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Hipgnosis Songs Management has purchased 100% interest in publishing copyrights to 217 songs in the catalog of TMS, the British songwriting and production trio.
This latest acquisition includes the trio’s publishing copyrights, producer royalty streams, and neighboring rights, including “Someone You Loved” and “Before You Go” by Lewis Capaldi and “Don’t Be So Hard on Yourself” by Jess Glynne.
Comprised of Tom “Froe” Barnes, Benjamin Kohn, and Peter “Merf” Kelleher, TMS has already sold the copyrights of 121 of their other songs to Hipgnosis in the past, including songs recorded by G-Eazy, Sigma and Emeli Sandé. The writers’ share of ownership and royalties of the previous 121 songs is also included in the latest acquisition.
“Someone You Loved” has achieved 7-times platinum status in the U.K. since its release in 2018 and is touted as the U.K.’s most played song of all time on Spotify. Worldwide, it ranks as the fourth most streamed with 2.6 billion and counting. “Someone You Loved” was written by Lewis Capaldi, Samuel Roman, and the TMS trio, meaning Hipgnosis now controls three out of five writers’ shares of publishing. TMS also produced the track.
Hipgnosis Songs Management, the entity managing the publicly traded company’s catalog, acquired these songs on behalf of Hipgnosis Songs Capital, an investment vehicle established by Hipgnosis and Blackstone. The world’s largest alternative asset manager, Blackstone pledged $1 billion to further investment in music IP with Hipgnosis and also took a majority stake.
TMS has also worked with Dua Lipa, John Legend, Maroon 5, Ed Sheeran, Lily Allen and Bebe Rexha, One Direction, Cher, Ed Sheeran, Leona Lewis, Rita Ora, Jessie J, Lily Allen, Labrinth, JLS, Years & Years, Oily Murs, Ella Henderson, Birdy, Jem & The Holograms, Sinead Harnett, Kwabs and Dot Rotten.
It is not clear which, if any, of these artists’ songs are included in this deal. Financial terms weren’t disclosed.
TMS were represented by Paul Centellas at North Pole Management and Sonia Diwan at Sound Advice.
“Froe, Ben, Merf and their manager Paul Centellas have been an important part of the Hipgnosis family for many years now so it’s fantastic that we’ve been able to continue our relationship with this new acquisition including what will undoubtedly be a contender for song of the decade with Lewis Capaldi’s iconic ‘Someone You Loved,’” says Merck Mercuriadis, CEO and founder of Hipgnosis Song Management.
Barnes, Kohn and Kelleher (TMS) jointly add, We’re incredibly proud of this body of work and know Merck and the family at Hipgnosis will be excellent custodians of these copyrights in future. It’s incredible to see what they’ve built in just a few short years and we know they’ll continue to represent these songs with passion and commitment.”
“Nobody is doing more to elevate the standing and value of the songwriter than Merck and the team at Hipgnosis,” says Centellas, managing director, North Pole Management. “We’re very happy to entrust them with these incredible copyrights and look forward to working with them across various initiatives to ensure the songwriter is properly valued and remunerated in future. Without songwriters, there is no music business.”
Arriving just before New Years’ Eve, on Friday (Dec. 30), the Copyright Royalty Board judges issued their ruling on streaming royalty rates for songwriters for the period of January 2023 to December 2027, upholding a settlement proposed by the National Music Publishers’ Association (NMPA), Digital Media Association (DiMA), and Nashville Songwriters’ Association International (NSAI) in late August. This ruling sets the rates for Subpart C and D of the five year period known as Phonorecords IV (or “Phono IV” for short), and it represents a compromise between the music industry and the streaming services, creating certainty around the royalties owed to songwriters for U.S. mechanicals.
According to the settlement, which the NMPA touts as the “highest rates in the history of digital streaming,” the headline rate will increase from 15.1% of revenue in 2023 to 15.2% in 2024 and then up a half a percentage point in each of the remaining three years, peaking at 15.35% in 2027, the final year of the term.
For stand-alone portable subscription offerings — like Spotify — the total content cost (TCC) component of the rate formula will be set at 26.2% of what’s paid to labels for the entire term, or $1.10 per subscriber, whichever is lower. Previously, those numbers were 21% of revenue and 80 cents per subscriber.
This means that the resultant TCC pool is measured against the total service revenue. Whichever is larger is designated the “all-in” pool, including both performance and mechanical royalties. After this is established, performance royalties are subtracted out, leaving behind solely the mechanical royalties.
Finally, the resultant mechanicals are compared against a pool, calculated by multiplying a streaming service’s total subscribers by 60 cents per person. Whichever of these two totals is bigger becomes the final mechanical royalty pool paid out to publishers and songwriters. Previously, the multiplier for the last 10 years had been set at 50 cents per subscriber.
This final ruling, reached two days before its rates are set to take effect, is a striking contrast from the lengthy proceedings to set streaming rates for Phonorecords III (2018-2022). Though that five year period is nearly over, its rates are still not finalized. In 2018, the music industry initially won the increase of the headline rate from 11.4% to 15.1% over the five year period, but the following year, Spotify, Amazon, Google and Pandora appealed, hoping to secure a lesser rate. This resulted in a legal back-and-forth that continues today, and although it is nearing its completion, it has created uncertainty surrounding what songwriters are owed for their work.
In hopes of streamlining the process and avoiding lengthy proceedings, the three settling parties worked together to propose a settlement for approval or denial by the CRB. Though other participants and interested parties outside of those who took part in the settlement were given the opportunity to explain their point-of-view during the month-long “comment period,” which ran from Nov. 7 to Dec. 7, the board explained in its ruling that its role is to either adopt or decline the settlement’s terms as presented, not to “modify” or add “requested adjustments.”
The ruling makes note of concerns provided by the 20 total commenters who weighed in on the settlement during the period, including that to some independent songwriters “the proposed rates might seem inadequate” and that several commenters prefer “alternative methods for inserting inflation adjustments.” “However,” the board states in the ruling, “the settlement is what is before the judges for consideration, not alternative rates or proposals for alternative procedures.”
In a statement Friday, NMPA president and CEO, David Israelite, celebrated the news. “Starting January 1, songwriters will enjoy the highest rates in the world and the highest rates in the history of digital streaming,” he said. “Thanks to the many songwriter advocates who worked hard to make this happen. There are still many challenges ahead to ensure that songs receive their proper value, but the future is bright.”
DiMA president and CEO, Garrett Levin, added, “We appreciate the Copyright Royalty Board for recognizing the benefits of this landmark agreement and the certainty it provides for streaming services, publishers, and songwriters alike. Thanks to the agreement, we can kick off 2023 focused on fans and continuing to grow streaming for the benefit of all stakeholders.”
Additional Reporting by Ed Christman