Music is the lifeblood for many of our lives, but that mellifluous sound emanating from our radios and AirPods belies an immense and intricate web of collection societies, labels, copyright holders, and investors who need to connect the cash that consumers pay for music to the artists and songwriters who are owed royalties for their intellectual work.
Like so much of our world today, music royalties are complicated and heavily paper-based, making it nearly impossible for artists to know when a check might be coming, how much they are owed, and how much income they might expect in the future. Investors can’t value a library of songs easily, making it hard to trade these assets, while publishers have to retain large operations teams to track down payments in every jurisdiction around the world. Like the creative process itself, it’s a mess, and in this case, not a particularly valuable one.
Enter Kobalt. The company, which was founded nearly 20 years ago by a Swedish saxophonist, has emerged as the dominant player in this critical space, riding the waves of the growth in digital streaming to become a singularly unique and fascinating example of how software can replace bureaucracy and help pretty much everyone to win. The company has raised more than $200 million in venture capital, and while it may not be a household name, it certainly represents the sounds you hear: In the final quarter of last year, it represented the artists behind 38 of the top 100 songs on U.S. radio.
TechCrunch’s media columnist Eric Peckham wrote this extensive EC-1 covering not only the origins of Kobalt, but also how it’s changing the economics of music and empowering the rise of “middle class creators” — those musicians trying to make a living in a superstar world. Like all EC-1s, our hope is that you walk away not only with a better understanding of this complex space and this singular company, but also with strategies and tactics about how to grow in a fragmented and complicated ecosystem.
Kobalt had no input in the content of this analysis and did not get advanced access to it. Peckham has no financial ties to Kobalt or other conflicts of interest to disclose.
The lead editor for this EC-1 was Danny Crichton. The operations editor was Arman Tabatabai. The copyeditor was David Riggs, and the illustration is by Bryce Durbin.
There are four parts in this EC-1, representing 12,000 words and roughly a 48 minute reading time. Let’s get started:
- Part 1: Founding Story and Overview “How a Swedish saxophonist built Kobalt, the world’s next music unicorn” (3,000 words / 12 minutes) — explores the history of Kobalt from a small town in Sweden to the modern music juggernaut it finds itself as today
- Part 2: The business of recording royalties “How Kobalt is simplifying the killer complexities of the music industry” (3,400 words / 14 minutes) — analyzes the changing nature of the music business from the lens of the royalties for a single song
- Part 3: Building a new economic class of musicians “How Kobalt is betting on music’s middle class and DIY stars” (3,800 words / 15 minutes) — investigates the rise of a new wave of digital-first musicians and how Kobalt’s artist services may disrupt record labels going forward
- Part 4: Competitive landscape “Kobalt’s edge in changing the music industry” (1,800 words / 7 minutes) — analyzes the changing nature of the competitive landscape in music and how Kobalt has positioned itself to succeed as companies like Spotify and Apple Music take a greater share
As always, we’d love your feedback on this profile as well as the EC-1 format in general. If you have comments or ideas, please send them to Extra Crunch Executive Editor Danny Crichton at danny@techcrunch.com.