There are at least a dozen well-capitalized companies buying up song catalogues for hundreds of millions of dollars. Their thinking is that these songs are timeless and, minded properly, will continue to generate income for decades to come. Meanwhile, the artists get a giant whack of future royalties up front so they can enjoy their money (and the security it brings) today.
One of the biggest–maybe THE biggest–of these companies is Hipgnosis, run by Canadian Merck Mecuriadis. As he continues to buy up the rights to some of the most iconic songs of all time, people want to know how he’s going to make his money back. A reasonable question, no?
Hipgnosis is a public company and therefore has to disclose all its financial doings. The latest annual report, which covers the last financial year (it ended March 31) offers the following insights on revenue.
- Hipgnosis spent US$2.69 billion(!!!) on buying song catalogues.
- The company owns 138 song catalogues and about 64,000 songs.
- Net revenue for the year was up 66.1% to US$138.4 million with an after-tax profit of US$38.9 million.
- Revenues came in as follows: Streaming, 32%; performance royaltiesl 29%; Mechanical/master royalties (i.e. sales), 17%; Sync (use TV, movies, commercials, etc.), 15%, and a final 3% from “other digital sources.”
And there’s more to come. The company is looking at the NFT space. Plus Hipgnosis has since signed deals with Peleton and TikTok.
Speaking of TikTok, here’s a quote: “We believe TikTok alone is already 6.5% of Sony Music’s revenues and we expect that in due course these emerging digital platforms such as TikTok, Triller, Roblox, Peloton and others will generate as much as 15% of our revenues.”
If you want to read the whole report, it can be found here. (Via Music Ally.)