Kobalt, the music tech startup that has built a platform for rights holders to track incremental and full plays of music across a wide sea of platforms, is announcing another big step in its bid to put its money where its mouth is. The company’s fully owned subsidiary Kobalt Capital is unveiling a $600 million music royalties fund to buy up music copyrights to collect royalties themselves. Fund’s lead investor is the RPMI Railpen, the UK workers’ pension fund, along with other institutional investors. Railpen had also been an investor in Kobalt Capital’s previous $350 million fund, raised in tranches to help the company buy into music copyrights.
The fund is a special purpose vehicle — that is, money that is raised not directly for the equity of Kobalt itself, but towards developing a secondary line of business that also happens to be tied to the company’s main technology.
The fund is divided up with $345 million in equity for the investors, with the rest in debt, and none of this part of its business sits on Kobalt’s own balance sheet. “We’re continuing with our service model,” said Ahdritz. “We don’t want to own copyrights, but we want to be aligned with our customers.”In other words, with this fund, Kobalt remains at the same valuation as it had in its last round — $789 million — which was extended a couple of weeks ago when Bill Maris (the ex-GV founder who is now running an independent VC firm) put $14 million into Kobalt and joined the board. The business of owning music copyright is an interesting counterpoint melody in the world of music today.
Kobalt has created “$3 billion in copyright value” for creators and music publishers that use its platform. And there are a lot of creators and publishers on there: Kobalt says that some 40 percent of the world’s top 100 tracks are using Kobalt to collect revenues on full and partial plays of its music.