Kobalt on expansion trail after raising $75m in funding

One of the fastest growing music companies today, Kobalt Music Group, has raised an impressive US$75 million in its latest capital raising round.

Kobalt will be valued at $775 million as a result of the latest cash injection.

According to Kobalt’s founder and CEO Willard Ahdritz, the fresh money will be used for the digital royalty-hunting agency to cover more streaming sources, include tracking music on video and virtual reality services, and to sign up more acts to represent..

Currently, Kobalt tracks play on the 20 top audio streaming platforms around the world, including Spotify, Apple Music and SoundCloud.

Ahdritz wants to expand to 40 platforms within six months.

“A big hit today has 4 billion micro-transactions,” he points out. “Now that we are connecting the rest of the world in streaming, we will be able to track 10 billion transactions.”

A dedicated video tracking product should be in place within a year, as companies as YouTube, Vevo, Facebook and Spotify expand video services.

London-based Kobalt, which has operations in Australia, found instant success when it emerged in 2000.

Part Ahdritz’s vision and part timing, it came at a time when the digital explosion began. Ahdritz could see how the music industry was going to be completely transformed and pitched the new company to the centre of these changes.

He also identified that a major problem in the transformation was that artists – especially independent ones – were finding it difficult to track royalties online. Much of these were disappearing into a big dark hole in cyberspace.

Kobalt provided innovative and far-reaching royalty collections platform. It not only identified every bit of royalties owed – even from samples – but actually collected them and was transparent about the way it did it.

As Ahdritz has explained, the transparency was the key to volume in business, along with its investment in the latest technology to aid its clients.

Kobalt’s clients now number 25,000 songwriters, 600 publishers and 20,000 independent artists. It is estimated to have 40% of the Top 100 chart in the US and the UK at any given time.

Not surprising: acts include Paul McCartney, Dave Grohl, Nick Cave, Zayn Malik, successful Swedish record producer and songwriter Max Martin, The Chainsmokers, Kelly Clarkson, Miles Davis, Stevie Nicks, Pitbull, Elvis Presley, Skrillex and Sam Smith.

At this point of time, Kobalt is in a perfect place to attract major investment.

According to the latest figures from the IFPI, the digital music sector now generates $7.8 billion (making up half of all global music revenues) while the number of users of streaming services rose 60% to 112 million.

Kobalt itself is in a healthy shape. Its last financials saw revenues up 15% to $260 million, gross profit up 8.4% to $30.7 million, while its operating losses of $16.7 million were down 32.4% from $24.7 million the previous year.

In 2015, Kobalt had gathered $60 million in a funding round led by GV (previously Google Ventures). It also generated further investment of $56 million in between the two rounds.from a consortium of investors.

The latest Series-D round was led by Heart Entertainment, publisher of Cosmopolitan, Esquire and Good Housekeeping.

Hearst has invested in digital media companies Pandora, BuzzFeed, Vice Media, Roku and Awesomeness TV. Its expert in video will be essential for Kobalt’s move into this space.

“We are excited to welcome Hearst as a new investor in Kobalt,”Ahdritz said. “They share our passion for making sure creators are paid and fully informed.”

“Hearst is a prominent content owner with exciting investments in new forms of entertainment for the next generation of consumers.

“We welcome them on the board of Kobalt.”

In the latest moves at Kobalt Music Group, Laurent Hubert became President, overseeing publishing and neighbouring rights.

Sas Metcalfe was moved up to chief creative officer, Lonny Olinick became Chief Strategy Officer, and Jeannette Perez promoted to President of Global Synch and Brand Partnerships.