One company was on everyone’s lips in 2020: Hipgnosis.
Now with the acquisition of a 50% share in Neil Young’s catalogue and income interests, the company is going to continue making waves in the world of songwriting and copyrights.
As you’d expect, Mercuriadis had plenty to say about his achievements. So, here’s a bonus online Q&A with the Hipgnosis boss, where he opens up about how Hipgnosis has changed the industry and outlines his vision for future growth…
Around 18 months ago, you appeared on Music Week’s cover and spoke about your ambitions for building a £1 billion company. How’s that going?
“Setting up setting an initial goal of £1 billion was a pretty lofty goal. I believe that we’ll eventually get to £3 billion in the next couple of years. I’m a music person, but the financial community is obviously very conservative. So I was being very brash to say a billion pounds at that moment in time. But I believed in songs as an asset class. I believe that what makes songs so special is that people are always consuming music. The amazing thing about music is, if times are amazing, if you’re living your best life, you're doing it to a soundtrack of music. Equally, if you're experiencing challenges, you're using music to escape and to take comfort in, so music is always being consumed. And this is what I was able to demonstrate to the community: the reason why you invest in things like gold and oil are because they're predictable and reliable. Well, songs have that.”
But they have to be the right songs. How have you managed to secure the catalogues to grow Hipgnosis over the past 18 months?
“Well, you have to have access. I've been very lucky throughout my career, I made good choices. I've always made my money, and my reputation, with artists, songwriters and producers, as opposed to at the expense of artists, songwriters and producers. So, I'm a welcome face to many of them and I have access to many of them. And I'm very particular about what I buy. So, with over £1bn invested, we only own 57,000 songs [up to September 2020 according to interim results]. But 10,000 of them are Top 10 songs, almost 3,000 of them are No.1 songs. So it's a very small catalogue, relative to Universal, Warner or Sony. But the ratio of success within that catalogue is very high, there are very few songs that are not successes. So for me, the criteria is not just predictable and reliable income, but it's cultural importance as well. Everything that I buy is proven, it's successful, but it's also culturally important. So when you look at Eurythmics’ Sweet Dreams (Are Made Of This), Mark Ronson's records including Uptown Funk, Lady Gaga, Lindsey Buckingham and Fleetwood Mac, Steve Winwood, Nile Rodgers and Chic with Bernard Edwards, these are all culturally important artists who made big records that the whole world can sing, but are really important to people as well.”
The way that you get more out of songs is by putting more into them
Following the acquisition of Big Deal and key appointments, you have a 70-strong staff. Are you now officially a music publisher?
“No, we're a song management company. I object to being called a music publisher. The first main motive, above making money, is to change where the songwriter sits in the economic equation. I had a very good sense that it would be successful, and that it would give me the leverage of great assets to help to be a catalyst for changing where the songwriter sits in the economic equation. That's important to me.
“The second aspect that's important to me is that, when I look at Universal, Warner and Sony, which are great companies that have great people in them, they're operating under a paradigm that I don't agree with when it comes to how a songwriter is paid. What those companies primarily do is focus on creating new songs. So if you're working at Universal right now, you're not going to get a lot of credit for what Chuck Berry did, you're going to get credit for going out and discovering the next Andrew watt, Ryan Tedder, Benny Blanco, Nile Rodgers or Dianne Warren. What happens is that they sign them 10 at a time, and they work really hard to put them all in the right rooms, with the right songwriters and with the right artists. Hopefully, those turn into placements and hopefully those placements turn into hits. And, hopefully, those hits make one out of those 10 successful enough to pay for the nine that didn't happen. They use the passive income of their great hits, their incredible catalogues, to underwrite that business. We’re not in that business, we're in the business of managing songs. And I believe that the way that you get more out of songs is by putting more into them.”
Can you give us an example?
“We own the catalogue of Al Jackson, former drummer for Booker T And The MG’s. He wrote Let's Stay Together for Al Green, he wrote I’m Still In Love With You, Call Me, eight or nine of Al Green’s biggest records. He co-wrote Green Onions, probably the greatest instrumental of all time. So, all the Booker T And The MG’s hits, big royalties with everyone from Bill Withers to Otis Redding. So we buy this catalogue, and it's earning 400 grand a year, predictable reliable income. But when you dig deep into it, 82% of the income is one song: Let's Stay Together. So what we've done in the year that we've owned the catalogue, we've grown the revenue by a third. But equally importantly, we've taken the concentration on Let's Stay Together from 82%, down to 50%, and now the other 50% of revenue is across another five or six songs.
“When you're in a company that has 20,000 songs [managed] per person, there just isn't the bandwidth. So with what we're doing in song management, it's not because we're smarter than anyone else or that we've got some special sauce. It's just that we've got more time to put into it. We’re structured so that we've got the bandwidth to be able to manage songs.”
Subscribers can read the Music Week magazine interview with Merck Mercuriadis here.