Hipgnosis has announced financial results for the year ending March 31, 2021 that reveal the scale of its investments in music copyrights.
The UK investment company focusing on songs and musical intellectual property rights acquired 84 catalogues for $1.089 billion during the 12 months. It takes the total value across 138 catalogues to approximately $2bn.
Big deals in the last year include songwriter’s shares in catalogues by Neil Young, Lindsey Buckingham, Steve Winwood, Debbie Harry and Chris Stein of Blondie, Chrissie Hynde, Carole Bayer Sager and Barry Manilow, as well as the songs of Shakira, Rick James, Enrique Iglesias and B-52’s.
Streaming income increased by 18.4% in the second half of the year compared to the previous six-month period.
Operative NAV (net asset value) increased by 11.3% to $1.6829 per share over the year. Including dividends paid, this represents a total operative dollar NAV Return of 15.7% for the year, taking total NAV return since Hipgnosis’ IPO to 40.7%
Hipgnosis reported ike-for-like valuation uplift across the portfolio of 10.4% during the year. Catalogue revenues remained “highly resilient” through Covid-19 and are well placed for future growth with acceleration of streaming adoption.
We are entering an era where now, for the first time ever, almost all consumption of music is paid for
Merck Mercuriadis, Hipgnosis Songs Fund CEO and founder of The Family (Music) Limited, said: “We are delighted to announce a strong set of annual results which reports on a remarkable year for Hipgnosis… This strong return evidences not only our ability to be able to buy and manage our culturally important and extraordinarily successful songs well but also the highly uncorrelated nature of proven songs.
“Whilst we would never have wished for a pandemic, it has not only demonstrated the predictable, reliable and uncorrelated nature of the income of proven songs, but also accelerated the change in consumer behaviour to consuming music by streaming. Revenues have been highly resistant during the course of this incredibly challenging year and are well placed for future growth with global streaming adoption beating all expectations - seeing the 30 million paid subscribers when we first started grow to 450 million paid subscribers today to what are forecast to be 2 billion paid subscribers by the end of the decade.
“This has turned music from being a discretionary or luxury purchase to very much being a utility as a result of the convenience and access afforded by streaming. Going forward this accelerated streaming will be enhanced as revenues from TikTok, Peloton, Triller, Roblox, and other rapidly emerging digital platforms start to be paid through. These are new income streams, expected to be a material portion of our revenue going forward, that are not in the data that we buy catalogues on. We are entering an era where now, for the first time ever, almost all consumption of music is paid for.”
Sync grew to 15% of revenue from 9% in the prior year, according to the latest results. There have been a series of big appointments to the song management team including Ted Cockle, Amy Thomson, Tom Stingemore, Patrick Joest and Joe Maggini.
Examples of Hipgnosis’ impact on newly acquired catalogue include the combination of Miley Cyrus and Blondie on TikTok last October. The platform has helped introduced both versions of Heart Of Glass to a new audience and has been streamed more than 250 million times.
Following his Music Week interview last year, Mercuriadis continues to advocate for songwriters to receive a greater share of a song’s income, including in evidence to the DCMS Committee hearings in the UK.