Viewing: Blockchain - View all posts

Kobalt Founder Willard Ahdritz on the New State of the Music Industry 

Kobalt Founder Willard Ahdritz on the New State of the Music Industry

Guest post from the Midem 2020 Digital Edition Keynote. Kobalt founder Willard Ahdritz looks at the radical but not altogether negative effects the pandemic will have on musicians and the music industry. 

Willard Ahdritz: 

There is definitely a lot of passion at Kobalt for our mission to change the industry and make it better for everyone, from fans to rights owners to creators, so when I came up with the idea for Kobalt in 2000, I saw three clear themes. First, I strongly believed in the digital transformation and the opportunities that came with it. As you know, it was doom and gloom up until 2015 – people said streaming was death. But already in 2000, I thought that having access to music on a global scale was a huge opportunity. I also understood that there would be a problem of high volume, low transaction values that could be solved with technology and a centralized global platform. 

Second, I feel for creators and musicians and, having been in the industry both as an artist and having run an independent record and publishing company using the major’s systems, I wanted to introduce transparency into the industry. Technology needs transparency, and I thought transparency drives liquidity, drives volume. And in this, I also saw a huge opportunity for creators to improve their relationship with fans and be able to go directly to them and actually for the first time in music industry history, have the upper hand in being the content creators. I always wanted to be a service provider in order to be aligned with creators. 

And lastly, I also thought it was very important that, to be successful in this environment, Kobalt should be both a music company and a tech company. I wanted to have respect both in Hollywood and in San Francisco to work with creators, understand their needs, take care of their copyrights, and at the same time speak the language of tech people and create tools that would allow everyone to benefit from the opportunities I saw. 

Kobalt Founder Willard Ahdritz 

How the pandemic has changed the way Kobalt works 

So as you know, we take care of 40,000 creators. Every week, we represent 50 – 70% of the Top 100 on the charts. We have 14 offices around the world so we have an organization to take care of and I think we all feel sad for all the suffering we see everywhere. Not just in the music industry but physical suffering, so it is a tough time for a lot of people. At Kobalt, we closed our offices around the world on March 10th. Being a tech company, all employees have a laptop and we are all used to working remotely, globally, across borders. Within 24 hours we were all up and running remotely and after a week, our productivity actually went up. I think that shows Kobalt’s great spirit and we realize that supporting our creators and making sure they receive their distributions is even more important during these tough times. 

How the business has changed during the pandemic 

If we talk revenue side first, there are some financial reports out in the market that say publishing will be up 3% this year and 3.5% next year. We see a bigger impact in areas like synch, given that major film and TV productions have stopped. We know that live, which in certain territories in Europe is a good income for publishers, is lost for the time being. Performance fees from restaurants and bars have suffered but having said that, 

PROs are delayed and only very few societies pay out directly what they have. Most pay out six months, twelve months after they have collected. So we see this being drawn out but overall, I think we can say that if we are -10% this year, we believe that we will be at +20% next year, that people will bounce back, and we see certain productions starting again around the world. There is talk about production hubs where people work and live to start TV production again. 

We are lucky in publishing and in recording. At AWAL, our recording arm, it’s very much business as usual. It’s a digital streaming label and we are working marketing remotely so overall, we are doing very well. What is exciting is that we do get a lot of songs. Creatives have continued to create even more today so I believe later in the year or next year we are going to see some fantastic songs, fantastic music that is just now being written. 

Reports on the global music economy 

Don’t worry, the genie is out of the bottle when it comes to music and streaming. My comment on Goldman’s report, which is a very detailed report and has a lot of good data, is that overall I believe that short-term publishing will be negative this year rather than the 3% growth they mentioned just because of the impact on synch, live, and the restaurants and bars I mentioned. Having said that, I think we are going to bounce back and have 20% growth next year in publishing overall. I agree on the longer term growth they see in the coming ten years. In recordings, I’m actually more bullish than the Goldman report this year; I think they are too conservative as the business has moved so much to online or streaming, so I think we are going to see bigger growth than they are seeing on that point. And one very interesting take-away from the IFPI report that came out a couple of weeks ago is that independents have grown 38% last year and artists direct 42%. And if you include that 12% of what the majors do is distribute independents, it was really a fundamental shift for independents and access, which I thought could happen when I started Kobalt. I think there is a huge opportunity now for the middle tier artists that I have pushed for and believed in to live on their music. We can see now hundreds of thousands of artists that can live on their art. On average, we saw that at AWAL, artists are getting twice as much from recording royalties than from their touring income. So that is a fundamental change in artist economics, and that was pre-pandemic. And obviously that is even more important today. We have artists that you have never heard of – even if you’re a huge fan of live music and cool bands. We have hundreds and hundreds of bands that you have never heard about making $100,000 or more per annum in royalties. And for me, that is a great success in itself for fans, for culture, and for the artists and creators. 

How AWAL artists are making more from recording royalties than steaming 

It is about what kind of contracts you have entered into and how you are making sure that your money is reaching you. We have full transparency at Kobalt so for example in publishing, within our management, we have our own global digital society called AMRA. AMRA has deals with the 30 biggest DSPs in the world. We take in the global usage files, we match, and we send one invoice to Spotify for the global consumption and claim. I have audit rights on my society, our clients have audit rights on the society, and 

as you maybe know, that is not the case in the traditional society environments. We have control of the cost, control over the information, as do our clients. That obviously drives more. On the AWAL side, we are a service provider and we deliver a different kind of deal. Having said that, there are also great record labels who put in big risk money upfront to do that so obviously the deals are different in a way but I have always said that breaking online globally is very different today. Today, you can be #1 without having one video. You have to know how to navigate, how to promote, to work gradually cross border in one go instead of working in one territory and trying to replicate that in a different territory. 

Why independents had so much growth in 2019 

I think it is the access to music that people can see today. You know yourself how you explore music, how you access music, how artists are recommending other artists they like or fans are recommending. And the latest data suggests that half the people in the UK listen to music through Facebook today. There’s more interesting access to music coming. Think about Tik Tok, where were they on the map two years ago? And in this pandemic, I see people are investing in how they can enjoy live streaming, how they can use new tools and new services. I think the pandemic will fast forward the transformation. I believe that the music industry will be even bigger than what we thought it would be pre-pandemic. Fundamentally, 85% of people think that music is essential or very important. Fundamental human behavior has not changed, so I am positive. 

How Paul McCartney came to Kobalt 

I can only say what I believe myself, that I met his advisor and lawyer, Lee Eastman, who followed me over the course of 5/6 years where I told them what we do, how we work. They did their due diligence, saw us delivering. In the end, they came on board and they were very happy that we delivered what we had told them we would. I like to say that Kobalt is the smart people’s platform, and clients recommend clients. 

I think up to half of our clients have been recommended by someone they trust or they work with and they see on our apps or portal what we have delivered for them. It is very humbling that Max Martin and Paul McCartney are competing for who has the most #1s on the Billboard charts, and they are both clients. 

What I find exciting is that technology treats everyone the same. I am pleased to say that whether you are Paul McCartney or the new young band, you keep your copyrights and get the same great service. We learn something new, we develop something, and we roll it out to every client. 

That is how I think we create a great industry, how we create value for everyone in the industry.

Could a Scalable Curation System be a Way Out of Our Industry’s Data Mess?  

Could a Scalable Curation System be a Way Out of Our Industry’s Data Mess?

It seems almost unimaginable that the problem of matching copyrights to copyright owners in order to enable accurate, streamlined, expedient, and reliable royalty payments to those to whom they are due is one of the largest problems facing the music industry in our current technologically advanced global community... until one begins to peel back the complex layers of historical lack of music industry record-keeping, incongruent global laws surrounding royalty issues, and the avarice-fueled corruption so prevalent in an industry that generates billions of dollars worldwide. Add to these issues the fact that there is little motivation from some organizations around the world that benefit financially by opposing solutions to the problem!

While many theories have been floated about how artificial intelligence and blockchain could be the cure for rights holders’ and creatives' financial woes, neither of these would untangle the industry’s rats nest of data, but a scalable curation system might. 

Could a scalable system offer a solution out of the music industry's data rat's nest? Could it be put in place in spite of those who would stand to lose ill-gotten gain so easily gleaned and hidden within the current mess? Check at this article by Vasja Veber, Co-Founder and Business Development Director for Viberate and let me know your thoughts.

Scalable Curation System Is Possible And A Way Out Of Our Industry’s Data Mess 

If you’ve talked to anyone in the music or entertainment space over the last ten years, you’re likely to have heard complaints and laments about the state of data in the industry. Though recording and composition metadata are often at the center of these woes in music–they are, after all, how creatives and rights holders get paid–other slices of the music business are faring even worse when it comes to data. 

There’s lots of gushing about everything from AI to blockchain, technologies that many of us take very seriously, but at the bottom of the problem is just one big, tough-to-untangle data mess. 

The nature of the mess may sound familiar to many outside of music and live entertainment. The data tend to be of very poor quality; you don’t actually know who came into your club or event, as ticketing information is appallingly inaccurate, for example. Data are very dispersed, scattered across socials, retail sites, streaming platforms, and other proprietary services. Worst of all for this machine learning-powered era, some of the early indicators of what’s going to be big–in the live music case, what’s taking off at certain small clubs, smaller tastemaker festivals, or key parties–may not be part of the mainstream data that’s easy to integrate via existing APIs. 

These issues find specific form in the music and entertainment industry, but have relevance to a wide range of businesses, from hospitality and event organizing to DTC and other data-reliant retail. And in live music, as in many other realms of commerce and marketing, addressing them demands a serious look at how to build a team to cultivate accurate information globally, which in turn requires a scalable approach that empowers individual data curators. 

To do anything with data, you have to find and refine the necessary sources for input, the data points that actually say something about the business, community, or scene. There are so many options out there in most cases that it’s tempting to rely on scraping plus a few APIs from relevant platforms. Another common approach is to simply set things up for crowdsourcing, and let the communities or customers fill in the data, yet that can quickly turn from exciting approach into moderation hell. Ideally, you want to combine a few firehose-like streams of data with important input from users who are incentivized to do a better-than-shoddy job at contributing information. In short, you need to tame what’s out there in the wild. 

Only humans can tame this wilderness and make it productive, people specially trained to weed out poor or irrelevant data. There’s too much complexity, nuance, and regional variation at this point to find automated solutions. That’s why we knew, as we tackled the data mess in our business, that we needed curators, real humans who knew what looked reasonable and what seemed off. Because we’re growing a large network of profiles, crossing the million mark recently, we also knew we needed enough humans to do the work well, and needed them to have certain knowledge and skills. 

These skills were determined by the focus we adopted early on. We knew that aiming to become something vague yet all-encompassing (“the Facebook for music,” as many startups liked to bandy around at some point) would make our site useless. Furthermore, we saw a massive gap in the live event realm. So we focused on live music and how other platforms and data points speak to live music scenes. There’s a lot to be said for niche approaches, and when you want to create industry-leading data, being a generalist isn’t necessarily a logical choice. 

In fact, our industry, like many others, has seen a proliferation of vanity metrics in the digital era, as well as metric fraud like purchasing, follows and streams. To counteract these forces, we homed in on unexpected metrics and data points that tell stories helpful to our clients and users, who range from fans to festival organizers and booking agents. For example, we surface which artists of note are following one another, something hard to figure out when scanning an artists’ thousands or millions of Twitter followers. This can show unanticipated connections and suggests potential collaborations and partnerships. 

We also made sure to solve one of the industry’s toughest data problems, by following one simple rule. One artist = one profile. It sounds ridiculously obvious, but even the world’s leading streaming platform doesn’t follow that rule. The only way to achieve that level of precision is by adding a human touch. A lot of times we have to defend our claim that we have one of the largest artist databases in the world, currently just shy of 500,000 profiles. We hear things like, “yeah, but I know this service that has 2 million.” They might claim this, but if you go to that particular service and type in “Tiesto”, you’ll get 10 or even more profiles for the same artist. From a data perspective, this renders such service useless, because having data scattered through multiple profiles for the same artist doesn’t let you engage in any kind of data-related analysis. It’s like one person having multiple social security numbers. 

Along with finding these simple, but hard-to-solve data pain points, we also looked for benchmarks and metrics that made sense to our community. For example, we realized that the price of a standard-sized beer was a great benchmark for the overall cost of a festival or venue, guiding music fans to find the right experience for their budgets and helping event operators see how they measure up to the competition. People note the cost of a pint, our curators validate it, and we can then show a meaningful data point to our users. Other industries may find other quirky yet extremely telling metrics that can only be revealed by well-cultivated data. 

On top of right-scaled humans and data that actually matters, you need a large dose of flexibility. To find enough skilled people with a broad grounding in pop culture and strong local knowledge, we had to get creative. We found lots of talented and qualified people in our home region of Eastern Europe. We recruited people from around the world and used crypto to pay those in unstable regions who had the skills we needed. For example, we found a good group of curators in Venezuela, where inflation almost instantly destroys fiat currency values and where banking is chaotic, to say the least. By keeping our focus reasonable, we can make their jobs reasonable, reducing curation or moderation burnout. 

These approaches need to be tailored to your industry, but the human-machine balance in cultivating quality, actionable data should be your goal. It’s allowed us to raise the bar on insights into the live music business, insights we expect to continue to grow richer as time passes. A scalable curation system is possible, with the right mix of openmindedness, tech tools, and smart people.

2020 Colorado Music Educators Conference Presentation 

I am looking forward to speaking at the 2020 Colorado Music Educators Conference at the Broadmoor Hotel and Convention Center in January.

My topic: Makin a Living Making Music: Entrepreneurial Opportunities in the New Music and Entertainment Industry.

Click here to view the CMEA Conference Schedule

Today’s music industry is the wild, wild, west! The gatekeepers who once determined the fate of an artist’s success, the projects that would be recorded, the songs to be released, the bands that would take the stage, no longer wield their career crushing power. To succeed in today’s music industry, musicians need to expand their skillset from being musicians alone to being musical entrepreneurs. This session, Making a Living Making Music: Entrepreneurial Opportunities in the New Music and Entertainment Industry, will help you discover and declare your IDENTITY as artists and entrepreneurs, your VISION for the life and vocation you dream of, and your INTENTION and plans to begin to transform your dreams into realities. 

I was fortunate enough to be invited to speak by CMEA Tri-M Music Honor Society Chair, Michelle Ewer. Tri-M Music Honor Society offers students, grades 6 through 12, an opportunity to perform, serve the community as well as places them in leadership positions. It helps to bring a music department together and operate as one. Tri-M looks different in every school. Colorado has one of the most robust Tri-M conventions across the country; Students come together to share and discover new ways to make their chapters stronger. Students walk away feeling excited and eager to try new ideas they have experienced at the convention. Feel free to click on the links below to answer questions that you may have.  

Click here to start a NAfME Tri-M® chapter at your school 

Click here for NAfME Tri-M® chapter resources

Michael Pickering, President and Chief Creative Officer of Lionsong Entertainment, Inc., and former Director and founder of the Music and Entertainment Entrepreneurship program at the Community College of Aurora, is a creative leader, entrepreneur, educator, and musician. He holds a Master of Arts in Music Business Degree and a B.P.S. in Interdisciplinary Music Studies Degree from the Berklee College of Music. He has served on the boards of local arts and entertainment organizations, authored post-secondary music curricula, and spoken at many local and national music industry events. He also provides music and entertainment business and performance consulting services (www.mpickeringmusic.com). Michael and his wife, Amy Pickering, remain active as national headline music and clean comedy performing artists for corporate, theatrical, educational, outreach, cruise, and private clients worldwide — www.michaelandamy.com.

Spotify Invests $10M In Facebook's Libra Cryptocurrency  

Spotify Invests $10M In Facebook's Libra Cryptocurrency

Spotify has officially joined Facebook's new Libra global cryptocurrency initiative. Spotify stands out as the only music or media company among 28 A-list players ranging from Visa to Uber to Andreessen Horowitz that each invested $10 million. 

Here's of Techcrunch describes Libra: "Facebook wants to make Libra the evolution of PayPal. It’s hoping Libra will become simpler to set up, more ubiquitous as a payment method, more efficient with fewer fees, more accessible to the unbanked, more flexible thanks to developers, and more long-lasting through decentralization." 

All that delivered locally on a global scale and with bitcoin tracking built in, and you get some idea of what a massive project this is. 

Why Spotify? 

For Spotify, Libra offers a chance to more easily receive payments globally, including from the many outside the banking system.  Someday soon, Libra could facilitate payments to artists and rights holders, as well. 

Alex Norström, our Chief Premium Business Officer, explains: 

“One challenge for Spotify and its users around the world has been the lack of easily accessible payment systems – especially for those in financially underserved markets. This creates an enormous barrier to the bonds we work to foster between creators and their fans. In joining the Libra Association, there is an opportunity to better reach Spotify’s total addressable market, eliminate friction and enable payments in mass scale.”