Since the recession, investment in the underlying copyrights of songs has steadily grown, as publishing and public-performance revenues are increasingly seen as attractive, stable, long-term investment annuities. The landscape of non-music players interested in buying or investing in catalogs has widened and now includes corporate banks, pension funds, private equity funds.
Hipgnosis Songs Fund is a British music IP investment and song management company founded by Merck Mercuriadis and Nile Rodgers in 2018. It was formed with the purpose of turning popular songs into its own asset class, giving everyday investors the opportunity to invest in music IP without having to go through closed industry gatekeepers.
Will Hipgnosis Last?
When Hipgnosis was first introduced, there was a lot of skeptics. Many companies in the past sought to position music publishing copyrights as an asset class. But Hipgnosis seems here to stay. The company has raised a total of over $1.4 billion through its 2018 Initial Public Offering on the London Stock Exchange and subsequent issues. It was transferred to the premium segment of the London Stock Exchange in November 2019. In March of 2021, Hipgnosis owned or partially owned more than 64,500 songs. The majority of Hipgnosis’ acquisitions consist of newer catalogs that may have not yet matured; about 70% of its songs are under 10 years old! Even so, the catalog was valued at over $2.2 billion in June, representing a $200 million increase over the approximate $2 billion spent on the catalog.
Whole swaths of the music business, like touring, shut down in 2020, but music publishing has been a raging bull market. The need of many artists to raise cash during the pandemic has led to a flurry of lucrative deals. Many artists complain that they have no choice but to consider selling their most prized asset because of their loss of income. Stevie Nicks sold a majority share in her catalog for $80 million. Bob Dylan signed away more than 600 copyrights for an undisclosed amount estimated at $300 to $400 million. Successful singer-songwriters often view their catalogs as their most valuable asset, and Hipgnosis is pushing the envelope in seeking to buy out these assets entirely. The company, unlike many across the world, considered 2020/2021 a “remarkable year” and its leaders expect even greater results for its shareholders in 2021/2022 as performance income will “quickly return to and exceed pre-COVID-19 levels as lockdowns are being lifted in our largest revenue generating markets.”