Hipgnosis
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Concord’s $469 million bid for Round Hill Music Royalty Fund, announced on Friday, did more than give Round Hill’s shareholders a tidy premium over the previous day’s closing price. The offer, which must be approved by 75% of Round Hill shareholders at the company’s Oct. 18 general meeting, also provides a vote of confidence in music asset valuations and the ability of the marketplace to seek out value.
Andy Moats, director of music, sports and entertainment at Pinnacle Financial Partners, says Concord’s offer is “a win-win for all parties.” Round Hill, which had been trading at a steep discount to its catalog’s value, was offered a premium over the share price prior to the announcement. Concord gets to pay fair-market value for a catalog of 150,000 songs by the likes of Bruno Mars, The Supremes and Louis Armstrong.
The deal comes as Round Hill’s share price struggled to meet expectations and falls short of it the value ascribed by multiple independent experts. Concord bid $1.15 per share, 11.5% below the per-share net asset value (NAV) ascribed to Round Hill by Citron Cooperman, a leading valuation expert. Round Hill’s shares had been trading at a 47% discount to NAV the prior day and had fallen 11.5% year to date.
But the fact that Concord’s bid is slightly below Round Hill’s NAV shouldn’t be viewed as a negative, says Larry Miller, clinical professor and director of music business program at New York University. “When you see a liquidity event like this at even close to NAV, I think that is a sign of a strong business fundamentals, notwithstanding how some class of investors — in particular investors in alternative assets — might view the value of the catalog to NAV.”
Moats agrees that Concord’s bid should be seen as a positive despite falling short of Round Hill’s recent NAV. “It was consistent with what we’ve seen in the past” in terms of where deals transact, he says. Not all deals close precisely on valuations, Moats says. Some prices are above valuations and some fall below. The Round Hill price is “within range of what I’ve seen over the last five years where something trades relative to its valuation,” he says.
Other people see additional positives in Concord’s bid for Round Hill’s music royalty fund — which still leaves Round Hill with a substantial publishing and recorded music business. To some, the acquisition reflects a functioning market in which Round Hill’s music assets are moving to Concord’s more efficient cost structure.
Roy Salter, senior managing partner at Virtu Global Advisors, says the deal shows the market is working as intended. “Among the major messages symbolized by the Concord transaction is the continuing advancement of music royalty capital market efficiencies, wherein an increasing number of pension and profit-sharing funds, insurance companies, sovereign funds and similar capital market constituents are steadily entering the market in search of predictable, non-correlated investment returns, and business operations which support music royalty administration continue to be enhanced such as enables optimal market-efficiencies,” he says.
For others, Concord’s bid is an important vote of confidence for firms’ NAV models. “The key takeaway from this Round Hill deal is that it affirms the valuation methodologies that have been used for large music portfolios,” says Michael Poster, an attorney with Michelman & Robinson. “For all the negativity that has come out of a handful of analysts around some of these valuation methodologies, at the end of the day, the market tells the story.”
NAV, a measure of an investment fund’s assets minus debts and liabilities, has been a sticking point for Round Hill and the other publicly traded music royalty fund, Hipgnosis Songs Fund, in recent years. Citron Cooperman, FTI Consulting and other valuation experts employ valuation models that calculate music catalogs’ values by estimating their cash flows over a lengthy period of time. A company’s NAV can improve if the valuation expert believes the catalog merits a lower discount rate, for example, or because favorable industry trends suggest previous revenue forecasts are too conservative.
Some equity analysts have raised questions about not just the valuations but the music industry’s tendency to constantly update NAV. Most funds in other sectors hold their new acquired assets at cost “until there are verifiable reasons” — such as a market transaction — “to suggest a change is warranted,” Stiefel analysts wrote in a Jan. 7, 2021, note to Hipgnosis investors.
Over the last roughly two years, a gap between independent valuation expert’s NAV and Round Hill’s trading price had widened dramatically. The discount to NAV stood at 5% on Dec. 31, 2021, when Round Hill’s NAV was $1.12 per share, and peaked at 51.6% on April 3, 2023, when Round Hill fell to $0.615 per share.
To give the market more faith in its NAV, Round Hill commissioned a second valuation report, by FTI Consulting, that put its NAV within 3% of Citron Cooperman’s estimate. This additional valuation supported Round Hill’s view that its portfolio was being “significantly undervalued” by investors, Round Hill CEO Josh Gruss said at the time.
The move appears to have helped some: Round Hill’s share price rose 19.7% over the following month (Hipgnosis shares, not part of Round Hill’s efforts to change investors’ impressions, fell 4% over that period). But whether investors remained concerned with NAV methodologies or motivated by rising interest rates and other macroeconomic factors, Round Hill’s share price remained well below NAV until last week.
Concord’s bid also provided a boost to Hipgnosis Songs Fund shares that have also been trading at a deep discount to NAV. The day before Concord’s bid was announced, Hipgnsosis shares closed at 0.798 pounds ($1.00), a 58.3% discount to the company’s NAV on March 31 of $1.92. Whether investors regained faith in the NAV or expect Hipgnosis to negotiate a similar asset sale, its shares jumped 15.7% to 0.923 pounds ($1.15) the day of the announcement, peaked at 0.962 pounds ($1.20) on Tuesday and closed at 0.93 pounds ($1.16) on Wednesday.
Had Concord’s bid come in significantly less than NAV, there could have been ripple effects that touched everybody from banks to investors. In such a scenario, people would re-think the value of catalogs and their interest in investing in music assets.
But that didn’t happen. Concord and Round Hill, both widely considered to be smart players in the music asset market, agreed to a price tag close to the often-criticized NAV. If the market was looking for a signal about how to value Round Hill, it received a credible confirmation.
“There’s a lot of stability and consistency in this space,” says Moats, “and this transaction provides that.”
Range Media Partners has launched a music publishing division and tapped Casey Robinson to lead it, the company announced Tuesday (Sept. 12).
Robinson arrives at Range Media from Hipgnosis Songs Group, where he served as executive vp of A&R and led the company’s pop division, working with artists and songwriters including Monsters & Strangerz, John Ryan, Julian Bunetta, Normani, Teddy Geiger, Imad Royal, Dan Wilson, Joe London and Steph Jones. He joined Hipgnosis following the company’s 2020 acquisition of Big Deal Music Group, where he served as co-president/partner. Robinson also previously worked as senior director at BMI, where he signed Imagine Dragons.
Other employees of Range’s new publishing division include director of A&R and publishing Sam Drake, director of A&R Federico Morris and manager and vp of A&R Jared Cotter. The division has already signed songwriter Geoff Warburton, known for his work with artists including Shawn Mendes, Demi Lovato, Keith Urban and Elle King.
“Casey and the team believe there is a tremendous opportunity to launch a boutique publishing company inside of the Range ecosystem,” said Range Music founding partner/Range Media Partners co-founder Matt Graham in a statement. “The connectivity to our management roster, label, film/TV relationships and music supervisors provide a fertile ground for developing writers and producers … His experience as a builder at Big Deal and Hipgnosis is essential to getting our strategy and culture honed to ensure maximum opportunity for our talent. We couldn’t be more excited about what we can create together.”
Added Robinson, “I’m thrilled to be joining the creative team at Range. Since the company’s creation just a few years ago, I’ve admired its spirit, culture and dynamic growth. Range’s curated approach to identifying and fostering talent across genres will serve as a blueprint for how we build the publishing company, which will be dedicated to long-term career growth for both artists and writers.”
Launched in September 2020, Range Media is led by managing partners Graham, Jack Minihan, Tyler Henry, Melissa Ruderman, Chris Thomas, Evan Winiker, Cory Litwin and Shawn McSpadden, as well as partners Michele Harrison, Greg Johnson, Rachel Douglas, Ace Christian and Joel Zimmerman.
Merck Mercuriadis‘ publicly-traded Hipgnosis Songs Fund Ltd reported a gross revenue decline for its fiscal year ended in March due to one-time charges and a tough year-ago comparison, but said adjusted revenues in 2022 grew on strong growth in streaming revenues and the return of live performances.
Gross revenues for Hipgnosis Songs Fund declined by 11.5% to $177.3 million for the year ending March 2023 compared to the year-ago period, mainly due to two large, non-recurring adjustments related to usage accrual and other factors. Net revenues also declined to $147.2 million from $168.3 million a year ago.
Stripping out those one-time items and taking into consideration a $16.1 million benefit Hipgnosis expects to gain from the CRB III retroactive accrual, the fund’s underlying revenues rose $12.9 million, chief financial officer Chris Helms said during an investor presentation discussing the results.
The fund’s pro-forma annual revenue (PFAR), which reflects revenue earned from royalty statements and strips out impacts from new catalog acquisitions and one-time items — the metric executives say best reflects the fund’s revenue performance — rose by 12.1% to $130.2 million for the year ending December 2022, rising strongly for catalogs aged younger and older than 10 years.
Overall, streaming income rose 14.8% to generate $52.1 million for the fund, while syncronization income rose 24.7% to make up $19.4 million and performance income rose 9% to $30.8 million, all compared to the year ago period. Mechanical income edged 2% lower to 4.9 million, while digital downloads made up $2.5 million and other publishing income comprised $3.9 million of revenues.
The fair value of the fund’s portfolio rose 4% to $2.8 billion, and the operative net asset value broken down by share price rose 3.6% to $1.9153, driven by revenue exceeding the fund’s independent valuer’s forecast.
Nonetheless, Hipgnosis Songs Fund’s operative EPS for the period is negative 7.41 cents, and adjusted earnings per share is 4.12 cents, down nearly 43% compared to the year leading up to March 2022.
Mercuriadis said this was the company’s “best revenue performance since coming to market in 2018,” reflecting the fund’s high-quality catalog and active song management.
“The songs in our portfolio we’ve bought carefully and we’ve bought well,” Mercuriadis said during the investor presentation. “We have a relatively small portfolio with a very high rate of success. We optimize revenues and collect them as efficiently and cost-effectively as we can.”
Mercuriadis pointed to major synch wins Hipgnosis had from four songs Rihanna sang during the SuperBowl Halftime Show, including “Birthday Cake,” “All of the Lights,” and “Umbrella,” which Hipgnosis from its acquisition of rights held by The-Dream, J eff Bhasker and Tricky Stewart. Other major placements included some on The Masked Singer, where Bon Jovi’s Richie Sambora performed Fleetwood Mac’s “Go Your Own Way” and “Brass In Pocket” by The Pretenders.
Billboard and The Financial Times reported on Wednesday that Hipgnosis has selectively shopped around a portfolio of non-core assets, possibly with the aim of raising money to buy back shares and shore up the fund’s stock price.
Mercuriadis declined to comment on whether a portfolio was being shopped or what assets it could contain, saying the fund is exploring its options with shareholders and the board.
The fund’s adjusted operating costs were 21.2% lower for the period to $29.5 million, due to lower advisory fees “as a function of the company’s lower share price during the year,” reduced administration, legal and professional fees, and lower aborted deal costs, the CFO Helms said.
The company also recognized a $43.8 million catalog performance provision or bonus relating to 6 catalogs. The provision will be paid out contingent on performance hurdles being met by the catalogs, Helms said, declining to detail the targets, which were detailed in the acquisition agreements.
Here are the key points from HSF’s disclosure:
Gross revenues declined by 11.5% to 177.3 million for the year ending March 2023 compared to 2022, due to two large, one-off adjustments. Stripping out those two non-recurring costs, underlying revenues rose by 10.9%.
PFAR rose 12.1% to $130.2 million.
Hipgnosis operative net asset value per share rose 3.6% $1.9153
Syncronization revenues rose 24.7% to 19.4 million.
Streaming revenues rose 14.8% to 52.1 million
Performance income increased by 9% to 30.8 million
A flurry of senior executives and staff members have left posts at Hipgnosis Song Management in recent months, as the company credited with popularizing songs as an asset class explored selling assets to shore up investor confidence ahead of a key vote this fall.
Since March, employees including Hipgnosis’ chief music officer Ted Cockle, along with the global heads of sync operations and song management and an executive vp of digital and innovation, have announced plans to leave the company, according to posts employees shared on LinkedIn and a statement from Hipgnosis.
The staff turnover comes as sources say the roughly 5-year-old Hipgnosis Songs Fund Ltd. has been shopping a package of assets that it apparently hopes to sell before its first continuation vote, where investors will be asked to decide whether the publicly traded trust should continue to operate under the management of founder Merck Mercuriadis or liquidate all assets.
SONG, the fund’s ticker on the London Stock Exchange, is down about 14% year to date and down 28% since it went public in July 2018. The stock was worth 0.75 British pounds ($0.97) on Wednesday (July 12).
At that price, SONG is worth less than half of its $2.2 billion operative net asset value, a discount that sources say has prompted Mercuriadis to explore selling some of the fund’s non-core assets.
For months, analysts at Jefferies and other investment banks have called on Hipgnosis to sell some of the fund’s non-core songs to raise cash to shore up the share price. The Financial Times reported Wednesday (Juy 12) that some Hipgnosis Songs Fund investors also want the fund to sell non-core assets to generate cash for buying back stock.
In addition to providing the fund’s managers with an arbitrage opportunity to boost the stock price, it could leave the company with enough extra cash to issue shareholders a special dividend — a sweetener issued ahead of the fund’s continuation vote at its next annual meeting in September.
If investors vote not to continue with the fund and to liquidate its assets, Mercuriadis and Hipgnosis Song Management — which is majority owned by private equity firm Blackstone — would likely have the right to bid on the assets in the fund; or if it goes up for auction, Mercuriadis, with Blackstone, likely has matching rights. Sources speculate that Mercuriadis and Blackstone would want to buy back the portfolio’s most iconic music assets, minus the non-core assets — the package of assets that has been selectively shopped around and which sources say includes copyrights from The-Dream and The Outfield — for their private, Blackstone-backed fund, Hipgnosis Songs Capital.
Hipgnosis Songs Fund will report results for the year ending March 31 on Thursday. In December, the company reported a 7.5% rise in revenues amid a “challenging environment” that “fundamentally undervalues the company,” founder Mercuriadis said during a shareholder meeting discussing the results.
On Wednesday, Hipgnosis announced Cockle, its chief music officer will be leaving the company. A former Universal Music Group executive known for nurturing the careers of Scottish superstar Lewis Capaldi, Bastille, Emeli Sandé and others, Cockle joined Hipgnosis Songs in 2020 as president.
“Given our decision to focus our marketing in the US, Ted Cockle, our Chief Music Officer, will not be moving long term with the Company,” Mercuriadis said in a press release. “He’ll work on the transition to America over the coming weeks. I would like to thank Ted for all he has done for Hipgnosis and I hope there will be opportunities for Ted and Hipgnosis to work together again in the future.”
Last week, Tom Stingemore, Hipgnosis Song Management’s global president of sync & creative, wrote on LinkedIn he was leaving the company after joining in 2021 to build its sync and creative operation. Hipgnosis’ synch team has played a key role in getting the songs that it acquires to generate more money than the often-high price Hipgnosis paid for them, and the team has been successful. In December, Hipgnosis Songs Fund reported sync revenues for the first half of the company’s reporting year rose 32% to 9.78 million compared to $7.41 million a year ago.
“As the division is now fully up & running, my mission is complete,” Stingemore wrote, adding that he may “go & do it all over again” as he works to “plot my next adventure.”
Cockle and Stingemore’s departures follows several other senior staff members. In late May, Nick Jarjour announced on LinkedIn he had left his role as global head of song management at Hipgnosis Songs Fund (a source who declined to speak on the record says his departure occurred six months ago); and in March, Tony Barnes’ announced he would be leaving his role as executive vp of digital & innovation at Hipgnosis Songs Fund in the coming months to lead the metaverse gaming company he co-founded, Karta. Barnes is currently still employed by Hipgnosis.
Stingemore, Jarjour and Barnes did not respond to requests for comment for this story.
Hipgnosis continues to hire, announcing two new hires in Hipgnosis Song Management, a separate company from the publicly traded fund, on Wednesday.
Danny Bennett, son of iconic singer Tony Bennett, joined as executive vp leading global marketing and audience development. Bennett joined Hipgnosis from the Verve Label Group, a Universal Music Group company, where he was chief executive officer.
Sara Lord was hired as executive vp content creation from Concord Music, and Patrick Joest, who joined Hipgnosis in 2021, was promoted to the role of head of synchronisation.
In the press release announcing the hires, Mercuriadis said Hipgnosis has continuously invested in new hires and upgrading systems over the past 18 months.
“These appointments demonstrate our commitment to investing in our capabilities and team in order to grow the value of our catalogues, and, most importantly, bring our songs to new audiences around the world,” Mercuriadis said.
Continuation Vote
At Hipgnosis Songs Fund’s annual meeting in September, Mercuriadis’s young company will face one of its biggest tests yet.
In the United Kingdom, publicly traded trusts are required to hold regular continuation votes, where shareholders vote on whether an investment trust should continue in its current form. At this continuation vote, shareholders can choose to stay the course, change managers or liquidate the fund.
Analysts at the investment bank Jefferies issuesd a buy rating on SONG last month, upgrading from their previous “hold” rating, because they said they believe Hipgnosis may sell some non-core assets from its catalog, which would provide a catalyst to narrow its current discount to net asset value ahead of the vote.
However, the continuation vote comes at an inopportune time, only a couple months after Hipgnosis Song Management and Mercuriadis were publicly rebuked by Rod Stewart, who said he called off a deal to sell some his music assets to the company.
In an unusual move, Stewart issued a statement that said, “It’s become abundantly clear after much time and due diligence that this was not the right company to manage my song catalog, career or legacy.”
Additional reporting by Ed Christman
Rod Stewart has backed out of a potential catalog sale to Hipgnosis after two years worth of negotiations with the company, a representative for the singer told Billboard.
Citing that he wanted to retain the ownership of his song catalog, Stewart said in a statement, “this catalog represents my life’s work. And it’s became abundantly clear after much time and due diligence that this was not the right company to manage my song catalog, career or legacy.”
Hipgnosis declined Billboard’s requests for comment, citing a non-disclosure agreement.
Further details about the potential catalog sale are not known, including whether he intended to sell his full catalog or just a smaller piece or royalty stream. Stewart’s team declined to comment further on the deal when asked for specifics.
Two music asset buyers independently noted to Billboard that Stewart’s public statement might be a “great way to drum up business for the catalog” and “to generate calls from potential suitors,” but another source noted it seems that a star of this magnitude would not need to speak out publicly in order to gain the attention of other buyers.
A two-time Rock and Roll Hall of Fame inductee, Stewart is one of the most celebrated and recognizable singers in pop music history. Some of his greatest hits across his more than five-decade career include “Maggie May,” “Tonight’s the Night (Gonna Be Alright),” “All for Love,” “Da Ya Think I’m Sexy?” “Baby Jane,” “Forever Young,” “One More Time,” and more. He first rose to prominence in the late 1960s as the lead singer for Jeff Beck’s post-Yardbirds effort The Jeff Beck Group and later as frontman for Faces, alongside fellow Beck alum Ronnie Wood.
By 1971, the raspy-toned singer had become a household name with his own solo album Every Picture Tells A Story and its surprise radio hit “Maggie May” which went on to simultaneously top the charts in the UK, US, Canada and Australia. From there, through the 1970s and 1980s, Stewart remained one of the mainstays on Billboard’s Hot 100 chart, continuing to earn hits as he experimented with daring elements of glam, disco, new wave, synth pop and more in his work.
His impact on music has continued into the 21st century, though mainly through covers. In the early 2000s, he found renewed success though a series of albums mining American pop standards and since then has released collections focusing on soul, rock classics and more, further cementing his legacy as one of music’s great vocalists.
Beyond landmark deals that have helped it amass a catalog of over 65,000 songs and records, Hipgnosis Songs Fund, the portion of the Merck Mercuriadis-founded company that is publicly traded on the London Stock Exchange, has struggled since last summer, with its share price declining by 27% from a year ago to 81.85 pence. “I’m not going to pretend that the current share price is anything other than disappointing,” Mercuriadis told investors in December. SONG reported its 2022 revenues rose 7.5% over the year prior.
With few levers to pull to grow Hipgnosis Songs Fund — the fund has been fully invested, meaning it has no additional funds to acquire new rights, for more than a year — Mercuriadis has struck deals with companies like Timbaland’s Beatclub to open up Hipgnosis’s catalog to more synch and sample opportunities.
Hipgnosis’ Blackstone-backed fund does not disclose its financials. While heightened macroeconomic concerns and interest rates have increased investor scrutiny for big-ticket deals, Hipgnosis and Blackstone have so far acquired rights to Justin Bieber’s catalog for an estimated $200 million in the last year. Other recent deals for Hipgnosis in general include songwriter Tobias Jesso Jr. and TMS, the British songwriting trio behind hits like “Someone You Loved” by Lewis Capaldi.
With reporting by Elizabeth Dilts Marshall
Songwriter and producer David Foster has sold a stake of his writer’s share of performance income for all of his songs to Hipgnosis Songs Capital, a partnership of Hipgnosis Song Management and funding from Blackstone.
Throughout his storied career, Foster has earned 47 Grammy nominations (16 of which were wins), three Academy Award nominations for Best Original Song (“I Have Nothing” by Whitney Houston for The Bodyguard, “Glory of Love” by Peter Cetera for The Karate Kid, Part II, and “The Prayer” by Celine Dion and Andrea Bocelli for Quest for Camelot), three Golden Globe nominations (also for “The Prayer” and “Glory of Love” as well as “The Secret of My Success” by Night Ranger for The Secret of My Success) and was inducted into the Songwriters Hall of Fame.
Apart from the songs that earned him these accolades, the songwriter has also written songs like “Got To Be Real” by Cheryl Lynn, “After the Love Has Gone” by Earth Wind & Fire, “It’s Falling in Love” by Michael Jackson, “Through the Fire” by Chaka Khan, “Hard to Say I’m Sorry” and “You’re the Inspiration” by Chicago, “St Elmo’s Fire (Man In Motion)” by John Parr, “Best of Me” by Cliff Richard, and more tracks from hit-making artists like Andrea Bocelli, Celine Dion, Madonna, Mariah Carey, Rod Stewart, Bette Midler, Bryan Adams, Destiny’s Child and Michael Bublé.
In 2011, peermusic purchased a majority stake in Foster’s song catalog. The deal encompassed all of the songwriter’s publishing vehicles — Foster Frees Music, Air Bear Music and One Four Three Music — and his catalog of more than 500 songs. The two had been longtime partners, and the team at peermusic has been administering Foster’s publishing for more than 25 years.
Hipgnosis’ deal with Foster aligns with other recent news from the company, which continues to invest in music IP. This year already, Hipgnosis has also acquired other legendary writers behind the world’s biggest hits, including their purchase of 40 songs from the catalog of Tobias Jesso Jr, this year’s Grammy winner for Songwriter of the Year, and their acquisition of rights from the catalog of TMS, the British writing trio behind “Someone You Loved” by Lewis Capaldi. Both deals were announced in February 2023.
Hipgnosis Songs Capital is an investment vehicle established by Hipgnosis in conjunction with Blackstone. In October 2021, the New York-based private equity firm pledged $1 billion to further investment in music IP and holds a majority stake in the venture. HSC is considered separate from Hipgnosis Songs Fund, the London-listed acquirer of music publishing and recording rights. Led by founder and CEO Merck Mercuriadis, the company also includes Hipgnosis Songs Management, which manages Hipgnosis Songs Fund’s catalog.
Mercuriadis says of the deal that “David is recognized globally as one of the greatest songwriters and producers of all time. He is the songwriters’ songwriter and the producers’ producer. David is truly special, and we are delighted to be working with his almost 50 years of incredible songs and to welcome him to the Hipgnosis family.”
Foster adds, “I’m very happy to be joining the Hipgnosis family. I’ve long admired what Merck and his team have built and I trust they will be terrific partners.”
Hipgnosis Song Management announced a deal on Tuesday that gives Beatclub producers access to some of Hipgnosis’ iconic hit songs and boosts its own access to more synch opportunities, the companies said in a joint statement.
Launched in 2021 by four-time Grammy winner Timbaland and his longtime manager, the head of Mono Music Group Gary Marella, Beatclub is an online marketplace built to help creators and producers monetize their beats and music.
Beatclub users can already use beats by Timbaland and others, like Justin Timberlake, Tainy, J. Cole and Mike Dean, in their own mixes. Hipgnosis, which also invested in Beatclub’s recent series A-2 funding round, will now also offer a hand-picked collection of songs from its catalog approved for sampling by Beatclub’s elite tier of producers. Any other rights that artists need to have cleared for usage are handled by Beatclub’s licensing team.
The deal could also help place more of Hipgnosis’ songs in films, TV, ads and games because Beatclub’s portal helps connect artists on its platform to synch opportunities with major brand, label, gaming and production companies. Similar strategies have been deployed by other catalog companies, like Primary Wave.
Timbaland has worked with Hipgnosis and its founder Merck Mercuriadis before, having sold his catalog to the music investment in 2019.
“At a time when interpolation and sampling has never been a more important part of creation and success, I want the greatest creators in the world to have access to our incomparable songs to make them the hits not only of the past but the future,” Mercuriadis, founder and head of Hipgnosis Song Management, said in a statement.
Calling Mercuriadis a “disruptor,” Timbaland said Mercuriadis’ “vision of the future of the music creator economy aligns closely with Beatclub’s.”
Marella, Beatclub’s co-founder, said Hipgnosis’ mission to promote songwriters and producers’ rights aligns with Beatclub’s values. “Beatclub … was built for creators by creators,” Marella said in a statement. “Our mission has always been to empower artists, song writers and producers however we can.”
Hipgnosis Song Management has bought 100% of Tobias Jesso Jr.‘s interest in his publishing, including the writer’s share of performance, for 40 of his songs. All tracks included in the deal were released between 2015 and 2020, including “When We Were Young” by Adele, “Slow Hands” by Niall Horan, “You Get My Love” by P!nk, “If You Leave Me Now” by Charlie Puth, “Hallelujah” by Haim and “Malibu Nights” by LANY, as well as several songs Jesso released himself.
News of the deal arrives on the heels of the Grammys, where Jesso made history as the first person to win in the new Songwriter of the Year category. He was awarded the prize based on his extensive impact on pop music in the last year, penning songs like “Boyfriends” by Harry Styles, “Can I Get It” and “To Be Loved” by Adele, “Careless” by FKA Twigs, “C’mon Baby Cry” by Orville Peck, “Dotted Lines” by King Princess, “Let You Go” by Diplo and TSHA and “No Good Reason” by Omar Apollo. None of these songs are included in the Hipgnosis deal.
Hipgnosis Songs Capital is an investment vehicle established by Hipgnosis in conjunction with Blackstone. In October 2021, the New York-based private equity firm pledged $1 billion to further investment in music IP and holds a majority stake in the venture. HSC is considered separate from Hipgnosis Songs Fund, the London-listed acquirer of music publishing and recording rights. Led by founder and CEO Merck Mercuriadis, the company also includes Hipgnosis Songs Management, which manages Hipgnosis Songs Fund’s catalog.
Jesso was represented in the deal by his manager, Ben Persky at Mixed Management, and lawyer Nicky Stein at Clintons.
“Tobias is amongst the most important songwriters in contemporary music today as demonstrated by his winning the 2023 Grammy Award for Songwriter Of The Year, in its inaugural year,” said Mercuriadis in a statement. “I fell in love with his songs right from the get go with Goon eight years ago and he never fails to deliver. I’m delighted to welcome Tobias and his manager Ben Persky to the Hipgnosis family.”
All songs included in Hipgnosis’ purchase are listed in alphabetical order below.
“Alive” by Sia
“Ayala” by XXXTENTACION
“Bad Words” by Tobias Jesso Jr.
“Broken” by Madison Ryann Ward
“Bruised Fruit” by St. Paul & The Broken Bones
“Can We Still Be Friends” by Tobias Jesso Jr.
“Can’t Stop Thinking About You” by Tobias Jesso Jr.
“Crocodile Tears” by Tobias Jesso Jr.
“The End Of Love” by Florence + The Machine
“For You” by Tobias Jesso Jr.
“Grace” by Florence + The Machine
“Hallelujah” by HAIM
“Hollywood” by Tobias Jesso Jr.
“How Could You Babe” by Tobias Jesso Jr.
“How Do We Make It” by Jarryd James
“Hunger” by Florence + The Machine
“If He Won’t” by Guy Sebastian
“If You Leave Me Now” by Charlie Puth
“Just A Dream” by Tobias Jesso Jr.
“Lay Me Down” by Adele
“Leaving Los Angeles” by Tobias Jesso Jr.
“Malibu Nights” by LANY
“Marching Into The Dark” by John Legend
“Nice To Meet Ya” by Niall Horan
“Nice To Meet Ya (Diplo Remix)” by Niall Horan
“No Judgement” by Niall Horan
“Not Thinkin’ Bout You” by Ruel
“Not Thinkin’ Bout You (Remix) Ft. Goldlink” by Ruel
“Oh Lord” (from the soundtrack to Netflix’s The Get Down)
“Orlando” by XXXTENTACION
“Reasons” by Cautious Clay
“Roses” by Shawn Mendes
“Same Mistakes” by Seramic
“Same Old Story” by John Legend
“Slow Hands” by Niall Horan
“Still Around” by Paloma Faith
“Tell The Truth” by Tobias Jesso Jr.
“Treat Myself” by Meghan Trainor
“True Love” by Tobias Jesso Jr.
“Trying” by Seramic
“Unsaid” by Ruel
“The Wait” by Tobias Jesso Jr.
“When We Were Young” by Adele
“Without You” by Tobias Jesso Jr.
“Work For Me” by Laura Mvula
“You Get My Love” by P!nk
Hipgnosis Songs Capital has closed its deal to buy 100% of Justin Bieber‘s publishing, as well as his artist royalties from his master recordings and neighboring rights, Hipgnosis has confirmed. The deal was priced at just north of $200 million, according to a source familiar with the situation, making this the largest rights sale for any artist of Bieber’s generation. It’s also Hipgnosis’ biggest acquisition to date, covering all 290 titles in Bieber’s catalog released prior to Dec. 31, 2021, including his most recent album Justice (2021).
Billboard originally reported in December that a Bieber deal valued at over $200 million was in the works amid founder and chief executive Merck Mercuriadis‘ efforts to “close about $500 million in deals” between mid-November and mid-December. Although Mercuriadis did not say what the deals were at the time, the Bieber acquisition appears to be part of that disclosure.
Following a hot 2021 for catalog sales, with deals like Bruce Springsteen and Paul Simon making headlines and some of the world’s biggest private equity players including Blackstone, KKR and Apollo Global Management all taking stakes in the market, rising interest rates and changes in currency exchanges cooled the sector in 2022. Still, deals have been getting done. Last year, Justin Timberlake, Leonard Cohen, Nile Rodgers, Kenny Chesney, Neil Young and Nelly Furtado all sold some of their rights to Hipgnosis. Sting, David Bowie‘s estate, Phil Collins and his Genesis bandmates, Future, Frank Zappa and Neil Diamond also sold certain assets to investors in 2022.
Typically, newer catalogs like Bieber’s are considered riskier investments since they don’t have as much history behind them to prove staying power. That means they often sell for lower multiples than those of classic acts. Bieber’s success, however, has been undeniable since his 2009 debut album, My World, and the 2010 follow-up My World 2.0, the latter of which topped the Billboard 200 albums chart and included the hit single “Baby.” In all, Bieber has charted eight No. 1 albums on the Billboard 200 chart, including his most recent full-length studio release, 2021’s Justice.
On the Billboard Hot 100 songs chart, Bieber has collected 26 top 10s, including eight No. 1s. His albums have generated 28 million equivalent album units in the U.S., of which 13.2 million are in traditional album sales, according to Luminate. His collected songs billed primarily to him, per Luminate, have generated 16.6 billion on-demand official streams in the U.S.
“The impact of Justin Bieber on global culture over the last 14 years has truly been remarkable,” said Mercuriadis in a statement. “At only 28 years of age, he is one of a handful of defining artists of the streaming era that has revitalized the entire music industry, taking a loyal and worldwide audience with him on a journey from teen phenomenon to culturally important artist. This acquisition ranks among the biggest deals ever made for an artist under the age of 70, such is the power of this incredible catalog that has almost 82 million monthly listeners and over 30 billion streams on Spotify alone. Scooter Braun has helped him build a magnificent catalogue, and it’s a pleasure to welcome Justin and his incredible songs and recordings to the Hipgnosis family.”
“I want to thank Merck and his entire Hipgnosis team and all of our partners involved for working so hard to make this historic deal happen,” says Scooter Braun, Bieber’s manager for 15 years, founder of SB Projects and CEO of HYBE America. “When Justin made the decision to make a catalog deal we quickly found the best partner to preserve and grow this amazing legacy was Merck and Hipgnosis. For over a decade now Justin Bieber has entertained us and moved us with some of the biggest songs in the world. I’m so proud of him and all those involved over the years in helping amass this incredible body of work. Justin is truly a once in a generation artist and that is reflected and acknowledged by the magnitude of this deal. For 15 years I have been grateful to witness this journey and today I am happy for all those involved. Justin’s greatness is just beginning.”
Justin Bieber was represented by Braun, David Bolno of NKSFB, Aaron Rosenberg and Audrey Benoualid of Myman Greenspan Fox Rosenberg Mobasser Younger & Light LLP, and Michael Rhodes of Cooley.
Hipgnosis Songs Capital was represented by William Leibowitz of William R. Leibowitz Law Group, Seth Traxler and Rory Wellever of Kirkland & Ellis LLP, and Robert Fowler and Lisa Ong of H.W. Fisher.
Hipgnosis Songs Capital is in talks to buy Justin Bieber‘s interests in his recorded music and publishing catalogs for more than $200 million, with the deal likely to close in the next few days, according to sources. The acquisition would include Bieber’s biggest hits, from “Baby” to “Love Yourself” and beyond.
In correspondence with Billboard in mid-November, Hipgnosis founder and chief executive, Merck Mercuriadis, said the company was working to “close about $500 million in deals between now and mid-December.” Although he did not say what the deals were at the time, the reported Bieber acquisition seems like a possible part of that disclosure. News of the upcoming deal between Bieber and Hipgnosis was first reported by the Wall Street Journal.
The incoming deal arrives at the end of a year that saw a cooldown in the music catalog market. Though major acts like Justin Timberlake (who sold to Hipgnosis for $100 million), Sting (who sold to UMPG for an estimated $360 million), Genesis (who sold a package deal to Concord for around $350 million), David Bowie (whose estate sold his publishing catalog to Warner Chappell for $250 million) and more have closed deals in the last twelve months for blockbuster prices, 2022 has been a markedly quieter year compared to the red-hot market of the last half-decade.
“The environment has changed entirely since the end of last year — interest rates are significantly up, currency exchange rates are very different — I don’t think the current market is what it was,” explained Joe Brenner, partner at entertainment law firm Grubman Shire Meiselas & Sacks, in an interview with Billboard this fall. In a mid-year report to investors, Mercuriadis also admitted this year’s environment has proven more “challenging.” To top it off, Brenner added, there are simply fewer high-dollar classic rock catalogs left to acquire, as many of them have already been sold (Pink Floyd being a notable exception).
Catalogs only a decade or so old, like Bieber’s, are often considered riskier investments than those that have had a longer runway to prove they will stand the test of time, and, as a consequence, they tend to fetch lower sums. However, these younger song collections are often where Hipgnosis chooses to invest its capital. Between the Timberlake catalog purchase this year and other acquisitions like Jack Antonoff, Mark Ronson, Timbaland and more, the company has bet big on buying modern classics to flesh out its over 65,000-song portfolio, which also includes songs by more seasoned icons like Journey, Leonard Cohen and Barry Manilow.
Hipgnosis Songs Capital is an investment vehicle established by Hipgnosis in partnership with Blackstone. The New York-based private equity firm pledged $1 billion to further investment in music IP and also took a majority stake. Hipgnosis Songs Capital is considered separate from the London-listed Hipgnosis Songs Fund, the acquirer of music publishing and recording rights. Additionally, the Mercuriadis-founded company includes Hipgnosis Songs Management, which manages the publicly traded company’s catalog.
Representatives for Hipgnosis and Bieber have not responded to Billboard’s requests for comment.