around the creative end of the equation, putting the music first and business second. Major labels, while still having music at their core, are publicly-traded companies first, with corporate structures and a legal obligation on management to maximise shareholder value. Kobalt has undoubtedly created an organisational structure to rival that of the majors. 

Earned Fandom 

Kobalt is a next-generation label and it is plotting a course to becoming a next generation-major. That success will not be reflected in having the rosters of household names that characterise the traditional major model, but instead an ever-changing portfolio of niche superstars. The question is whether the current majors can respond effectively; they have already made big changes, including label services, JV deals, higher royalty rates, etc. 

Perhaps the most fundamental move they need to make, however, is to understand what a superstar artist looks like in the era of fragmented fandom. The way in which streaming services deliver music based on use behaviours and preferences inherently means that artists have narrower reach because they are not being pushed to audiences that are relevant. This shifts us from the era of macro hits to micro hits ie songs that feel like number one hits to the individual listener because they so closely match their tastes. This is what hits mean when delivered on an engagement basis rather than a reach basis. Quality over quantity. 

Majors can still make their artists look huge on traditional platforms, which still command large, if rapidly aging audiences. But what matters most is engagement, not reach. It is a choice between bought fandom and earned fandom. In the old model you could build a career on bought fandom. Now if you do not earn your fandom, your career will burn bright but fast, and then be gone.

Finding Your Passion  

If you struggle with the question, "What are you passionate about?" you're in much better (and much bigger) company than you probably realize. 

When I was younger, I thought I was passionate about a lot of things – music, movies, faith, girls, Star Trek... 

But in reality what I was truly passionate about was just feelingpassionate. Once the flame died, on to the next fire I'd move. 

It's tempting to rely on Hollywood's romantic formula for defining what it means to be passionate about something (or someone).  

And because I did this for so long, even now, when I am alone with my thoughts considering the question, "What am I passionate about?", I can still struggle to provide an answer. 

Because the Hollywood formula is both backwards and incomplete. 

"Dear world, offer me something I’m passionate about and I’ll show up with all of my energy, effort and care!" 

Where's the commitment? It's easy to show up, but without commitment it's equally as easy to walk away. Because nothing is good enough to earn your passion before you do it. Perhaps, in concept, it’s worthy, but as soon as you closely examine the details, the benefits... and the pitfalls, it’s easy to decide it’s better to wait for a better offer. Or if you already jumped in with both feet, once your feet begin to ache (or wonder) to run off after something else. 

Passion and commitment are inseparable. 

But what if you reverse and complete the formula? 

"Dear world, offer me a chance to contribute, and I’ll commit to work on it, with focus, and once I begin to make progress, I’ll become passionate about it!" 

Committed activity – before passion – measures our craft and calling in terms of contribution, not in a romanticized notion of perfection. Passion comes from feeling needed, from approaching mastery, from doing work that matters. 

To find your passion, commit yourself to doing work that matters. Contribute to the best interest of someone and something else. And feel the rush of being needed, wanted, and trusted. 

But I Don't Know How! 

But I don't know how!

Four words that never enter a child's mind before attempting, well... anything!

At least that's how it is with my young daughters. Oh, they can do anything,,, EVERYTHING... at least in their mind's eye. 

And then, in time, they do it before my eyes.

And the joy this brings... inspires me to be better.

Do they fail along the way? All the time! Does it matter to them? Maybe. But it rarely stops them from trying.

What about you?

This thing in your mind's eye? Do you know how to make it happen?

It doesn't really matter, does it?

Because we know that what matters...

is trying,

and failing,

and learning,

and growing.

It's not that you don't know how to do this thing in your mind's eye.

It's that you simply don't know how, YET.

But you will.

And when you do...

The joy YOU bring will inspire the rest of us to be better too. 

 

 

 

 

Feeling Inadequate?  

Along our journey, maturing adults get tired of the feeling that accompanies growth and learning.

We start calling that feeling, “inadequacy.” 

We’re not good at the new social media platform, we balk at considering a new way to problem solve, we never did bother to learn to play piano… 

Not because we don’t want the results, but because the journey will be difficult. Difficult in the sense that we’ll feel inadequate… 

Which accompanies all gain. 

1. First we believe something can be done. 

2. Then we believe we can’t do it. 

3. And finally, we get better at it. 

It’s the second step that jacks us up. 

If you care enough to make a difference, if you care enough to get better — you should care enough to experience inadequacy again.

SOUNDCLOUD IS NOW A DISTRIBUTOR: PLATFORM LAUNCHES TOOL FOR USERS TO UPLOAD MUSIC TO SPOTIFY, APPLE MUSIC ETC. 

Guest Post By Tim Ingham/ Music Business World February 19, 2019

The upgrade to the platform’s SoundCloud Premier monetization toolset allows users to “seamlessly” distribute their music to the likes of Amazon Music, Apple Music, Instagram, Spotify, Tencent, YouTube Music and more – all from within their SoundCloud account. 

Subscribers to either of SoundCloud’s upload offerings (SoundCloud Pro and Pro Unlimited) can gain access to SoundCloud Premier at no extra cost.

Premier’s core selling point is that it allows artists to monetize their music on SoundCloud, earning a revenue share which the company says “meets or beats every [other] streaming service”. 

In terms of the new distribution tool, SoundCloud says it’s not taking any cut from the earnings artists obtain on other platforms, while it promises “streamlined payments from everywhere – directly from SoundCloud”. 

“Only SoundCloud empowers creators with a unified platform to instantly upload and share, connect with fans in real-time and get paid for their work everywhere –both on SoundCloud and across other leading music services,” said Kerry Trainor, Chief Executive Officer, SoundCloud. 

“Creators can now spend less time and money jumping between different tools, and more time making music, connecting with fans and growing their careers first on SoundCloud.”

The move comes a few months after Spotify announced that it was also effectively becoming a multi-platform distributor. Daniel Ek’s company acquired a minority stake in third-party firm Distrokid in October last year, before launching a beta tool which made it possible for users to upload tracks to other services via the Spotify For Artists dashboard. 

Prior to rolling out its open beta distribution tool, SoundCloud worked with a number of artists including Leaf, mobilegirl, Jevon and Thutmose in a closed beta environment to test and get feedback on the new feature. 

“I believe SoundCloud’s new distribution tool is the way of the future for independent artists and music in general,” said rising rap artist, Leaf. “It makes distribution an easy one-step process, giving you a very simple way to monetize your plays and the freedom to reach new heights with your fan base.” 

Hip-hop producer and musician, Jevon, said, “SoundCloud’s distribution tool is a great way for unsigned artists to get their music out there for the world to hear. Everyone knows how easy it is to upload a song to SoundCloud, and now it’s just as simple to upload and distribute everywhere.” 

Over the course of the next few months, says SoundCloud, creators will see new functionality added to the monetization toolset – which is available for SoundCloud Pro or Pro Unlimited subscribers who own all applicable rights to their original music, and who are over 18 years old. 

To use the toolset, these artists must also have no copyright strikes against their music on SoundCloud at the time of enrollment. 

At last count, SoundCloud’s music catalog included over 200 million tracks from 20 million creators heard in 190 countries