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It’s a dizzying time to be in the music industry, with catalog investments, creative outputs, and AI-generated mayhem part of a pedal-to-the-metal explosion. On the ground, that means more companies are battling an avalanche of data overload and disconnected processes, with hair-pulling and stiff drinks part of the daily routine. But we’re also noticing that backend systems and brainiac innovators are quickly adapting and figuring out solutions, with a new class of huge winners emerging.
“May you live in interesting times,” the old adage goes. In the music industry, that’s never been a curse — it’s just Tuesday. The music industry has never known anything else.
Pick up Digital Music News on any given morning, and the blitz of game-changing mega-deals, AI developments, and record-smashing trends can feel relentless. Catalog acquisitions are not only reaching record levels, they’re also doubling year-over-year as major investors and banks conglom around music IP.
Meanwhile, streaming platforms are ingesting unfathomable levels of AI-generated content, while AI-generating platforms are receiving unfathomable levels of financing and record-setting levels of litigation.
Shall we go on?
Of course, the flip side of this coin is the adrenaline and innovation that come with a supremely exciting era of industry expansion and uncertainty. And on the less-glamorous but critically important infrastructure side of the business, enormous capital and innovation are percolating in royalty accounting, distribution, and payment processing.
For those figuring out problems tied to disruption and extreme volume, an enormous upside is emerging.
Indeed, infrastructure has never been more critical – or lucrative.
On that note, the recently consummated acquisition of Kobalt by Primary Wave comes into razor-sharp focus, with infrastructure players adept at managing extreme chaos emerging as big winners. That includes Kobalt investor Francisco Partners, which minted an estimated $600 million-plus (or much more) just a few years after acquiring Kobalt.
Also embedded into that deal are Kobalt-owned properties like KOSIGN and AMRA, both of which have been elbowing for a piece of indie publishing administration and CMO disintermediation, respectively.
Another not-so-splashy problem-solver is the now-WMG-owned Revelator, which is also thriving in the current environment.
Taking its infrastructure game one step further, the indie-focused Revelator tapped payment powerhouse Tipalti for its mass payments capabilities to help tackle a broad, complex payment chain rife with mass global payouts and tax-related compliance challenges.
Thanks to an ongoing relationship with both companies, Tipalti spoke with DMN on its partnership with Revelator – now part of the acquisitive Warner Music Group. For the uninitiated, the Bruno Guez-led Revelator has been solving indie-level distribution and infrastructure problems for years, with WMG absorbing the robust backend music distribution company this year to boost its high-wattage roster.
For both WMG and Primary Wave — easily among the largest music IP owners in the world — the acquisitions represented critical next growth steps. Managing chores such as distribution, rights management, and IP-owner mass payments has never been more critical to success.
According to Revelator’s VP of Marketing, Ahuvah Berger-Burcat, Revelator’s backend business makes infinite sense for larger IP owners like WMG. And Revelator’s tie-up with Tipalti, which first emerged in 2024, put things into overdrive. Tipalti is now a big part of Revelator’s broader payouts stack, which has the superpower to manage global payouts across an impressively large set of indie labels, each customized to their own specifications and needs.
“Revelator oversees a very large and very complex network of partners and associated customizations,” Berger-Burcat relayed. “We’re talking rights management across innumerable licenses, ever-changing royalty calculations and breakdowns, tax considerations in dozens of different countries – and of course the actual payout and accounting.”
This is basically a mass-payment ecosystem on steroids, with Revelator deploying Tipalti for a range of indie partners, who in turn customize the solutions to meet their specific payment needs for their artists, producers, and songwriter rosters. Interestingly, one of the most complex puzzle pieces is country-by-country taxation, an area in which Tipalti excels.
And that’s just scratching the surface on the emerging winners in the fast-changing, B2B infrastructure space.
Now, the $6 billion question is how these fast-evolving, industry-leading infrastructure plays can be deployed for AI.
On the streaming platform front, Deezer was the first to notify the industry that a tidal wave of AI-generated ‘slop’ was hitting DSPs. The French company has been at the forefront of identifying and managing AI uploads – or ‘sloploads’ – though the bigger challenge is how the industry will build and track IP within controlled AI environments that fairly compensate rights owners.
On that front, a few experiments and walled gardens are preparing for deployment, including a high-profile AI-generated remixing concept from Spotify and a walled-garden relaunch from Udio.
But how will these experiments work, exactly? And who stands to gain?
Already, deals with major AI platforms (like the aforementioned Udio) and mega-labels like UMG are attracting scrutiny – and lawsuits – as onlookers wonder whether all the ingested IP will actually be tracked and fairly compensated.
There’s also the question of what, exactly, is being used to train platforms like Suno and Udio, with both fighting ferociously to keep those input details under wraps.
It’s a perfect soup of uncertainty mixed with opportunity. And if (or, optimistically, when) an exhaustive list of inputs and required payouts emerges, there are companies ready to manage the extreme volumes and mass payouts that come with it.
“The music industry has always been a leading indicator for how digital economies evolve — and AI is no different,” Tipalti’s president Rob Israch shared. “What we’re watching right now is the rights and IP framework being built in real time. When it settles, and it will, the complexity of payouts required to fairly compensate every rights holder at scale will be unlike anything the industry has managed before.”
And potentially mint another $600 million-plus along the way.
Stay tuned.
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