Hipgnosis revenues up 66% as streaming surges during pandemic

Hipgnosis revenues up 66% as streaming surges during pandemic

Hipgnosis has reported a 66% increase in revenue ($138.4 million) for the 12 months to March 31, 2021.

The figure includes revenue from catalogue acquisitions made during the year and right to income of $22.7 million.

“The Covid-19 pandemic has had a devastating impact on society and much of the economy,” said a statement. “We are grateful however that music, whilst not wholly impervious to the virus, has proved to be extremely resilient throughout this time demonstrating the appeal of hit songs to millions of people even in the most challenging times. The Covid-19 pandemic has affected how people consume music with an acceleration of the adoption of streaming worldwide.”

Hipgnosis’ streaming income has increased by 18.4% in the second half of the year from the previous six-month period across all catalogues. For catalogues Hipgnosis defines as ‘steady state catalogues’ where there’s no anticipated decay from peak earnings, income increased by 24.3% over the same period.

This growth is without any material revenue recognised from royalties paid for the first time by TikTok and Peloton, which is expected to be detailed by Hipgnosis from the next semi-annual royalty statements in August and September 2021.

“With global streaming revenues growing 19.9% during the year, this highlights our steady state catalogues are outperforming the market growth of streaming,” said Hipgnosis.

Sync income grew significantly in the second half of the year, following the appointment of the new song management team, led by Ted Cockle and Amy Thomson, and the appointment of former BMG head of sync Tom Stingemore in the UK, former BMG global head of sync Patrick Joest in Europe and former Universal sync director Joe Maggini in the US. Sync represented 15% of net income during the year to March 31, 2021, compared to 8% in the prior year.

The unauditedoperative NAV per share increased by 11.3% to $1.6829 during the year, which, when including dividends paid, represents a Total NAV Return of 15.7%. It brings the total NAV return for our shareholders to 40.7% since Hipgnosis’ IPO in July 2018. 

Merck Mercuriadis, founder of Hipgnosis Songs Fund Limited and its Investment Adviser The Family (Music) Limited, said: “2020/2021 has been another remarkable year for Hipgnosis. At a point in time when the explosion of streaming has transformed music from a discretionary consumer purchase to a utility purchase and new heights of consumption we have acquired amongst the most important songwriter, artist and producer catalogues of all time.”

Recent acquisitions include catalogues of Neil Young, Lindsey Buckingham/Fleetwood Mac, Steve Winwood, Debbie Harry & Chris Stein/Blondie, and Chrissie Hynde/The Pretenders, as well as iconic artists, songwriters and producers Shakira, Barry Manilow, Rick James, Carole Bayer Sager, Enrique Iglesias, B-52’s, Jimmy Iovine, The RZA/Wu Tang Clan, Chris Cornell/Soundgarden, 50 Cent, George Benson, Nikki Sixx/Motley Crue, Rodney Jerkins, Kevin Godley &, Eric Stewart/10cc, Skrillex, Walter Afanasieff and many others including the 2021 Grammy Awards Producer Of The Year Andrew Watt. 

“In addition, whilst we never would have wished for a pandemic, it has accelerated the consumption of classic songs through streaming and demonstrated exactly what an excellent uncorrelated asset class proven songs are,” said Mercuriadis. “The pandemic looks set to now lead us into inflation and again we are extremely well placed with songs as an asset class for our shareholders to be beneficiaries. With all our catalogues chosen due to their extraordinary success and cultural importance, extra high levels of streaming demand are a natural feature.

“As an example, Journey’s catalogue has over the last four months grown from 2.5 million to 3.7 million streams per week on Apple Music and 13 million monthly listeners on Spotify. Don’t Stop Believin’ on its own now has over 1 billion streams on Spotify alone, both incredible achievements for classic songs. This accelerated growth leaves us well positioned for the future, with increased expectations for income over the long term. Concurrently, we’ve felt some temporary decline in our performance income consistent with the entire industry but we expect that to turn around by the autumn.”

Mercuriadis added: “Our new song management team, led by Ted Cockle and Amy Thomson, has made a strong impact, growing revenue and enhancing the legacies of our great Songs, which will make a positive economic impact to the Company in periods to come. Sync revenues have exceeded all expectations and despite film and TV production being shut down for much of the last 16 months revenues have increased. This has highlighted not only that we have bought well but also how undervalued our iconic songs have been by traditional publishers and the massive opportunity this affords Hipgnosis.”

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