Kobalt pulls its 700,000 songs from Facebook and Instagram. Is the music business headed for a historic meltdown with Meta?

MBW joked the other day that the global music business has become a bit “quiet” this summer – with a distinct lack of (public) companies falling out.

Please, loyal reader, allow us to strike this idea from the record.

MBW confirmed this today (July 24). “Kobalt” music publishing house. – home to 700,000 songs – is pulling its entire catalog from Facebook and Instagram in the United States.

Why does Kobalt take these measures?

According to a memo sent to Kobalt authors and partners yesterday (July 23), received MBWKobalt’s current US license agreement with Meta (the parent company of Facebook and Insta) expired and the two sides were unable to reach a new agreement.

“For several months, we have worked diligently and in good faith to reach an agreement regarding a new license for the Kobalt repertoire,” reads the memo (which you can view in full below).

“Unfortunately, fundamental differences remained that we were unable to resolve in your best interest, and as a result, Cobalt’s repertoire is in the process of being removed from Meta services, including Facebook and Instagram, in the United States.”

Tellingly, the note adds, “We’ve always stood up for songwriters, and we’re proud to continue to do so. We remain fully committed to reaching an agreement with Meta.”

Kobalt’s decision to remove its catalog has ramifications far beyond its own company.

Kobalt reckons it’s the songwriter publisher behind 40% of the top 100 tracks and albums in any typical week in the UK and US.

Therefore, the removal of Kobalt’s publishing catalog will inevitably affect the wide range of hits distributed/signed to the three major record companies, not to mention the various independent distributors/labels around the world.

Interestingly, today’s news comes just days after another prominent music rights holder, the worth 1.4 billion dollars Sweden’s Epidemic Sound – filed a lawsuit against Meta in the US, claiming that “unauthorized use” of its work on Facebook and Instagram is “rampant”.

The epidemic requires compensation over 142 million dollars from Meta due to this alleged violation.

Epidemic’s complaint (which can be read in full here) states: “Meta refused to enter into a license with Epidemic, even though Meta has done so with many other rights holders.

“Perhaps Meta is hoping to get away with it for as long as possible. Perhaps Meta is hoping this will intimidate a company like Epidemic into giving in to Meta rather than incurring the damages and costs of a lawsuit. The goal is wrong.”

After Epidemic’s lawsuits, and now the confirmation of Kobalt’s copyright removal from Meta, some obvious questions start to arise:

  • What is behind Cobalt’s refusal to sign (yet) a new deal with Meta? Could it be related to quality? data her songwriters get, amount money do its songwriters get paid – or both?
  • Could this result in more big-money lawsuits pitting the wider music business against one of tech’s most powerful giants?
  • Will other major music rights holders echo Cobalt’s refusal to sign a new deal with Mark Zuckerberg’s company?
  • What will be the consequences if hits created or co-created by Kobalt authors, who are not currently officially licensed for use on Facebook and Insta, continue to be published on these platforms?

We know one thing for sure: A many money is at stake here.

According to his latest Music in the air Goldman Sachs believes that Facebook contributed to this 29% of all “new platform” advertising revenue paid to the record industry in 2021.

what 29%calculated MBW (based on Goldman/IFPI numbers) which equates to slightly more 400 million dollars.

Remember: this is only for one year and only applies to money paid to the recording industry (not the music publisher).

Sources tell MBW that for now, Meta continues to pay the music business through upfront payments that are not tied to the exact consumption of music on its platforms.

There seem to be growing calls for Meta (like TikTok) to change this payment model to a “revenue share” system, whereby music rights holders will be paid a direct share of the advertising revenue generated by their copyrights on the platform.

Denis Ladegailleri, CEO of Believe, discussed this topic in an interview earlier this month.

“So [we want to see a Content ID equivalent from Meta], and this is what we expressed to them. But I would also say that with Facebook and Instagram, we’ve seen better data quality [than from other social media services].”

Dani Ladegailleri, Believe

We asked him if impatience is “creeping in” over Facebook’s failure to launch a direct equivalent of YouTube’s content identification system for music rights holders.

He replied, “Yes, and this is what we expressed to them. But I would also say that with Facebook and Instagram, we’ve seen better data quality [than from other social media services].

“We are very pleased with this. And the level of monetization [paid out, versus the consumption happening] on Facebook/Instagram is what it should be when you look at usage.

“Also, we can view track usage reports to [account to] artists, as it should be”.Music business worldwide

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