Kobalt Music is a tech platform and a music services company at the same time, providing rights holders with superior collection of payments and specializing in obscure digital royalties that can really add up. On the other end of its business, Kobalt Capital Ltd. has managed a $350 million fund of music rights since 2011 on behalf of institutional and private investors. Based on the success of Kobalt's business and its first fund, KCL announced on Nov. 6 that it has closed a second music rights investment fund amounting to $600 million.
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Kobalt Founder CEO Willard Ahdritz clarified the division between the two aspects of its business, "From day one, Kobalt's position has been that we don't own copyright because it creates a conflict of interest with our clients." The capital funds may invest in the rights of Kobalt's clients, if the clients are interested in selling. "When our clients do want to capitalize on the increased value, which Kobalt has created, this managed fund with institutional investors gives them an option to sell their copyright and still stay with Kobalt," explained Ahdritz. "It's been a very successful model." Investors and clients both benefit from Kobalt's tech-savvy aggressiveness in finding payments other collecting organizations might overlook.
How safe are these music rights as investments? The lead institutional investor on the $600 round also protects the pensions of British rail workers. "This opportunity provides us with just the type of long-term returns that we need to help us meet our mission statement to pay members' pensions securely, affordably and sustainably," said Railpen Deputy Investment Director Craig Heron.
Kobalt Music's artist clients include The Chainsmokers, Paul McCartney, and Skrillex.
