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

MBW quipped the other day that the global music business has gotten a bit “cozy” this summer – with a distinct lack of companies (publicly) going under.

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

MBW confirmed this today (July 24). Kobalt Music Publishing House – home of 700,000 songs – is pulling its entire catalog from Facebook and Instagram in the United States.

Why is Kobalt taking this action?

According to a memo sent to Kobalt authors and partners yesterday (July 23), received by MBWKobalt’s existing US licensing 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 covering a new license for Kobalt’s 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, Kobalt’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 put songwriters first, and we’re proud to continue to do so. We remain fully committed to reaching an agreement with Meta.”

Kobalt’s decision to retire his catalog has ramifications far beyond his own company.

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

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

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

The epidemic demands damage beyond 142 million dollars from Meta due to this alleged violation.

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

“Maybe Meta is hoping to get away as long as possible. Perhaps Meta is hoping it will intimidate a company like Epidemic into bowing to Meta rather than incur the disruption and cost of a lawsuit. Meta is wrong.

In the wake of Epidemic’s lawsuits and now the confirmation of Meta’s copyright takedown of Kobalt, a few obvious questions begin to arise:

  • What’s behind Kobalt’s refusal to sign a new deal (for now) with Meta? Could it be related to the quality of data its songwriters get, the amount of money its authors receive – or both?
  • Could it 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 follow Cobalt’s refusal to sign a new deal with Mark Zuckerberg’s company?
  • What consequences will there be if hits created or co-created by Kobalt authors – already officially unlicensed for use on Facebook and Insta – continue to be published on these platforms?

One thing we know for sure: A a lot money is at stake here.

According to your latest Music in the air report, Goldman Sachs estimates that Facebook contributed 29% of all “emerging platform” advertising revenue paid to the record industry in 2021.

Che 29%MBW estimates (based on Goldman/IFPI numbers) equated to just over 400 million dollars.

Remember: This is only for one year and only covers money paid to the record industry (not the music publishing business).

Sources tell MBW that Meta currently continues to pay music businesses through up-front advances that are not tied to actual music consumption on its platforms.

Calls for Meta (as well as TikTok) to switch this payout model to a “revenue sharing” system – where music rights holders would be paid a direct share of the ad revenue generated by their copyrights – seem to be getting louder. platform rights.

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

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

Denis Ladegailleri, Believe

We asked him if “impatience is creeping in” over Facebook’s failure to roll out a direct equivalent of YouTube’s Content ID system for music rights holders.

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

“We’re pretty happy with that. And the level of monetization [paid out, versus the consumption happening] on Facebook/Instagram is in line with what it should be when you look at usage.

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

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