Kobalt just combined its recording business under the AWAL brand and invested $150m in funding to spend on marketing and advances for artists. According to "MUsic Business Worldwide", a large chunk of the sum appears to have come from some capital raises Kobalt announced last year – first $75m from Hearst Entertainment, followed by another $14m round from Section32.
Moreover, AWAL is now hiring 100 more employees and updating its artist-facing app with key financial data (including earnings information from Spotify, Apple Music and YouTube).
AWAL is alreadyy working with thousands of artists, such as Lauv, Bruno Major, Tom Misch, Nick Cave & The Bad Seeds, R3HAB,The Wombats and VÉRITÉ: acts sharing around a billion streams between them, with Lauv on 600m+ alone.
Kobalt simply offers them a range of services (also digital distribution and music-data insights, funding, global marketing, A&R, and promotion), but allowing these artists to continue to own their copyrights.
According to "Music Business Worldwide", the emerging artists enter into a royalty sharing deal with AWAL which works out at around 85%/15% in favour of the performer. As they get bigger (and AWAL invests more), Kobalt’s share increases up to a top end of around 30-35%.
Kobalt founder and CEO Willard Ahdritz commented:
We take risks early on with artists, but we are so much more efficient [than others], guided by data, that we can execute on a global scale. We are fundamentally changing the cost structure of the recorded music business. The old model is $5bn in [a major company’s annual] cost, throwing pancakes at the wall and seeing what sticks – it’s extremely inefficient, not fair to artists and, to be quite honest, it’s stupid.
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