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(En) Biz profile: Hipgnosis songs fund

Hipgnosis Songs Fund It’s not a record label, and it's not a band: The company founded by Merck Mercuriadis is worth £984.08 million (gross). As the music veteran manager CEO said about the mission of the fund, it “offer investors a pure-play exposure to songs and associated musical intellectual property rights' '.

  • Hipgnosis value on Feb 8, 2023. Hipgnosis has raised over £1.05 billion (gross equity capital) through subsequent IPO’s: on 11 July 2018, and in April, August, October 2019; July, September 2020. Mercuriadis is also the founder of Hipgnosis’ investment advising board, “The Family”, consisting of award-winning members from artist, songwriter, publishing, legal, financial, recorded music and management communities. A talent: Helping the artist achieve his potential There are two types of talent: The first one rests inside the artist. The second one comes from someone who helps the artist emerge his potential. “You shouldn’t work with an artist if you don’t believe in him”. Mr. Mercuriadis says. “This is an integrity-based business”. And the formula has worked well. Years before founding Hipgnosis, Merck worked for Virgin Records, during the 80’s. Managing acts like “Simple Minds”, “Orchestral Maneuvers in the Dark” and “UB40”, his successful achievements made him CEO of “The Sanctuary Group plc”, where he brought profit through the hit-making process, working along with other managers, like “Iron Maiden” managers, just to point an act. After twenty years, Mercuriadis left “Sanctuary Group”. The company was sold to “Universal Music Group” for £44.5m. “The role of the manager needs to be reconsidered, particularly by the legal community, which seems to marginalize it” -Merck Mercuriadis, speaking to Music Business Worldwide, in 2019. Being a firm critic of Record Labels “double dipping” over artists and songwriters, Merck considers the actual streaming revenue distribution “a tragedy”, while record labels point as an industry’s “strong progress”. As an active defender for the artist and management communities, he states “Your manager could be someone that spends 10 hours a day with you, and a lawyer’s telling, ‘Don’t pay this guy.’ Whereas you could go into a studio tomorrow with someone who you’ve only met once and who you’re never going to work with again, and you would owe them their royalty forever.” For anonymous artists who believe in themselves and are into the hit-making process: One out of ten songs may be a hit. You can ask for feedback from friends, family and specialists. But when thinking in cents, just like digital streamers do, it’s not worth investing in digital music distribution. First, they won’t have covered their investment in one year by uploading their song to the service. Secondly, is not as reliable as keeping the money, unless if the uploaded song is played more than 10,000 times! The act of paying a subscription is not the same as buying music from the artist. Instead it is a legitimate attempt to receive his music in your device. By representing the weakest but fundamental asset for the whole industry, Mercuriadis gets support from friends who share the same ideal and don’t agree with the paradox - and are bound to change the system. Merck wants to prevent songwriters from being played, and not paid by the music industry. With artists playing the role of venture capitalists, the first investor was well known artist Nile Rodgers: “Nile and I, one day, just started riffing off of these ideas of how do we change this system, how to change what’s going on today where the songwriter – who provides the most important component in an artist having success – is the lowest person on the totem pole?" He believes that intellectual property value can last regardless of the world's economic cycles, and he is correct when referring to hits as “proven songs” that are predictable and reliable investing. Afterwards, the company had participation from Storm Thorgerson and Aubrey Powell, founders of the art and design group Hipgnosis. Later “The Family (Music) Limited”, a board of investors, was organized to support Hipgnosis Songs Fund. Some of the members of the board are: Mr. Mercuriadis, Rogers, Starrah, The-Dream, David A.Stewart, Nick Jarjour, Bill Leibowitz, Ian Montone and Rodney Jenkins. Hipgnosis can be found at the British Stock Exchange (FTSE). The company has purchased catalogs from legends of the music industry, based on the “proven songs” concept. They are like gold: it lasts long and increases its value through time. Better than that, they run unparalleled to the regular investor market. “Ultimately the idea is to take the leverage that comes from building this fund up and not only give a great return to our investors, but equally to change where the songwriter sits in the economic equation.” Like a manager who believes in the artist, believing in the songwriter can lead to proven songs, which might lead to certain forms of generating revenue. As some examples of Hipgnosis acquisitions: Rick James’ catalog (including 50% of the publishing share, meaning an ownership of 150% if added with the songwriting share), 33,000 songs and cuts from Kobalt Music Group (evaluated in $322.9 million), 162 songs from L.A Reid (100% of writers and publisher’s share), 4,400 songs from Big Deal Music Group, which includes cuts from Shawn Mendes, “Panic! At the Disco '', and “One Direction”. There are more stakes acquired by the company: Heavy names like David Guetta, Justin Bieber, Rihanna, Chris Brown, Santana, Beyoncé and Benny Blanco are between the lines. In conclusion: Songwriters became sound editors/mixers because of the advent of technology. Now people can afford studio equipment. In the future, will the audio engineer have credit in the copyright (for the sound recording) and thus earn royalties over the reproduction? Will writing music aggregate the use of the “Digital Audio Workstation” (D.A.W) to the intellectual property registering process? Therefore will the composition and sound recording become one? Since downloads fragmented the CD market, would record labels make their facilities available for anyone? Would it make proven music less valuable, or would aging preserve the many facets of composition and how production influenced the artistic performance? Just like the acoustic-to-electric guitar transition brought controversy to certain ears but delight to others, record labels remain attached to an outdated way of making money (even breakage deduction still exists). But this will change eventually. In order to survive, labels must open its doors to “the lowest players of the totem pole” which, on the other hand, will pay for their services, use their studio, hire their professionals, for a subscription, without attachment. When this happens, and songwriters attempt to make one hit out of ten songs, another person will join: Someone who certainly has the talent of bringing out their best performances.


Music Business Worldwide journal (MBW) “Merck Mercuriadis”:

Thought Economics “A conversation with Nile Rodgers and Merck Mercuriadis”:

MBW article “Hipgnosis Songs Fund”:

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