‘Songs are as good as gold or oil’: Merck Mercuriadis on the future of publishing
With the world of music publishing transforming at a rate of knots, Hipgnosis Songs Fund CEO Merck Mercuriadis and songwriter and board director of the Ivors Academy Of Music Creators, Helienne Lindvall, speak to Mark Sutherland about what the future holds for music creators…
It wasn’t so long ago that publishing was seen as the ‘unsexy’ end of the music business. Steady, safe, maybe even a little dull, when compared to the buccaneering worlds of recorded music and touring.
Well, times have changed. As it gets harder to break new artists and live music remains on hiatus, songwriting catalogues are the new hottest properties on the block.
And, these days, it seems like most of them are on the block. The steady world of publishing deals has been disrupted like never before, thanks to companies such as Primary Wave, Round Hill and, in particular, Hipgnosis.
These are not traditional publishers – although some occasionally do publishing deals – but specialise in ‘rights management’. Often that involves buying the writer and/or the publisher share of future royalties for a lump sum and then assertively maximising the value of those copyrights.
It’s a formula that has seen huge investment funds raised and Hipgnosis reach a market cap of £1.3 billion on the FTSE. It’s seen everyone from Neil Young and Shakira (Hipgnosis) to Stevie Nicks and KT Tunstall (Primary Wave) do deals for some or all of their catalogues. The practice has also spread to more traditional companies, with Universal Music Publishing Group snapping up Bob Dylan’s entire catalogue for around $350 million.
So why are these deals suddenly so popular? Hipgnosis CEO Merck Mercuriadis has no doubt about why his company is proving such an attractive destination.
“We recognise the true value of songs,” he tells Audio Media International. “We’ve demonstrated to the financial community that they are as good as gold or oil. We have an ethos that puts the songwriter first and we have an understanding and expertise in how they’ve built their careers. They know we will do everything possible to enhance their legacy and our revenues – but we will equally protect their legacy.”
Today, even deep catalogue songs are only a TikTok trend away from a big streaming boost (hell, if TikTok can revive Hoobastank, as it did last week, it can surely revive anything) – although it should be noted than any writer that sells their rights ceases to be able to block adverts or other uses they don’t agree with.
But Mercuriadis also claims to have an ulterior motive: “Using the leverage of our great songs and financial wherewithal to change where the songwriter sits in the economic equation.”
That might be just as attractive as the hefty multiples Hipgnosis is paying. Persistently undervalued by the wider music biz, in the streaming age – where the song typically receives just 10-15p on the pound of a streaming subscription, while the recording takes 55p – the income offered by tracks on major albums has dissipated to the point of no return(s). Songwriter Helienne Lindvall, chair of the Songwriter Committee and board director of the Ivors Academy Of Music Creators, says even songs with hundreds of thousands of streams no longer cover the expenses for the session that created it.
“When I speak to songwriters, whether they’re new to the business or have been around for a long time, it’s definitely worse than it’s been before,” she says. “The more streaming becomes the dominant form of consumption, the worse it gets, because it just doesn’t add up.”
No wonder some take the upfront cash offered by Hipgnosis and co. Whether Mercuriadis can really leverage his catalogue for a larger slice of the streaming pie for songwriters remains to be seen but, with songwriters struggling to get their voices heard at the DCMS inquiry into music streaming – and having to battle Spotify in order to get a Copyright Royalty Board-approved rise in the US – any support goes down well in a business that claims “the song is everything” but often pays the songwriter next-to-nothing.
In the short-term, Lindvall suggests labels should pay songwriters ‘per diem’ payments to cover the huge amount of development work they do with artists, and to offer points on the master from the label share to songwriters.
“Music creatives can’t just be pushing crumbs around the table,” she says. “We need a redistribution of profits so at least songwriters – the core of the industry – are not treated the worst.”
Cynics might suggest the real beneficiary of a hike in the song’s slice of streaming income would be Hipgnosis’ share price. But with the three major publishers all owned by the corresponding labels, many songwriters feel the recorded music side will always dominate negotiations.
Which is not to say writers selling their catalogues is guaranteed to work out. Lindvall notes that the Ivors Academy is a proponent of “music creators owning their creations – so we would like it to be beneficial enough for writers to keep their copyrights”. “But we do understand if they make another decision, particularly with the way things look right now,” she adds.
And many are making that decision, to the extent that, galvanised by the #FixStreaming and #BrokenRecord campaigns, it’s also spreading to the recorded music area. Fewer heritage artists own their master rights, but BMG recently acquired Mick Fleetwood’s interests in Fleetwood Mac’s recordings, one of the steadiest income streams, and BMG sources say they’re well-placed to do further deals of that type.
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Even those who don’t own their masters have options: Taylor Swift has recently followed through on her longstanding promise to re-record her earlier, Big Machine-released albums after they were sold to first Scooter Braun’s Ithaca Holdings and then Shamrock Capital without her being consulted. “If you sit in front of the wrong desk in front of the wrong person,” Swift told me in 2019, “They can take everything from you.”
So now she’s taking it back. A new ‘Taylor’s Version’ take on classic Swift single Love Story – is on track to chart in the UK tomorrow, with over 15,000 sales equivalents for the week. So what might Shamrock lose if the new versions supplant the old ones? Love Story has regularly clocked up around 4,000 units per week in the UK in recent times – extrapolate that across dozens of songs in multiple territories and doing those deals behind Swift’s back might not look quite so smart.
In the meantime, publishers are grappling with a potential existential threat to their business model.
None of the publishers or publishing trade bodies approached for this piece would go on the record, although Music Publishers Association chairman and Downtown Music EVP/head of European business development Roberto Neri told the DCMS inquiry that Hipgnosis-type deals merely demonstrate “the long-term value of song copyrights” and enable songwriters “to choose what they wish to do with their songs”.
There is, however, plenty of off-the-record cynicism about whether Hipgnosis, Round Hill, Primary Wave et al can deliver on their promises.
“Whenever you are building a better version of what’s come before, there will always be critics desperately trying to maintain the status quo for their own benefit,” shrugs Mercuriadis. “We are not concerned with them, our focus is on super-serving our songs, songwriters and investors and building a song management company that sets the standard for managing great songs.”
At the moment, it’s really only classic songwriters attracting buyouts – although sites such as Royalty Exchange, which has done $85m worth of deals in the last four years, also offer the chance for smaller royalty stream auctions. And some worry that it could undermine collective licensing.
After Hipgnosis ‘only’ raised $100m in its last funding round, some suggest investors may finally be falling out of love with these deals (although my sources suggest huge mainstream funds are increasingly looking at music assets). Either way, they’re here for at least the short-term.
“I believe we will continue to make acquisitions at a strong pace for the next couple of years,” says Mercuriadis. “Not many artists own their masters but we will certainly buy them or the income stream in conjunction with the songs.”
Will that and the DCMS inquiry put enough pressure on the industry to reset the economic picture for songwriters? Lindvall says many can’t afford to wait and see.
“In songwriting, we used to say you’re only one song away from buying a house,” she sighs. “But that’s less and less common now. We’re not asking to get paid for music that nobody listens to; we’re asking to get appropriately rewarded for music that is making everybody else in this business lots of money.”
Buckle up: the once staid world of publishing will be setting pulses racing for a while yet…
