Hipgnosis Says Its Monster Bets Are Already Paying Off: “There’s More Evidence to Back Our Thesis”

Hipgnosis is paying 10X — or more — on hit-heavy songwriter catalogs.  Just months later, the company says its bets are already paying off.

Hipgnosis, the UK-based song-rights investment company, is already applauding itself for a successful year one.

The company, which pays considerable sums for song rights in the hope that the tracks’ revenue will prove profitable in the long run, said its licensing and publishing earnings surpassed $9,000,000 between 2018 and early 2019. Hipgnosis execs also claim that their portfolio’s collective value has increased by more than $10,000,000 over the same period.

That last figure is incredibly difficult to confirm, though songwriter catalogs are indeed gaining value in the current market. Of course, Hipgnosis is playing a very long game here, especially with the kind of multiples they’re outlaying on catalog.

While supporters — i.e. investors — are satisfied with Hipgnosis’s sunny financial report, burning questions remain — including how valuable the organization’s song collection will be in the coming years. Moreover, some industry experts believe that Hipgnosis’s $150 million price tag on 3,000+ songs was far too expensive.

These 3,000+ songs, just part of the overall portfolio, were purchased during 2018 and the beginning of 2019, a period of continued streaming and industry growth. That suggests to possibility over overvalued ‘bubble buying,’ and could explain why major publishers and label groups haven’t been spending as aggressively.

Then again, perhaps Hipgnosis simply has the balls to place bigger, riskier bets.

Just as there can be no denying Hipgnosis’s short-term returns, there can be no denying that its founder understands the music industry inside and out. Merck Mercuriadis, who has managed Beyonce, Elton John, Iron Maiden, Guns N’ Roses, and several other bestselling artists, founded the fund. The Canadian executive has decades of experience — and thousands of significant relationships — in the music world.

In terms of these relationships’ advantages, look no further than the fact that he’s been able to sign mutually beneficial agreements with Beyonce. It seems likely that additional contracts will be agreed upon by the parties.

At the time of writing, Hipgnosis’s ever-growing stable of songs has cost more than $300 million; this includes roughly 6,000 tracks. The organization’s executives have indicated that they plan to acquire nearly $200 million worth of additional songs by the end of July.

Hipgnosis trades on the London Stock Exchange (LSE) under the symbol “SONG,” and despite the specified financial report, the fund’s value hasn’t risen or fallen by a significant amount as of late; this consistent price is likely indicative of the market’s “feeling out” what the company brings to the table.

Hipgnosis’s executives have made clear that they plan to continue increasing spending—and acquiring songs—moving forward.