Name: MPW London 2019: A Conversation with Avid Larizadeh Duggan
Uploaded: 2019-06-07
Duration: 9 min 36 s
Description: Duggan, COO of Kobalt Music Group, sits down with Fortune's Nina Easton to talk about how data is transforming the music business.

[ UNKNOWN ] has this incredible story that we're not gonna be able to get into because of time, but you were one of those who left early in the route. You were a month old, or you were born in Dallas. The Iranian revolution, her parents left in that, and we were just talking about all the talent that left that country. Your cousin is the founder or the CEO of Uber founder Sir. So that's another story for another time. Right now we're going to talk about music and how Cobalt is was founded basically we know we kind of all know even if you're not following you don't follow the industry intently. We all know that in the digital age. The artists and musicians have become, they kind of got ripped off. I mean they haven't really- Not kind of, they did. [ UNKNOWN ] they haven't enjoyed the value of their music. And you're trying to bring that back, tell us how. So, content producers, singers, song writers which is what we deal with in music. They create their content and whenever you hear music, whether it's on the radio, whether it's in a pub, whether it's on TV and an advertisement on Spotify on you YouTube, they need to get paid. And when you think about it today, there's an explosion of data. You have to track this in over 200 territories. You have to track it over YouTube, Spotify In all those territories, but also as I mentioned before, radio, etc. So if you take one song, you take one hit song, that song will have somewhere close to 12 billion transactions that happen. Because it's played in all of these multiple sources. And in order then to pay this artist you have to track them, you have to track where this music is being played and then collect the money from all of this sources. And then distribute to the artist and the only way to do that accurately today is to have technology, is to have a technology platform that enables to do so. And it's only recent if you were to look in 2000. So, not even 20 years ago, we had roughly call it 4 billion physical transactions. So you and I would go into a store and buy a CD, and it would be roughly over 70 territories. Now we're talking about trillions of transactions. Over 200 territories. So Cobalt processes over 1. 5 trillion transactions every year and that's increasing. Interfaces with over 10, 000 income sources. So again, this is the the Apple Music Store. Spotify is the collection societies in order to collect the money and distribute it to the artists. So you were at Google Ventures before this, which was investing in cobalt, not surprisingly, and you made the jump. So it's a technology company .>> Yeah ,>> as you describe it, but your competitors are still to help people understand the competitors are universal Sony your old line. Yeah ,>> record companies. How do you compete, i mean they've got the big superstars right. Yes, so. We compete in various ways. So they have some of the biggest superstars. If you look at Cobalt on the publishing side we have Paul Martin. Paul McCartney is with us the weekend Childish Gambino. And Miles Davis. We service the rights of these artists. The way we compete is, we don't own rights. So the traditional system is, you sign with a label or publisher, and you sign your life away, you sign your rights away. With Cobalt you don't have to do that. The way we make money is we take a service fee basically from the revenue that you make. And what that has done is that it's made us one of most trusted partners to these creators. So are founder CEO Leonard who started this company 17 years ago with a single vision to Changed the music industry to make it transparent to make it fair to make it efficient. Literally gets hugs from artists. [ LAUGH ]. And he jokes about it but it's serious. He says we don't get sued. We get hugs because artists love us because we actually paid them. We are hand in hand They're partners. So explain you have a relationship with either to explain that relationship as a way to explain the company. Sure. So on the just two sides, there's two sides to two main sides to cobalt. There's the publishing side which is songwriting. And then there's the recording sides on sort of the label side which is the artists and with either, either assigned to glass node which is a record label started by Daniel glass one of the most renowned and respected independent record labels and. Daniel and [ UNKNOWN ] and his team decided to leave Universal and join the Cobalt Platform. So we have a partnership with them in order to help them grow and release their artists globally. And Daniel would say it much better than I do. But one of the reasons that Cobalt is such a great partner in today's day in age Thanks to this technology and thanks to the way we work is we release artists globally from day one. And that's really important today because if you look at some stats. So Spotify a few months ago released a stat where British artists. 80 % of British artists on Spotify. Get the majority of their streams outside of the UK. That's how important releasing music internationally is. Because fans are now all over the world, and we have such easy access to music. Beforehand, you and I would get access to our music through radio. We would figure out what's good or not- Which was the gatekeeper, radio acted as the gatekeeper. Yeah, And then record companies acted as a gatekeeper. They controlled what was on the radio. Right. And now anyone can get their music onto social media, in effect. Access fans before they even release any music. And so we and the artists have a direct relationship and we have that globally. So how do you see things changing and disrupting in the future? You've talked about the number of superstars versus kind of mid tier. How do you see that changing? Give us some numbers. Sure. So, roughly, if you look at artists worldwide, let's say there's roughly 3 million artists worldwide and The top 2000 are the global superstars. The Ed Sheerans, the Beyonces is of the world. Then there's that mid tier of roughly 5000 artists and those are the artists that can make a living from their music. They might not be superstars. But they'll still make a good living for music. And then the rest of those 3 million are the emerging artists, the completely unknown artists, they can't live off of their artist. And it's not because they're bad musicians, it's because it's really hard to get access. It has been very hard to get access. This is to audiences and also for labels to sign you. What we are doing with a wall which is a recordings arm, we're actually taking care of this mid tier artists as well as we have some great stars. Because we have changed the economics so instead of taking 80 % of the profits and only giving 20 % back, we flipped it. We take 20 % on average and give 80 % back to the artists. That means Means that you need four times less stream to actually make money. And they continue to own their rights. And they continue to own their rights. And they have access to a global audience. And we can do all of this because we have such a lean cost structure. Whereas if you look at the majors, because of the way the music industry was before, the cost structures were much heavier. They have Very heavy footprint, regional footprint, lots of offices, whether it's in France or the UK or the US, etc. And it's much more expensive for them to release music, therefore, they need to have superstars in order to make their economics work. So that's an expansion of the mid tier. Yes. And have you ever thought about culturally what that's going to help that's going to play out? quote Well, I think it's fantastic one because you get access to so much more. Your you know, your brain expands your your knowledge of music expands. I I have so much more music knowledge because I can access it so easily. And I think it brings cultures together. Because just like food, music is another way to get to know a culture. So in that sense, it's fantastic and at the end of the day you're making Young Artist able to make a living from their art and that culturally is great to do as well. ( inaudible ) we wish you the best of luck. What a great pursuit. Thank you so much. Thank you. Thank you.

MPW London 2019: A Conversation with Avid Larizadeh Duggan

Leadership

Duggan, COO of Kobalt Music Group, sits down with Fortune's Nina Easton to talk about how data is transforming the music business.