“The old model is on the way out. I’m building the new music industry structure.”
Kobalt boss Willard Ahdritz has never been shy about proclaiming his company’s model – that of artists and writers holding onto their own copyrights – as the future of the music business.
Now a new film from The Economist delves into the pros and cons of musicians disregarding the traditional label deal – ie. receiving advance money in exchange for a lifelong portion of their royalties.
Nick Raphael, President of Capitol UK, makes the case for the defense of major record companies in the mini-movie, part of a series called The Disrupters.
Says Raphael: “We invest millions upon millions trying to find the next superstar, the next brilliant artist… ultimately, the songs that will make the soundtrack to your lives.”
Nick Raphael, Capitol Records
He adds: “We make all the investment, in terms of skillset and money…. and we take the risk.”
In the past couple of years, UMG’s Capitol UK has broken Sam Smith and Five Seconds Of Summer to multi-platinum success worldwide.
Raphael sums up the strongest argument against the ‘artist services’ model that Kobalt offers: that it is yet to truly develop a global new superstar.
“What Kobalt, in my opinion, offer is for artists/writers who do not need advances [or] development,” says Raphael.
“That’s great for the privileged few that can afford it. But actually if a new writer comes along and needs development, time, money and nurturing… that’s not their strongest point.”
Unsurprisingly, not everyone agrees with him.
Sam Winwood, SVP of Creative at Kobalt, comments: “That whole idea of owning your own records and getting someone to market and distribute it for you is the biggest threat to traditional major record labels.
“We’ve said to people… ‘You don’t have to give away your rights to earn money. In fact, you’ll earn more money if you don’t give away your rights.’”
His point is at least partly backed up by Jacob Whitesides, the YouTube star from Knoxville, Tennessee, who boasts over 2m followers on Twitter, 1.5m on Instagram and 1.6m on Facebook.
Whitesides last year launched a joint label with BMG that saw him maintain ownership of his copyrights.
“The fans are more powerful than most any label or bit of promotion you can buy,” says Whitesides in the documentary.
“They post my music, they find other people searching for new music and send them my [tracks]. People pay hundreds of thousands of dollars to get that kind of promotion.
He adds: “A lot of artists don’t need deals; if they can establish a solid touring foundation, they can make money, pay their bills; the fans you’ve already capture create that freedom. I feel a lot of artists lose that when they jump straight to a major label.”
“I have 100% creative control. That’s the one thing I wanted, and that’s not a popular thing in most deals… [BMG] saw the leverage I had and that I didn’t necessarily need them – that it was a partnership.
“The most important thing was going in [to the deal negotiation] with something instead of nothing.”
Ed O’Brien from Radiohead – a band now signed to XL/Beggars but who for years were on the Parlophone/EMI roster – appears to recall his own major label contract with some anger.
“Artist contracts were so weighted in favour of the record companies [in the past] – it was just hugely unfair,” he says.
“I don’t think anyone in the record companies would dispute that… they might [say] we’ve put in lots of investment. Yeah, you have, but let’s talk about [a deal structure] that’s truly fair.”
“I have never liked bullies.”
Willard Ahdritz, Kobalt
That opens the door for Kobalt’s Willard Ahdritz to kick the majors – and make the pitch for Kobalt’s sterling reputation when it comes to the technological management of an artist/writer’s income.
“I have never liked bullies,” says Ahdritz. “I don’t see why bullies should [be able to] walk around and make other people’s lives bad.”
He adds: “Kobalt has a big mission… it’s simple, but a big mission: to take the music industry into the digital age with transparency and trust. ”
Other music biz figures featured in The Disruptors episode include Moby, who snaps: “Major labels thought they were more important than the artists, and they never were.
“Now, as the artists leave, they’re clearly seeing that in the world of music, nothing is bigger than the music itself.”
Elsewhere in the video below, you’ll spot Snow Patrol’s Jonny Quinn, Sony Music UK’s VP of Strategy Fred Bolza and Brian Message from Courtyard/ATC management – who discusses Radiohead’s controversial pay-what-you-want release with In Rainbows in 2007.
“If you were in the camp of being excited by innovation and change, you loved it,” recalls Message.
“Clearly, within the recorded music business there’s a lot of people who are not that way, and are still not that way.
“That kind of change is a little bit of a threat.”
Music Business Worldwide