Hits don’t lie
Hipgnosis Songs Fund — a music mega fund that's spent the last 5 years and more than $2 billion acquiring the intellectual property rights to more than 65,000 songs — has announced that it's selling ~20% of its portfolio for $465m.
Entire song collections from Shakira, Barry Manilow, and Nelly will change hands in the deal, as the fund seeks to cut debts and buy back shares with the proceeds generated by the 29-catalog sale announced last week.
The idea behind the UK-based fund is simple. Founder Merck Mercuriadis believes that hit songs are actually long-term predictable assets that, in most cases, will hold their value for decades to come — particularly as streaming continues to be the rising tide lifting all boats.
Born to run deals
Hipgnosis’s aggressive deal-making has contributed to the trend of songwriters cashing in on their copyrights. The allure of big lump-sum payments, rather than royalties spread over decades, is obvious. Some of the biggest names in music, including Bruce Springsteen and Bob Dylan, have reportedly received $500m and $300m for selling off their respective songbooks.
Funds like Hipgnosis are comfortable shouldering the risk, and the rewards, associated with the future value of their music. But in HSF’s case, they might have slightly overstuffed their playlist just at the wrong moment: a pivotal vote in October determines whether shareholders will back the fund for another 5 years, or completely stop the music.
