This Vault Of 66,000 Songs Is Worth $2.7B!

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Good morning! It's Friday, June 9th - Today we're diving into how Hipgnosis Songs Fund, with its staggering $2.67B worth of 66,000 songs…let’s dig in!


This Vault Of 66,000 Songs Is Worth $2.7B!

The latest entity buying up the song catalogs of artists ranging from Mariah Carey to Justin Bieber isn’t a record label, it’s Merck Mercuriadis and his investment company Hipgnosis Songs Fund.

Hipgnosis is currently traded on the FTSE 250 Index and has a portfolio of approximately 66,000 songs valued at $2.67B.

What’s the Business?

Mercuriadis used to work as a music manager for artists like Elton John and Guns N’ Roses. In 2018, he shifted focus by founding Hipgnosis in an attempt to turn the music industry upside down.

The mission of Hipgnosis is to reveal the value of songs as an asset class and to appropriately reward songwriters in the process. It’s been an undeniably successful venture seeing how Hipgnosis launched on the London Stock exchange at ~$250M and now has a market cap of $1.2B

Each one of Hipgnosis’ songs or catalogs is assessed by an independent valuer and the purchases are made directly with the songwriter or producer. This results in much larger payouts for songwriters than what was traditionally expected. Plus, each artist receives contingent bonus payments based on revenue growth.

Hipgnosis owns the sound recording and composition rights to all of the songs in its portfolio. The royalty payments from the rights to their 66,000 songs garnered the company $168M in net revenue for the 2022 fiscal year.

How They Win

Invest in classics

Mercuriadis boldly claims that songs are a better asset class than gold or oil because people consume music regardless of the current economic conditions, and nowaday with streaming platforms, people treat music like a utility payment rather than a luxury purchase.

However, not all songs are made equal and that’s why half of Hipgnosis’ portfolio is made up of 10+ year-old songs that are deemed classics. Mercuriadis believes that the value of these songs will continue to increase overtime and will be listened to for a hundred more years.

Even if people stop listening to the original versions of classic songs, Hipgnosis will still receive licensing fees for their use in new compositions. For example, they received an extensive payout for Nikki Minaj’s song Super Freaky Girl, which was an interpolation of a song in their portfolio, Rick James’ Super Freak.

Active management

Hipgnosis doesn’t just purchase songs and sit around for royalty payments to come in. Each member of their song management team works to boost the popularity of the 500-1,000 songs they oversee to boost their royalty payments.

There are a variety of Hipgnosis song-boosting success stories, but one of the most impressive examples is that of Bruno Mars’ Talking to the Moon. When Talking to the Moon became certified 2X platinum, it had approximately 1.8M weekly streams. But following a campaign to push the song on TikTok, weekly streams jumped up to 5-7M from April of 2021 to April of 2022.

So What?

After working closely with artists in the music industry for his whole life, Mercuridas had a tuned sense of what songwriters wanted and the true value of music.

He founded Hipgnogis to fix the unjust music industry paradigm in which record companies are awarded the lion’s share while artists receive the scraps, and in doing so, he made a lot of money for himself and songwriters.