AWAL is dead, long live AWAL.
That seems to be the continuity message of Sony Music’s acquisition of the indie giant for $430 million (£314.4m) from Kobalt.
If Kobalt founder and chairman Willard Ahdritz’s much touted “fundamental revolution” for artists is to continue, it will now be masterminded by Sony.
But what does the deal mean for independent music? It remains to be seen whether regulators will look into the takeover. Assuming it goes ahead, the acquisition will be a significant boost to Sony’s overall streaming business.
According to Official Charts Company data, Kobalt’s recorded music division is No.6 in the UK behind the three majors, BMG and XL Beggars. As well as a 0.9% share of All Albums AES, AWAL had a 1% share of the Track Streams market in the UK last year. The total of 1.15 billion streams represented 23% year-on-year growth.
So does it matter that AWAL is no longer 100% independent? That probably depends on the artist, their management team and your definition of independence.
Supernature founder Andy Musgrave has founded his own label services and distribution operation, while partnering with Warner Music’s ADA on his management client AJ Tracey. He sees the acquisition of AWAL as part of the bigger streaming picture.
“I think it’s another indicator that the future of the business lies in the service model,” Musgrave told Music Week. “We're still in the early stages of the digital revolution in this industry.
“As artists become increasingly self-sufficient and business-savvy, service companies like AWAL – allowing artists to maintain ownership of their rights, plus the lion's share of the income – will only get bigger. As that happens, it's the quality of the service, not the size of the budget, that becomes the deciding factor for ambitious young artists looking to build a career.”
So what does a deal like this mean for the artists affected?
“In acquisition situations like this, you just hope the acquired company is enabled to maintain its vision and its values – whilst leveraging all the new resources on offer,” said Musgrave.
As artists become increasingly self-sufficient and business-savvy, service companies like AWAL will only get bigger
"What is the new definition for independent?" asked Cooking Vinyl chairman Martin Goldschmidt. Cooking Vinyl is a venerable indie, though it happily partners with The Orchard on releases such as last month's No.2 album Songs For The Drunk And Broken Hearted by Passenger.
Even The Smiths, the classic 1980s indie band, ended up signed to Warner Music, who now release the catalogue via Rhino.
For those who want to operate outside of major labels, there is still a strong independent distribution sector, from global operators such as PIAS, streaming specialists like Ditto Music, Believe and Supernature, and physical suppliers Proper Music and Plastic Head.
According to the OCC market shares for 2020, even if you take AWAL out of the equation, 23.6% of streams last year were released independently (which equates to more than 28 billion streams).
Admittedly, some big independent companies such as BMG (ADA) and Because Music (Caroline International) do work with the majors. What’s clear, though, is that all labels need to be artist-friendly in the streaming era, as there are now many routes to market and deals are up for renewal more regularly.
This is such a shame. Like in tech, the incentive & objective of innovation is not to succeed but to be bought out by a tech-giant. Sad if Music goes the same way.... @AWAL one of the most progressive new distribution & promotion leaders took the $. https://t.co/2jRBoI8Ibs— Crispin Hunt (@crispinhunt) February 1, 2021
While Ivors Academy chair Crispin Hunt expressed concerns about the Sony-AWAL deal on social media (“one of the most progressive new distribution & promotion leaders took the $), indie trade bodies have so far been measured in their comments to Music Week.
“AWAL’s sale to Sony highlights the incredible value created by the independent music community as well as the continuing appetite of the Majors to grow their market shares by acquisition,” said AIM CEO Paul Pacifico. “The value of being independent keeps increasing and will continue to do so as new sources of capital are starting to become available to independent music entrepreneurs, and organisations like AIM deliver ever better knowledge on how to play the music game and win.”
Helen Smith, IMPALA’s executive chair, said: “It’s great to see the value that this places on independent music. At the same time, this deal further cements the positon of a market leader, so we will be discussing it at our next board. It will be interesting to see what the regulators have to say, and of course with Brexit, that means the UK as well as the EU.”
It will be interesting to see what the regulators have to say, and of course with Brexit, that means the UK as well as the EU
Under its previous leader, Merlin spoke out against The Orchard’s “land-grab of independent rights” in 2017.
Jeremy Sirota, CEO of Merlin, responded to the latest Sony deal by underlining the strength of indies.
“The independent community has never been stronger,” he said. “For Merlin, 2020 was our best year ever, with 81 members joining, new deals and deepened partnerships, and a significant increase in top line revenue. Each year, independents outperform the marketplace, and we’re projecting 2021 to be even better for our members. For labels, distributors, and other rights holders, there’s never been a better time to join Merlin. If the past decade has taught us anything, it’s that the independent sector will continue to grow as artists and labels choose to take ownership of their future.”
AWAL’s move to a major could also boost opportunities for companies who have both scale and independence.
“We are entering the era of independent artists and there are now more opportunities than ever before for them to reach and develop audiences,” said Ben Rimmer, head of distribution for Believe UK. “Believe's model and values are built to enable this discovery. Our artists and labels always retain ownership of their masters and have the power to take decisions at all stages of their careers whilst remaining 100% independent. These are the principles that guide our relationship with our partners at Believe.”
AWAL artists may not notice much difference for now. CEO Lonny Olinick will continue to head up the artist and label services operation, which will continue to sign, develop and market its own artists. But AWAL will now work in alliance with Sony’s own label services operation, The Orchard
Even with Sony as a parent, though, AWAL could still potentially fly the flag for independent music.
Worldwide Independent Network (WIN) has always included majors’ distribution in its calculation of indie market share, on the basis that copyright ownership is the most legitimate definition of independence. WIN’s most recent global report had indies’ market share at 39.9%. In its 2018 report, WIN found that major-distributed independent music accounted for 22.2% of the indies’ market share.
Whatever the future of AWAL as a standalone entity, its growth in the last nine years since it was acquired by Kobalt is remarkable. Back then, Artists Without A Label (as no one calls it any more) had established itself as more transparent digital services company for indie acts.
The $430m is "a lot more than the £750,000 deal we agreed to buy AWAL for in 2011 and then got gazumped by Kobalt," noted Goldschmidt.
Today, it operates in 12 countries and provides global marketing, creative, sync and brand partnerships, radio promotion and distribution as well as access to analytics.
While Kobalt may have exited recorded music, the story of AWAL suggests that independent services companies are going to continue to be key drivers of streaming growth globally.