“
They are
trying to
twist this for
their own
purposes.”
Merck Mercuriadis’ eyes flash with exaspera-
tion. Over years spent managing the careers of
uncompromising artists like Elton John, Beyoncé
and Guns N’ Roses, the 57-year-old music industry
veteran has perfected a demeanor of cordial unflap-
pability. Yet a question skeptics have asked about
his 4-year-old company, Hipgnosis, has gotten
under his skin.
Hipgnosis has spent almost $2 billion to date
snapping up 129 publishing catalogs, the work of
everyone from Neil Young to Al Green’s drum-
mer Al Jackson. These are the iconic creative
forces behind the great music that Mercuriadis has
dedicated his life to, and his company’s purchases
have fueled an explosion of music publishing valu-
ations. In theory, a rising tide lifts all ships, but the
question irritating Mercuriadis right now is: Who
owns those ships? Or, to put it another way, once
songwriters sell their work to Hipgnosis, will they
continue to benefit from the ways Mercuriadis says
he’ll reshape the industry?
He has an answer to this, as he does to most
everything. His response to the first question of a
mid-February interview with Billboard clocks in at
just over 20 minutes, and an attempt to interject
makes him pause just long enough to grin and
say, “I appreciate that I’m monologuing you.”
Mercuriadis radiates an affable charisma, and he’s a
steamroller in interviews. He talks about Hipgnosis
as a disruptive force in answers that seem as
inspiring — and as well-rehearsed — as a political
stump speech.
Mercuriadis shuttles between a home in London’s
Notting Hill (where he and his wife, Sue, have three
cats) and a light-filled house in the Hollywood Hills
(where they have three dogs, one of whom, a corgi,
has his own Instagram, @louismercuriadis). The
Quebec-born son of a retired Greek professional
soccer player, he radiates both power and a hard-
won calm. Speaking with Billboard from Los Angeles
over Zoom, he’s dressed, as always, in black — in this
case, a sweatshirt — and appears before black-and-
white digital wallpaper patterned with the company
logo, an upside-down elephant with swirled,
hypnotized eyes.
Mercuriadis is explaining his two-pronged vision
for Hipgnosis, which he founded in 2017 and took
public on the London Stock Exchange (LSE) in July- Profits were up 917% in its fiscal year ended
Sept. 30, 2020, and the company now has a market
capitalization of $1.8 billion. As of the end of Janu-
ary, 389 investors own shares, including Aviva
Investors, Investec Wealth & Investment, AXA
Equitable and — Mercuriadis finds this as amusing
as most people would — the Church of England’s
fund manager, CCLA.
The central part of Mercuriadis’ vision is “song
management,” the term he much prefers to music
publishing. He believes that Hipgnosis can manage
the compositions it owns better than most estab-
lished companies because administrators at the ma-
jor publishers manage on average “20,000 songs per
person, whereas we operate on 500 to 1,000 songs
per person.” That means Hipgnosis can pay more at-
tention to each and every song it owns — as opposed
to just proven hits — promote them more effectively
and generate more revenue from placements in
films, TV shows and other video content. Mercuria-
dis thinks that the Hipgnosis model, where compa-
nies optimize revenue from portfolios of 150,000 or
so songs, is the future. As of December, the company
owned 61,000.
Synch placements can only drive so much rev-
enue though. And the second part of Mercuriadis’
vision, about increasing mechanical and public
performance royalties, is less specific and framed in
more idealistic terms. “We want to make money for
our shareholders and ourselves, but I also have an
ulterior motive,” he says. “I want to change where
the songwriter sits in the economic equation.” At a
time when singles drive a resurgent music indus-
try, the teams of songwriters that create them are
often left to divvy up, he calculates, just 11.5 cents of
every dollar a recording generates.
Mercuriadis very much wants to change this,
though it’s more complicated than he makes it
seem. While labels and artists who own their own
recordings can negotiate with on-demand streaming
services in a free market, publishers and songwriters
are constrained by a web of regulations. Mercuriadis
suggests that this could be addressed by collective
action, in the form of a songwriters guild, but it
might take years for such a group to gain as much
influence in the United States as existing organiza-
tions like ASCAP or the National Music Publishers’
Association (NMPA) — none of which has managed
to change the regulatory structure that denies pub-
lishing rights holders the negotiating leverage that
labels have.I
F ONE OF MERCURIADIS’
goals is to boost the fortunes
of songwriters, he has already
succeeded — beyond their
wildest dreams. Over the
past two years, the value of
song copyrights has soared to
record highs. For blue-chip catalogs, buyers are
paying upwards of 20 times net publisher’s share
(NPS) — multiples of an asset’s average annual
gross profits — essentially double what they were
a decade ago. Much of this is fueled by the growth
of streaming, as well as general optimism about
the music business. But Hipgnosis — which as of
December had acquired 129 song catalogs for atotal of $1.75 billion — is the primary factor that’s
driving prices to new highs, according to more
than 15 music publishing executives, lawyers and
consultants who negotiate such deals.
Hipgnosis has raised the stakes for new
companies and majors alike — and the bull market
it has supercharged has attracted the attention
of institutional investors like KKR & Co. (which
made its first music acquisition since 2013 when it
bought a majority stake in Ryan Tedder’s catalog),
Eldridge (which is a part owner of Billboard) and
Vine Alternative Investments. This may or may not
be good for Hipgnosis, which can position itself as a
leader among these new entrants but now also faces
more competition. But it has certainly been great
for songwriters and other rights holders.
“In the old days, if we wanted to shop a catalog,
there might be two to four publishers willing to
make an offer,” says Jordan Keller, a founding
partner of Nashville-based entertainment law firm
Keller Turner Andrews & Ghanem, which represents
clients in rights sales. “Now when we go to market,
we have 10 or 15 companies making attractive,44 BILLBOARD • FEBRUARY 20, 2021