12 Music Week 21.11.14 THE BIG INTERVIEW WILLARD AHDRITZ That’s precisely what Kobalt believes it owns
with its recently-updated Portal. Writers signed to Kobalt’s publishing company (and artists signed to its Label Services company) are given real-time royalty updates and access to social media-esque analytics tools by this membership-only online hub. The Portal displays updated information from all
income sources, including sales, downloads, streams and sync, plus a weekly account balance. There is even the ability for writers to take out a small loan online against expected future royalty payments. “Some people say they have a really good deal
with their publisher - let’s say a 90/10 split,” he says. “Not true: what you have in reality is ‘a minus 20’; you’re missing out on all the extra money we could collect for you. At the end of the day, it’s about what you have in your pocket. People need to think, ask questions and put the facts on the table.” But hold on a moment: don’t other publishers
say they also boast industry-leading online portals for their clients? Surely they’re not just sitting on their hands while Kobalt surges forward? Ahdritz is adamant in his reply: “People tell
me that other [publishers] are simply uploading their statement to a website. Our portal is an interactive, dynamic data communication tool that goes to our global database at source. “We see the same data as our clients - nothing is
hidden. I’d love to sit on a panel and compare this Portal to anyone else’s [equivalent].” The proof is in the pudding: Kobalt has
attracted some impressive, heavyweight publishing clients onto its books. It now works with three kings of modern transatlantic pop; Max Martin, Dr. Luke and Ryan Tedder. (Ironically, Martin is the favoured co-writer of hits for Spotify deserter Taylor Swift, including Shake It Off. Earlier this month, Kobalt announced that its writing clients now receive 13% more quarterly revenue from Spotify in Europe than they do from iTunes.) These megastar pop composers are a key
reason why, in a typical week, Kobalt will stake a publishing claim on 40-50% of the US and UK’s 100 top-selling singles. And its clients seem happy. Says Tedder: “Kobalt are a very forward thinking company representing the evolution of where I think music publishing is headed. I love their transparency and their commitment to raising the bar on how they service writers and producers.” But building a talent base with the ‘wow’ factor
is only the beginning of Ahdritz’s grand vision for the acceleration of Kobalt’s dominance. He believes a new commercial utopia awaits the worldwide music industry – but only if the market is brave enough to make some bold decisions. According to IFPI data, annual global recorded music revenues have shrunk from $33 billion in 2004 to less than $15 billion today. Ahdritz is convinced that figure can double in the next few years. Kobalt is now embracing a high-volume, low
RPU consumer model. In other words, Ahdritz believes billions of people listening to music cheaply all around the world will add up fast - but only if every penny is accounted for via the cost- efficient and transparent collection of artist royalties. One of the key products at the centre of
Ahdritz’s pitch is ProKlaim, Kobalt’s own online detection technology integrated with YouTube. ProKlaim allows Kobalt to identify unclaimed music in user-generated content. The result? 1.5 billion video plays per month are now being monetized by Kobalt – a significant growing revenue source for the firm’s profitable publishing outfit.
“Today, the music industry is suffering from a slow death. People can survive a while in a slow death, especially if they have big catalogues. I see no urgency in the music industry to change” WILLARD AHDRITZ, KOBALT
Ahdritz’s team pushes data identifiers for 400,000
copyrights into ProKlaim every day - which then spiders YouTube’s database for matches. The exec says expanding this collaborative YouTube strategy on a grander scale - combined with similar transparent data exchange with audio services such as Spotify - could explode the industry’s income. “Today, Kobalt monetises 400 million people
around the world,” he says. “Within three years, we want to monetise one billion. We can double the size of the music industry. That’s the potential.” It is perhaps unsurprising to learn that Ahdritz
thinks the two biggest threats to this outcome sit with major rights-holders: (i) an unwillingness to experiment with new pricing models - especially when CDs continue to pull in the majority of revenue in key territories - and (ii) a culture of receiving large advances from DSPs for licensing catalogues, while agreeing to paltry royalty rates. Adds Ahdritz: “I have a friend who worked at
IBM. He was there when they introduced Linux and free software [to their systems] and reinvented themselves from a [hardware company] into a company selling services. “He told me that IBM had to change quickly
because they faced death within two or three years. Today, the music industry is suffering a slow death. People can survive for a while in a slow death, especially if they have big catalogues. It means there is no urgency in the music industry to change.” Ahdritz is certainly not lacking any urgency.
He proudly states that Kobalt doesn’t care about advances from any digital service - partly because such sums would be impossible to fairly distribute to all of his clients, and thus go against the transparency at the centre of Kobalt’s USP. “We have no desire to squeeze out upfront
advances or equity stakes for anyone else - but I only want the best rates for my clients,” he says. “When we tell DSPs we don’t want advances, they often
immediately increase the [royalty rates] for my clients by 20%. That’s happened a number of times.” But how can Kobalt afford to turn down what
must amount to millions of dollars in upfront payments from digital services? “Simple: I don’t need to run off quarterly
results,” replies Ahdritz. “To be honest, that’s a problem we have seen in all kinds of industries. We have seen it in the City and on Wall Street; short-term bonuses do not build healthy long-term business models. I’m not attacking any individuals because it’s set up this way. But it’s wrong. It is not sustainable, and it is not best for the creators.” I remind Ahdritz that the YouTube he is
gambling his company’s future prosperity on is the same YouTube accused of handing huge advances to the major labels last year in exchange for their acceptance of questionably small per-play royalty rates. Does the Google-owned service deserve the rap it got for striking those deals - and initially cutting the independent labels out of the equation? “People forget that Google bought [digital music
licensing platform] RightsFlow in 2011 - that was a serious investment in YouTube’s back-end in order to be able to process effectively,” says Ahdritz. “For that I take my hat of to them. A lot of
DSPs don’t bother: it’s, ‘Give me a licence, I’ll give you an advance and off we go to the races.” Taylor Swift’s recent headline-grabbing
decision - alongside her Big Machine label boss Scott Borchetta - to remove her catalogue from Spotify is understood to have been motivated by the platform’s refusal to let the star make her material exclusively available on its premium tier. Ahdritz is a fan of the prospect of streaming
services experimenting with a multi-tiered pricing model: perhaps $5 a month for students, $9.99 a month for standard premium and $15 a month for ‘super-fans’ of specific artists, who could be given special undiscovered trinkets. He is also keen to start an industry-wide
discussion on payment splits from digital music services to rights-holders, which currently weigh heavily in the favour of labels and artists over songwriters and publishers. Although the vast majority of Kobalt’s business
revolves around non-ownership of copyrights - empowering artists to claim the majority of their royalties - Ahdritz says he has no problem
RIGHT
Maroon 5: US band signed an exclusive global publishing
admin deal with Kobalt at the end of last year
www.musicweek.com
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