Music investment firm Hipgnosis Songs recorded a revenue boom this morning, up 31 per cent to $74.1m (£55.5m) in its half-year results.
The Guernsey-based fund, backed by music icon Nile Rodgers, attributed this success to a number of catalogue acquisitions, pushing EBITDA up 16.2 per cent year-on-year to $54.6m (£40.9m).
In simple terms, Hipgnosis frames music royalties as an asset class, and buys the music rights (and catalogues) from artists.
Founded in 2018, the firm already owns 138 catalogues, with over 64,000 songs, from the likes of Fleetwood Mac, Neil Young, Shakira and 50 Cent.
Within the business model, it means that when Hipgnosis buys a song from an artist, every time it is played or streamed from Spotify or Apple Music, Hipgnosis will take a cut.
Alice Enders, analyst at Enders Analysis, pointed out the symbiotic relationship between the success of streaming platforms and catalogue investments: “There is no question that the rise of music rights is led by the rise in streaming. Streaming has also increased as more people are staying at home in the pandemic to consume music.”
For a company like Hipgnosis, Enders added that it is “all about scale”, and trying to acquire as many rights as possible, especially ‘evergreen’ records. Evergreen tracks would be older music from the 60s,70s, and 80s that is already valuable and popular.
Founder Merck Mercuriadis said that it was in fact these vintage catalogues that “made up for a fall” in what he called a “challenging” time for the company.
Mercuriadis added how the closure of music venues, bars and pubs during the various lockdowns undoubtedly impacted financial performance and the impact of the pandemic has been “fully felt” in these results.