Sony Music acquires Kobalt's recorded music business

 

By Emmanuel Legrand

AWAL's tag line was "A world artists love". But it will now come with an addendum: "Powered by Sony" as Sony Music Entertainment has entered into a definitive agreement with Kobalt Music Group to acquire Kobalt’s recorded music operations, including AWAL, the service division for independent artists, and performance rights collection agency Kobalt Neighbouring Rights.

  Terms of the transaction have not been disclosed, but a Sony source told MBW that the price was $430 million.

  AWAL and Neighbouring Rights will become a new division within SME’s portfolio of independent artist and label services offerings. The division will be "enhanced" by the technology and network of SME’s independent music distribution company, The Orchard. Brad Navin, CEO of The Orchard, pledged to "give more artists a transparent, global solution and access to multiple touch points to release their music however they choose.”

An expanded network of recources

  Lonny Olinick will remain CEO of AWAL, which will continue to sign, develop and market its own artists, and provide services such as global marketing, creative, synch and brand partnerships, radio promotion and distribution as well as access to real-time comprehensive music analytics. Sony said AWAL’s extensive roster of artists will have "access to an expanded network of resources and partnerships around the world."

  Kobalt’s Neighbouring Rights division is led by CEO Ann Tausis. It represents more than 2,000 performers. With this agreement, Sony said that SME artists and The Orchard distributed labels "will be able to partner with Neighbouring Rights to capitalise on its infrastructure and collection network."

Flexible solutions for artists

  “Our investment in AWAL’s continued growth gives us another level of service to offer the independent music community. With their flexible solutions to building artist careers, together we will offer creators more exciting choices to connect with their audience worldwide,” said Sony Music Group Chairman Rob Stringer.

  “The AWAL team has futuristically enabled artists to deliver their creative vision since its inception," said Olinick. "Now, as part of the global Sony ecosystem, we can dramatically expand on this vision for them. We are also excited to build on our innovative neighboring rights as well as DIY platforms with extended support from The Orchard.”


[Analysis:

So the peeling of Kobalts' businesses continues. A few months ago, Hipgnosis acquired assets from Kobalt, and now SME makes an important acquisition to cement its position as a key provider of services for independent artists and labels. This segment has been growing, as documented by Mark Mulligan, and all three majors, as well as indie players such as Downtown or Believe/TuneCore, as beefing up their offering for the indie sector. Sony's acquisition of AWAL narrows even further the diversity of choices for the independent sector. 

  Meanwhile, Kobalt is back to its core business, which is managing publishing assets. How long will it be able to continue as a stand-alone company? It seems that the vision of Kobalt founder Willard Ahdritz (whose name is absent from the Sony Music statement) has crashed on the hard reality of market forces and the need for some financial orthodoxy. 

  Kobalt has been an innovator and a force for change in the music industry. What's happening looks very much like the old saying about football (soccer): "It's a game played by 11 people on each side and in the end Germany wins!" Well, adjusted to the music sector, it feels like music is a competitive place where disruptors can score points but in the end, major companies win!

Emmanuel Legrand]