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Sony Music buys Kobalt’s AWAL
By Chris Cooke | Published on Tuesday 2 February 2021
There are two known truths in the music business. If you take your eyes off a music festival for too long, when you look back it will have been acquired by Live Nation. Do the same with a music distributor, and Sony Music and The Orchard will probably have snapped it up. Which begs the question: who forgot to keep an eye on Kobalt’s AWAL?
So yes, Kobalt’s recorded music division – consisting of the AWAL distribution and label services business and the separate Kobalt-branded neighbouring rights agency – has been bought by Sony Music in a deal worth around $430 million.
It’s the latest land grab by a major in the music distribution and label services domain. All three majors have expanded their distribution operations over the years, especially as an increasing number of artists have looked to set up their own labels and then access label services, rather than signing a more traditional record deal.
Sony has long been the most prolific in this space, mainly via its The Orchard division. Most of the major’s distribution acquisitions have ultimately been merged in with The Orchard, which has also directly acquired smaller rivals.
For now, AWAL and the Kobalt neighbouring rights agency will become a standalone division within Sony Music with current CEO Lonny Olinick still in charge. However, it will very much sit alongside The Orchard, with Sony stating that AWAL’s offering will be “enhanced by the technology and network” of its existing distribution set-up.
The original AWAL business, like The Orchard, was one of the early players in digital music distribution. It was then acquired by Kobalt in 2011, initially as an entry-level DIY distribution platform that sat alongside Kobalt’s then new label services division.
In 2018, all of Kobalt’s activities in recorded music, other than neighbouring rights, were relaunched under the AWAL brand, which meant AWAL was working with artists at all levels, in some cases as a simple distributor, and in other cases offering pretty much all the services of a more traditional record label. It also provided B2B distribution services to other record companies.
Ever since it moved into the recordings side of the music industry, and especially around the big 2018 AWAL relaunch, Kobalt and its founder Willard Ahdritz made bold claims about how their approach to working with artists was different to what had gone before. They were particularly keen to distinguish their approach from that of the majors.
That approach isn’t expected to change in the short term despite the Sony acquisition. After all, while it’s true that working with AWAL is different to signing to a Sony label, it’s not that different to artists working with The Orchard.
Confirming the deal yesterday, Sony Music boss Rob Stringer said: “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”.
Meanwhile, The Orchard’s CEO Brad Navin added: “The Orchard’s comprehensive offerings, global footprint and technology will contribute to AWAL’s continued success. We will give more artists a transparent, global solution and access to multiple touch points to release their music however they choose”.
AWAL CEO Olinick chipped in: “The AWAL team has futuristically enabled artists to deliver their creative vision since its inception. 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”.
Back at Kobalt, Ahdritz said that – having sold its recorded music business to Sony – the company would now renew its focus on song rights, via the main Kobalt rights administration business, its AMRA collecting society and the catalogue-acquiring Kobalt Capital fund.
“As Kobalt moves forward under the leadership of our CEO, Laurent Hubert, we are both excited for the big opportunities ahead across music publishing, AMRA and Kobalt Capital”, he told reporters. “Our team and capabilities will only grow stronger and play a continued role in making the industry better for creators”.
The there mentioned Hubert added: “Kobalt’s mission from the start has been to create transparency and fairness for creators. I could not be more excited to focus 100% of our efforts on our incredibly successful music publishing business. Through our world-class creative and sync team’s ‘one roster, one territory’ approach, combined with our global tech infrastructure, Kobalt has become the destination of choice for some of the most successful music talent in the world”.
Kobalt’s management were also keen to stress yesterday that there’ll be no more asset sales for the foreseeable future. Reports circulated last year that the Kobalt group was considering sell offs – including a possible sale of the whole business – as part of plans to raise new finance.
Kobalt Capital then sold off a bunch of catalogues to Hipgnosis in November and, of course, yesterday’s AWAL sale is a significant transaction. But, it seems, that’s now it, and the rest of Kobalt is no longer up for grabs.
The AWAL deal is subject to “customary regulatory and closing conditions”. The independent sector will be following the ins and outs of the deal closely as it progresses. Trade groups like IMPALA have previously raised concerns about Sony’s dominance in the marketplace, specifically citing the boost to market share it enjoys as a result of its distribution business when opposing Sony/ATV’s complete buy-out of the old EMI songs catalogue.
Commenting on the transaction yesterday, Paul Pacifico of the UK’s Association Of Independent Music stated: “AWAL’s sale to Sony highlights the incredible value created by the independent music community as well as the continuing appetite of the majors to grow their market shares by acquisition. The value of being independent keeps increasing and will continue to do so as new sources of capital are starting to become available to independent music entrepreneurs, and organisations like AIM deliver ever better knowledge on how to play the music game and win”.
