Sony Artists better off with Kobalt acquisition?

On February 1, 2021, Sony announced its acquisition of Kobalt subsidiaries AWAL and Kobalt Neighbouring Rights, once independent havens for artists. Sony’s press release primarily focuses on AWAL. Only at the very end it spends a few words on the neighboring rights (NR) side by saying its artists and The Orchard distributed labels will be able to partner with Kobalt Neighbouring Rights to capitalize on its infrastructure and collection network.

The question is, will Sony artists indeed benefit? In some ways, yes, definitely. It may become easier for Sony artists to receive higher advances. However, on the flipside, Sony is likely to a tighter grip on artists and their careers now that it controls more money streams. This tighter grip may also become noticeable in more subtle mechanisms. Let’s take a look at the administration of NR for US artists.

Bear in mind that by default US artists don’t qualify for NR at PPL (UK). By contrast, the US label they’re signed with is entitled to collect PPL royalties in full (in fact including the full artist share). Now, sometimes an American artist records a track outside the US and then that track will qualify at PPL. However, PPL will in that case require that the record label confirms this. Were the label to confirm the track has been recorded outside the US, they would lose 50% of their UK NR income for that track. So moneywise, there’s zero incentive for the label to confirm this. A truly independent NR agency would fight for its artist and turn to the label to have it list the track as recorded outside the US.

Now, if this situation were to happen in case of a Sony artist, please raise your hand if you believe Sony’s NR division would take on Sony’s label and force them to accommodate the artist ……… No one??