Sunday, December 5

Hipgnosis to pay higher dividends as billion-dollar music rights spree pays off Music industry

Hipgnosis, which owns the rights to 65,000 songs from artists from Neil Young to Beyoncé, has increased its dividend as it expects the pandemic-fueled streaming boom to continue as listening on digital services like TikTok and Peloton increases.

The London-listed company, which makes money every time one of the songs to which it owns the rights is played, nearly doubled its revenue from $ 82 million to $ 160 million in the year through the end of March.

This was fueled by a $ 1bn (£ 722 million) spending spree on evergreen hits during the pandemic, with Hipgnosis buying the rights to 84 song catalogs last year, including those of artists like Shakira and Debbie Harry.

The company increased its pre-tax operating earnings year-over-year from $ 41.5 million to $ 44.5 million and increased its annual dividend target by 5% to 5.25 per share as it expects the boom of the broadcast.

Merck Mecuriadis, founder and CEO of Hipgnosis, said the pandemic had accelerated the shift in streaming listening, with 443 million users of subscription services like Spotify, Apple Music and Amazon Music. By the end of the decade, that number is forecast to reach 2 billion.

“This has turned music from a discretionary or luxury purchase to a utility as a result of the convenience and accessibility that streaming offers,” he said. “Moving forward, this accelerated streaming will be enhanced as revenue from TikTok, Peloton, Triller, Roblox, and other emerging digital platforms quickly begins to pay off. We are entering an era in which now, for the first time, almost all music consumption is paid for ”.

Hipgnosis said streaming revenue increased 18.4% in the second half of its financial year, compared to the first six months. The company’s portfolio of 138 song catalogs is valued at $ 2.2 billion, 10% more (about $ 265.6 million) than it costs to purchase.

Hipgnosis is increasingly focusing on classic hits, with the share of songs older than 10 years accounting for 60% of its total portfolio, up from 32.5% at the end of March last year. Two years ago, that proportion was only 10%. Just under half of Hipgnosis’ portfolio (46%) is pop music, and rock is the second largest genre at 27%.

Mercuriadis said the spate of deals – in December, Bob Dylan sold his entire catalog of hits, including Blowin ‘in the Wind, to Universal Music for more than $ 300 million – was due in part to older musicians looking to cash in on it. towards the end of their careers.

Sign up for the daily Business Today email

“Great creators have matured to a place where they are now starting to go for natural causes, many of them are sprinkling the Is and crossing the Ts of their estate planning and wanting to make sure that not only are their families well cared for but that their songs they are also well cared for, “Mercuriadis said in an interview on BBC Radio 4’s Today program.” These songs are available at attractive prices. We believe these songs will triple their net asset value by the end of the decade. “

The streaming boom is benefiting companies in the music industry. Warner Music, the world’s third-largest music company, home to artists like Ed Sheeran, went public last June and its share price increased by a quarter in the past 12 months to give it market value. of almost $ 19 billion. Its owner, Len Blavatnik, paid $ 3.3 billion for the company in 2011.

Vivendi, the owner of the world’s largest music company Universal Music, home to artists and rights from Lady Gaga to the Beatles, is set to float to Amsterdam in September with a valuation of more than € 35 billion (£ 30 billion).

Leave a Reply

Your email address will not be published. Required fields are marked *