Hipgnosis Songs Fund’s Annual Report Cites Growth in Streaming and Synch Amid Stock ‘Frustration’
Merck Mercuriadis and his team at Hipgnosis Songs Fund, the London-based investment trust that owns rights to music by big-name artists including Leonard Cohen, Blondie and Justin Bieber, have delivered the company’s fiscal year (ending in March) results that reflect growth in streaming and sync revenues. On the opposite end, the company reported a decrease in net revenue ($147.2 million from $168.3 million in the year prior) bur cited those dips as a result of non-recurring changes in accrual.
Hipgnosis’ pro-forma annual revenue (PFAR), described the report as “the royalty revenue earned by catalogues in a calendar year largely based on royalty statements received,” increased to $130.2 million from $116.2 million. Streaming income lifted 14.8% in 2022 while sync revenue also showed strong growth of 24.7% in 2022. Naturally, performance income also grew by 9%, blowing away the previous years’ deflated numbers that came as a result of the pandemic shutdown.
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“Five years ago we predicted that the recovery of the music industry from the previous 16 years
of technological disruption would be driven by the convenience and transformational growth of streaming,” Silverstone said in the report’s opening remarks. “In addition, we considered that we could deliver an exceptional return by acquiring iconic Songs while they were still attractively priced. Since then our thesis has become reality and we have transitioned from an era where almost all consumption of music was unpaid to one where almost all consumption of music is being paid for. This set of results is an early indication of what’s to come in the future.”
The robust attitude of the annual report comes as reports by the Financial Times say Hipgnosis has been under pressure from its investors to shop around non-core assets with the goal of buying back the company’s shares to uplift the fund’s decreased stock price. Hipgnosis is set to hold an official shareholder vote in September that will determine the company’s next move — whether that be to liquidate or allow the fund to continue operating in its current form.
“The current share price does not reflect the success of our investment strategy and I know all Shareholders share my frustration and disappointment that this is the case,” writes Silverstone. “When we launched the Company, we created a new asset class with Songs. It is therefore perhaps not a surprise, that in a world of incredible turmoil following a global pandemic, the largest war in Europe in nearly 80 years and increasing inflation and interest rates, that some investors have turned to ‘risk free’ safe havens over exposure to new asset classes. However, despite these unique macroeconomic conditions, the strong growth in paid consumption for music continues.”
The report additionally highlighted its biggest syncs, namely Rihanna’s Super Bowl Halftime performance, and Nicki Minaj’s interpolation of the Hipgnsosis-owned Rick James song “Super Freak” for “Super Freaky Girl.” It also celebrates the company’s increased earnings, made possible by partnerships with sub-publishers such as Peermusic, along with their direct licensing and administration alliance with Sacem.
Click here to view the 67-page report.
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