PUBLISHING AND MUSIC BANKING: A New Model

Efficient isn’t a word often used when talking about music publishing. Complex, confusing and contradictory-those have always been a better fit.

Efficient isn’t a word often used when talking about music publishing. Complex, confusing and contradictory-those have always been a better fit.

Make way for Kobalt Music Group. For the past seven years, Kobalt has been working on a groundbreaking digital publishing model-including an innovative online royalty collection method and clear avenues of interaction with clients-that has eliminated a number of hassles involved in song pitching and revenue stream tracking. Longtime industry pro Willard Ahdritz formed the idea well before technology caught up.

“In the 1980s, I founded one of the most successful music startups in Sweden,” Kobalt’s founder and CEO explains. “No one was traveling to Stockholm to listen to our music then. In the end, Clive Davis came to Stockholm to sign up all of our acts. We had worldwide hits, and I worked with a guy who took care of ABBA’s publishing for 15 years at [a publishing house] in Sweden. It was there that I saw I had to wait two or three years to get my money. I couldn’t understand my [revenue] statements…I realized there were issues that we had in publishing.”

A major problem, of course, is lack of communication. Kobalt’s virtual interaction with clients worldwide has helped alleviate that, and it offers total transparency between those on both ends of the deal. “The main difference [between Kobalt and traditional publishers] is that we have a centralized organization using an in-house, developed technology platform,” Ahdritz explains. “We communicate electronically on a global level.”

“For instance, instead of a Nashville writer going to discuss things with the regional office in London, who then goes to the local office in Germany…here we have a satellite conversation based in London that’s 100 percent transparent by using a portal to our clients. We have proven that we have increased efficiency in the publishing industry and lowered the cost, which means more copyrights are worth more. We find that people get 25 to 30 percent more money by using this structure. Songwriters and other publishers we work with are very pleased.”

Those at EverGreen Copyrights certainly are. “Kobalt is unlike any other publisher,” says David Schulhof, co-CEO of the New York City-based company which represents a raft of artists from J.J. Cale to MC Hammer. “They have technology that allows us to go online and see where our copyrights are generating money, how much they’ve earned. Collection and verification is very accurate. On the other hand, they have a great creative side that helps us get songs placed in corporate advertising, film and TV. They’ve been very successful in placing in our songs.”

Kobalt’s revolutionary methods have earned it an impressive roster of accounts and clients. The company monitors more than 100,000 copyrights from offices in London, Los Angeles, New York, Nashville, Stockholm and Berlin; just a few of its 500 clients include Barry Manilow, Gwen Stefani, Badly Drawn Boy, Toby Keith, Gomez and Guns ‘N Roses frontman Axl Rose. It’s not hard to imagine that clear lines of communication attracted the notoriously prickly singer to Kobalt.

In March, Kobalt launched possibly its most significant leap toward the future, a pipeline royalty advance product that allows copyright holders access to funds based on an estimate of future royalty projections. Ahdritz calls the new approach “a revolving door of credit” that is available to those he works with. Think of it as something like online banking with a credit window for the music industry.

“Historically, you’d get a publishing deal and sign off on your publishing-then get your money for that,” he explains. “With this new pipeline, you can get money today and still keep the publishing rights. Songwriters are very pleased. It could also [affect] a band that has sold 50,000 albums. Say they need $50,000 to go on the road to promote a new album. Instead of giving them publishing deeds for three albums, I give them $50,000. When they’re back from the tour, they’ve recouped, as they say…and they still have the publishing rights.

“It increases peoples’ choices; that’s very much what we do. We put the facts on the table, say which songs work and give clients choices to make informed decisions. Over the years, it’s been difficult to make an informed decision.”

Songwriter Shelly Peiken, who recently signed with Kobalt, recognizes the value of the company’s approach. “It’s refreshing to see a company that specializes in administration have so much creative passion,” she says. “In an ever changing music business, Kobalt has the desire not only to make a difference but to be the difference.”