Hot Seat: Paul Hitchman MD – Kobalt Label Services

Paul Hitchman has more than a touch of pioneering spirit. The British executive was behind Playlouder, one of the earliest entrants into the digital music marketplace. Hitchman fought those messy tech and content licensing battles in the late 1990s and early 2000s which paved the way for today’s buzzing digital music market. They were bloody fights.

Hitchman, who has had stints with indies and major labels (BMG and Warner Music), went on to launch the award-winning Playlouder MSP (later renamed Media Service Provider), a music channel partner for ISPs that enabled music to be bundled with broadband access.

Now, Hitchman is running Kobalt Label Services, the artist and label-services arm of Kobalt Music Group. In February, KLS and Bad Seed Ltd. propelled Nick Cave’s Push The Sky Away into the upper tier of sales charts across the globe. It was the first KLS release, and it proved to be one of Cave’s biggest hits to date – arriving in the top-3 in 13 markets and at No. 1 in six countries, including Australia. The likes of Prince, Pet Shop Boys and Maya Jane Coles also plug into KLS. KLS is expanding its digital distribution and marketing services company AWAL with the appointment of former head of Cooperative Music GM Vincent Clery-Melin as Global Managing Director.

Let’s talk about those early days with Playlouder. You went through all those early challenges. What did you learn from that experience? 
First of all, everything takes longer (than you’d expect). There was a group of us who still know each other and jumped into digital around 1999-2001. We all felt huge growth was going to happen in digital music, it just took several years longer than we all realized. We streamed Glastonbury Festival in 2000. And we had the first legal download store in the U.K., ahead of iTunes (which arrived in 2004). So you have to have patience and you have to think the bigger picture and be in it for the long term. Which I think most of those people were; if you look at them now they’re in leadership positions in the music industry. It was a good grounding for where the music industry is growing. The other thing we learned was the complexities of music licensing. And the oil-tanker maneuverability — or lack of — of the big music companies. Coming myself from first an independent record label and then working at a major record label, I always had a lot of sympathy for the major labels. They’ve difficulties trying to protect one business while trying to develop a new one; trying to come to terms with technologies that they weren’t necessarily equipped to understand. We all accept that mistakes were made. And could have been done better. But we are where we are.

Was it frustrating? 
Hugely frustrating. I remember trying to launch a subscription service. I went through several phases of licensing. The first time I spoke to Universal about licensing would have been around 2002 and at that time they were only prepared to license in their own proprietary file format, Bluematter. Forget MP3, forget Windows Media, forget AAC, they had their own developed proprietary digital format. Every time you went back to a lot of the music companies with a new idea they would say, ‘we’ve got it figured out. This time it’s going to be this way.’ The next time we met with Universal it was all about Windows Media. Which we felt was not going to be accepted by consumers. The third time we went back we were trying to monetize file-sharing and trying to monetise music discovery. It was only on the fourth time we went back — we compromised each time – that we got the licences from all the majors to do streaming of music like Spotify. It took four rounds to get there. The problem with the record companies is they never dealt with a consumer. It’s only in recent times they ever really even thought about dealing with the consumer. Because they dealt with the retailers. I’m still not sure many record companies really get the consumer.

How do you select your clients at KLS? 
We have to be selective because we get approached by many artists. We’re looking for artists that are making great music but at the same time have a fanbase that fits the model. Having said that there are a lot of artists out there that will be right for us, and I think we’re about to enter into a period when a lot of artists who previously might have thought there was only one option for them now realize there is more than one option and they’re getting really excited about that. We’ve got to keep proving that we deliver. Then the more conservative artists will realise that this is a viable option. And probably their best option.

In a way, label services are enabling that DIY ethos. 
It’s DIY in terms of controlling your masters, but plugging into a service and a system that can deliver you as good a result or better than any other entity in the market. That’s certainly our aim. We’ve proved that in the main campaigns we’ve done so far.

You mentioned that many artists approach you. Is there a ratio for how many you take on? 
To begin with, it was a question of me and a couple of other people within Kobalt going out into the market and telling everybody what we were doing. It was us pitching, but also a lot of ideas coming out of that. Now that we’ve had some success, we’re finding many artists, and management companies and lawyers approaching us. I don’t know about a ratio, but certainly we’re having to be selective.

You had a massive success with Nick Cave’s album. How did that all come about? 
Nick had reached a point creatively and from a business perspective where he was looking to change it around a little bit. He’d appointed new management and wanted to do things differently. You could see that reflected in the album. The sound of the album feels new and different. He was interested to try something different. That was around the time when we where starting to talk to artists and managers about what we were doing. There was that initial connection. We sat down with Nick’s management and talked about objectives. There were creative objectives; he’d never really done much in the digital market so we really wanted to explore opportunities in the digital market. Not just for selling digital downloads, but selling CDs through digital marketing techniques and really address the market. At that point it became clear to management that there was a good fit here. We agreed on the objectives and the business model, and it was just a matter of Nick signing off.

You’ve just appointed Vincent Clery-Melin. What does that mean for AWAL? 
It represents our ambition for AWAL. It has a huge opportunity. Vincent is the right person to come in and realize that opportunity. You look at the growth of the digital markets and the opportunities across the digital market, from YouTube to iTunes to streaming services to everything that’s out there. And it’s clear there is a massive opportunity for a company like AWAL. What we want to do is develop the AWAL services further and develop AWAL’s relationships with clients further. And that’s what Vincent is coming to do.

What’s your mantra at the company? 
The mantra at Kobalt is to service the artist. The artist is our client. We are a service provider. They don’t work for us, we work for them.

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