The music industry is an ever-changing business, and in the last few decades artists have been faced with lost revenue from the decline in sales of physical product and the increase in the less lucrative streaming services.
Many artists were able to capitalize on an increase in attendance to live concerts, including the proliferation of huge music festivals, Vegas residencies and music themed cruises. The pandemic shut down that revenue stream, and now artists are looking for other avenues to keep the money flowing, which has created an opportunity for Merck Mercuriadis, the founder of the Hipgnosis Songs Fund.
Since their founding in 2018, the Hipgnosis Songs Fund has acquired full or partial rights to more than 57,000 songs and plans to spend another billion dollars to continue to build its music portfolio. The publicly traded company has benefited from the inability of musicians to tour during the pandemic. They have recently closed deals with Neil Young, Fleetwood Mac’s Lindsey Buckingham and the estate of Buffalo legend Rick James.
Mercuriadis has a long history in the music industry, which includes managing some big names like Beyoncé, Elton John, Guns N' Roses, and Iron Maiden. He also served as CEO of Sanctuary Records, a label that focuses on the acquisition of catalogues from artists that had established fanbases and long-term appeal.
Ownership of publishing and other rights related to songs and catalogues can be very lucrative, and there are many horror stories involving artists who signed record deals early in their career that resulted in the loss of significant income and control. Prince and Taylor Swift are noted for their high-profile battles over the rights of their catalogue. As a form of protest, Prince performed with the word “slave” on his cheek, and even changed his name to an unpronounceable symbol. Swift has threatened to re-record portions of her back catalogue to compete with her own music, which she does not control.
The concept of music publishing acquisition as an investment is not a new concept. Perhaps the most famous business deal involving the acquisition of publishing rights occurred when Michael Jackson purchased the rights to a significant portion of the Beatles catalogue in 1985, including massive hits like “Hey Jude” and “Yesterday.” Jackson made more money off the Beatles songs than he did his own music.
Jackson was indirectly taking investment advice from former Beatle Paul McCartney, who became friendly with Jackson in the early 1980s when they collaborated on some songs together. On one occasion McCartney showed Jackson a computer printout of all the songs McCartney had purchased the rights for, including Buddy Holly’s and some Broadway tunes.
Not long after that conversation, Jackson acquired the rights to some major hits like “Runaround Sue” and “The Wanderer.” Jackson attempted to secure the rights to the Jackson 5’s back catalogue, but it was not for sale, so he kept looking for more music to invest in when he heard about the ATV Music Catalogue that included many Beatles songs,
McCartney could not have imagined that Jackson would aggressively go after the rights of the Beatles music, especially after McCartney himself turned down an opportunity to purchase ATV’s holdings, because it was too expensive.
The deal soured McCartney and Jackson’s personal relationship, but Jackson’s initial $47 million investment in 1985 reaped massive financial rewards for Jackson. In addition to the income derived from the catalogue, Jackson sold half of his interest in ATV to Sony in 1995 for $100 million, doubling his initial investment while still retaining a 50% share of the rights. Jackson’s estate sold the other half to Sony for $750 million in 2016.
Those numbers must have played a part in Mercuriadis’ decision to pursue high-profile publishing deals, but the major difference is that Mercuriadis is rewarding some artists handsomely, as opposed to McCartney, who had signed away part of his publishing rights when he was in the Beatles. McCartney was able to win back the majority of his publishing rights in 2017 as part of a legal settlement.
As many artists become cash-strapped due to a lack of touring, we will likely see more artists signing away some of their publishing rights. That may result in fewer artists having to rely on live music as a primary source of income, which is good news for artists that don’t like to be on the road, and potentially more bad news for fans of live music.
Thom Jennings covers the local music scene for Night and Day.