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‘Record companies have me on a dartboard’: the man making millions buying classic hits | Music

Merck Mercuriadis had a good Christmas. On Christmas Day, the No 1 tune in the UK was LadBaby’s Don’t Stop Me Eatin’, a novelty cowl model of Journey’s 1981 soft-rock anthem Don’t Stop Believin’. It changed Mariah Carey’s All I Need For Christmas Is You, which had topped the chart 26 years after its unique launch. Each songs are unkillable, evergreen hits, that are closing in on 1 billion Spotify streams apiece. Each songs are amongst the 61,000 owned, in entire or partially, by Mercuriadis’s funding firm, Hipgnosis Songs Fund, and epitomise the thesis that has made the 57-year-old Canadian, in lower than three years, the most disruptive power in the music enterprise.

Put merely, Hipgnosis raises cash from buyers and spends it on buying the mental property rights to fashionable songs by individuals like Mark Ronson, Timbaland, Barry Manilow and Blondie. In a fast-growing market, what units Hipgnosis aside from rivals is its founder’s bona fides as a veteran A&R man, supervisor and report label CEO. Like an old-school music mogul, Mercuriadis sells his model by promoting himself. In contrast to these moguls, he’s a buff, teetotal vegan with spartan tastes. “The one materials factor that I actually care about is vinyl,” he says. “And Arsenal soccer membership.” He seems to be reasonably like a rock-concert safety guard: shaven head, burly torso, plain black T-shirt, hawkish gaze. Mark Ronson calls him “the smartest man in the room”.

Blondie
Merck Mercuriadis’s Hipgnosis raises cash from buyers to purchase the rights to songs by acts like Blondie. {Photograph}: Michael Ochs/Getty Pictures

Each weekday, he will get up at 5am, solutions emails, works out for 90 minutes after which spends hours on video calls with musicians, buyers and workers. Largely primarily based in west London since 1986, he’s now stranded in Los Angeles by lockdown laws, which suggests he has to rise even earlier to talk to buyers in the UK. His Zoom background is an array of inverted elephants: the Hipgnosis brand.

Mercuriadis has given his gross sales pitch to buyers so many instances that his spiel feels computerized. It’s a easy idea however, till lately, a radical one. Songs, he says, are an asset class extra dependable even than oil or gold as a result of demand is impervious to financial and political upheavals. While you’re feeling joyful, you play music to rejoice; when instances are arduous, you play music to cheer your self up. A classic tune, he says, is a supply of “predictable, dependable revenue” in an unpredictable world.

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In contrast to a conventional music writer, which takes a 10-25% lower for administering songs, Hipgnosis buys the rights to 50-100% of all future royalties from songwriters for a substantial lump sum. There’s a lot of cash in songs (the three main publishing companies pulled in more than £2.3bn in 2019) and Mercuriadis believes there could possibly be a nice deal extra. Underneath the previous, pre‑digital mannequin, songwriters earned most of their royalties from report gross sales and airplay in the preliminary part of a tune’s life. In the streaming financial system, nevertheless, a fashionable tune generates cash every single day, even a long time later. Mercuriadis needs to exchange old school music publishing with “tune administration”, which maximises the worth of songs by proactively pursuing “syncs” (placements in motion pictures, TV exhibits, pc video games and adverts), samples and canopy variations. (Two songs in Hipgnosis’s catalogue, Maroon 5’s Girls Like You ft Cardi B and Shawn Mendes’s My Blood, have been lately lined in the Netflix present Bridgerton.)

Beginning in 2016, Mercuriadis made this pitch to 177 buyers. A handful instructed him to by no means darken their doorstep once more; 38 (together with the Church of England) backed him; the relaxation stated that they have been intrigued however didn’t wish to be his guinea pigs. Hipgnosis went public on 11 July 2018. Mercuriadis walked into the IPO ceremony at the London Inventory Trade with Terius “The-Dream” Nash, the writer-producer behind Rihanna’s Umbrella and Beyoncé’s Single Girls (Put A Ring On It) – his first A-list acquisition. “I didn’t wish to stroll into that ceremony empty-handed,” he says. “I wished to say, ‘Let’s get began.’”

Ed Sheeran
Ed Sheeran’s Form Of You is the most streamed Hipgnosis monitor. {Photograph}: Getty Pictures

Hipgnosis, which employs 65 individuals in London and LA, has now raised greater than £1.5bn, and spent it quick. In December and January alone, the fund introduced offers with Neil Younger, Shakira, Fleetwood Mac’s Lindsey Buckingham, the Kaiser Chiefs, and producers Jimmy Iovine and Jack Antonoff. Hipgnosis has a stake in round 3,000 No 1 hits and 5 of the songs in Billboard’s Prime 10 of the final decade, together with Ronson’s Uptown Funk and Ed Sheeran’s Form Of You. Round 50 of the buyers who instructed Mercuriadis they might wait and see have since come on board. “Every little thing I’ve ever instructed my buyers has both come true or been exceeded,” he says.

“When Merck’s speaking to artists and buyers, they have to consider in a system that they’ve by no means encountered,” says Stylish’s Nile Rodgers, a longtime pal who sits on Hipgnosis’s advisory board, The Household (Music) Restricted. “They have to consider that he’s honest, good and has good instincts. The success of a enterprise is mainly due to the particular person operating the enterprise.”

Companies have been quietly buying tune catalogues for years, however by no means on this scale. Due to Hipgnosis, demand is operating purple sizzling, with rising competitors from rival funds and main publishers who have been spooked into chasing prize properties. Final December, Common acquired all of Bob Dylan’s songs in what was stated to be one in every of the greatest ever offers of its form. For Mercuriadis, who had been negotiating with Dylan’s representatives for 2 years, it was a uncommon disappointment. “We have been able to make a deal after which [Universal] made a suggestion that we couldn’t probably compete with,” he says. “You’d have to be a firm of that measurement to soak up the worth they paid.” It was, he says, a lot increased than the £225m reported at the time. “I might love the Bob Dylan catalogue but it surely wasn’t the proper deal for us.”

Common’s large swing for Dylan – utilizing cash that might have been spent on growing new artists – is a signal of Mercuriadis’s Richter-scale influence on the music enterprise. “The entire enterprise is operating scared,” says Ted Gioia, a music historian with a enterprise background. “In the present atmosphere, proudly owning the rights to previous, confirmed songs is considered as the final protected funding in music.”

Chic’s Nile Rodgers
Stylish’s Nile Rodgers is on the board of Hipgnosis. {Photograph}: Alexandre Schneider/Getty Pictures

Mercuriadis has even greater plans. He needs to rewrite the music trade’s decades-old economic equation, which signifies that a recording earns round 5 instances greater than a composition. This ambition combines self-interest (Hipgnosis would get extra money) with a sense of justice (so would all songwriters throughout the board). It makes him a headache for the large three report labels (Sony Music Leisure, Common Music Group, Warner Music Group) and their publishing arms (Sony Music Publishing, Common Music Group Publishing and Warner Chappell Music). I ask him if he has made enemies.

“None of that is private,” he says. “The individuals who work at Common, Warner and Sony are nice individuals who love music. It’s not them that I have a downside with; it’s the paradigms that have existed for 75 years.” He laughs. “Behind my again, I’m positive they’ve obtained a image of me on a dartboard. And there’s a lot of brow to throw darts at.”

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When Hipgnosis purchased a 50% share of Neil Younger’s catalogue, it acquired half of the first album that Mercuriadis ever cherished: 1972’s Harvest. Like Younger, Mercuriadis is a product of small-town Canada. In his case, the cities have been very small certainly.

He was born on 2 October 1963. His father was a former skilled footballer in Greece who moved to Schefferville, an remoted mining city in northern Quebec, to work in the iron-ore trade and begin a household. When Mercuriadis was 5, his household moved to the equally tiny Middleton, Nova Scotia, the place they opened a diner. Mercuriadis would assist out behind the until, chatting to highschool college students as they pumped cash into the jukebox. “Songs turned your folks as a result of there are solely so many issues that you would be able to expertise in these little or no cities,” he says. “My first expertise of empathy was listening to Elvis sing In The Ghetto on the jukebox.” As he started accumulating albums, he turned entranced by the far-out album sleeves of Pink Floyd and Led Zeppelin. The designers were called Hipgnosis, which means “hip information”. (A lot later, Mercuriadis managed co-founder Storm Thorgerson, requested him for permission to make use of the identify, and commissioned him to design the fund’s brand.)

As a teenager, Mercuriadis did what small-town youngsters are likely to do – drink an excessive amount of, take medication, get into hassle – till his finest pal died in a automobile crash. “That had a large impact on me. That was the starting of me going, ‘OK, I’ve obtained to get out of right here.’” Devouring rock biographies and music magazines, Mercuriadis knew he lacked the musical expertise to be the subsequent Neil Younger, however thought he might emulate his legendary supervisor, Elliot Roberts. “I can’t play that instrument, I can’t sing that tune, I can’t write that tune,” he says. “Duty is the solely high quality that I carry to the social gathering. I by no means let anybody down.”

After his household relocated to Halifax, Nova Scotia, Mercuriadis began writing letters to Simon Draper, the co-founder and A&R visionary of Virgin Data, whose signings included Mike Oldfield, the Human League and Tradition Membership. “I really like this, I hate that, Virgin’s the most artist-friendly label in the world” is Mercuriadis’s abstract. Ultimately, aged simply 19, he was provided a advertising and marketing job at Virgin’s Toronto workplace. “I keep in mind him as a actual fanatic, a complete music fanatic, and he’s stayed that method,” says Jeremy Lascelles, who ran Virgin’s A&R operation in London. “He has an unimaginable, encyclopaedic information of music and a big report assortment. When [we both] lived in west London, I used to see him in Tough Commerce, buying 40 information.”

At Virgin, Mercuriadis helped to develop the cult Canadian singer-songwriter Mary Margaret O’Hara and to launch Easy Minds in North America. “It was his vitality and dedication that noticed us go from gold to multi-platinum in Canada, after which obtain comparable in the States,” says Easy Minds frontman Jim Kerr. “He was nice to hang around with. I recall him securing the finest seats for us all to go see a Springsteen present. I had the impression that, for him, working with music was some large, thrilling journey.”

Al Green
Hipgnosis makes cash from classics like Al Inexperienced’s Let’s Keep Collectively. {Photograph}: Tim Mosenfelder/WireImage

In 1986, Mercuriadis moved to London to work for Sanctuary, the administration firm and, later, report label based by Iron Maiden’s managers Andy Taylor and Rod Smallwood, and stayed there for the subsequent 21 years. “He was like three individuals rolled into one,” Smallwood remembers. “He knew all the music, he was up on the information and gossip in the enterprise, and he had his administration day job. Being a teetotaller in all probability helped. That was uncommon in the enterprise at the moment.” When Mercuriadis married in 1989, his finest man was Iron Maiden’s Bruce Dickinson. His three daughters all work for Hipgnosis whereas his son, a Brit faculty graduate, is “the just one in the household who has musical expertise”.

In 2000, Mercuriadis moved to New York to run Sanctuary Data’ North American operation. He helped to relaunch the Tough Commerce label, propelled by the Strokes and the Libertines, whereas his administration roster included Elton John and Beyoncé. He had a specific expertise for working with artists who have been infamously arduous to deal with, resembling Axl Rose and Lou Reed. “His administration type was very a lot to get into the head of the artists and attempt to perceive what they wished to attain,” says Taylor. “He has a bond with artistic individuals.”

Mercuriadis jokingly calls himself a “horse whisperer”. “I take heed to the artist to seek out out what’s essential to them, after which I attempt to make that occur,” he says. “The reality is, success isn’t tough whenever you’re proficient. What’s tough is having the success that you really want, and meaning you have to be incorruptible.”

When Mercuriadis turned CEO in 2004, Sanctuary was the UK’s largest unbiased label in addition to the world’s largest administration firm and largest unbiased holder of tune catalogues – however then all of it fell aside, and quick. After a interval of fast enlargement, Sanctuary was hit particularly arduous by free filesharing providers resembling Napster and collapsing album gross sales that plunged the entire trade into an existential disaster. Nile Rodgers remembers feeling anxious for Sanctuary when he visited the label’s extravagant new places of work. “It was actual Hollywood. I used to be like, ‘Woah, what occurred?’ I knew that was the starting of the finish.”

A painful interval of downsizing and refinancing wasn’t sufficient to avoid wasting Sanctuary, which went to Common Music Group for a fire-sale worth of £44.5m in 2007. In the course of, Mercuriadis misplaced most of his administration purchasers. At 44, after greater than twenty years of unbroken success, he was poleaxed by his first main reversal of fortune.

“I withdrew,” he says. “I used to be nonetheless managing individuals like Morrissey and Diane Warren, however I knew there was one thing lacking. I’d constructed one thing with my companions that was finest in school and to me all of it felt like a failure. After 21 years, I had nothing to point out for it.” He rubs his cranium. “I by no means went for a analysis, I’ve by no means taken remedy, however if you happen to requested my spouse, she’d in all probability say that I used to be depressed.”

Trying again, he thinks that he misplaced self-discipline and focus, and vowed that may by no means occur once more. “The ego, as everybody discovers in some unspecified time in the future of their life, is a horrible factor.”


Hipgnosis flowed from the merging of two distinct concepts throughout Mercuriadis’s fallow decade. First, he realised in the early days of Spotify that streaming would save the music trade by activating a huge variety of passive listeners: individuals who had by no means purchased an album would fortunately pay £120 a yr for a Spotify subscription. “Music has gone from being a luxurious buy to being a utility buy,” he says. Not solely would streaming increase the general income pool; its granular information would quantify the worth of each tune.

At the similar time, Mercuriadis believed that songwriters deserved a higher deal. Out of each pound spent on streaming, round 58p goes to artists and report labels for the recordings, whereas solely 12p goes to songwriters and publishers for the songs. This inequity, enshrined in the trade for many years, was being highlighted by the rising significance {of professional} songwriters. The final Billboard No 1 album to not function a single further songwriting credit score was Bob Dylan’s Tempest, in 2014; Beyoncé’s Lemonade, against this, featured nearly 40. “Songwriters are delivering the most essential part, but getting the smallest cheque,” Mercuriadis says.

Annie Lenox of Eurythmics
Mercuriadis says he turned down a seven-figure supply from McDonald’s to make use of the Eurythmics’ Candy Goals (Are Made Of This) in an advert. {Photograph}: Getty Pictures

All people is aware of that is unfair, however there’s little incentive to rebalance the equation, as a result of the three main publishers are owned by the similar individuals as the large three report companies. “I wished to alter the system, however I realised that I didn’t matter as a person,” Mercuriadis says. “I’d handle some nice purchasers, I’d have cash in the financial institution, however I might nonetheless be swatted like a fly. I recognised that I would wish leverage if I used to be going to have any influence.”

Hipgnosis offers him that leverage by rising the revenue and bargaining energy of songwriters. Mercuriadis says that tune administration is partly a query of manpower: a staffer at a writer would possibly deal with 20,000 songs, whereas a Hipgnosis worker shall be answerable for not more than 2,000, so that every one will get critical consideration.

“The quantity and the high quality of placements has gone up,” says Nile Rodgers, whose 1979 hit We Are Household, which he co-wrote and produced for Sister Sledge, lately featured in the Tremendous Bowl trailer for Eddie Murphy’s Coming 2 America. “Thus far, everyone appears joyful. I haven’t encountered individuals who have stated, ‘I’m sorry I did this.’”

Not so way back, it was taboo to promote the rights to your songs. “The primary rule in music at all times was: by no means promote your publishing,” says Mark Ronson. “However Merck has upended that total method of thought.” The monetary panorama of music has modified, too. Artists who toured more durable as a way to offset losses from falling album gross sales now discover themselves caught at dwelling as a result of Covid-19. “In case you are a pop star dwelling a lavish way of life, your alternate options are stark: both downscale or promote out,” says Ted Gioia. “Guess which one they select?” Mercuriadis concedes that the pandemic has made older artists particularly extra anxious to promote. “Lots of them are at a level of their life when they might by no means return on tour once more and are dotting the Is and crossing the Ts on their property planning.”

When songwriters promote to Hipgnosis, they give up their authorized proper to veto placements or “syncs”, so Mercuriadis has to persuade them that he shall be a righteous custodian of their life’s work. He argues that dealing with songs with care isn’t simply morally proper; it’s good enterprise. “I do know that a large a part of the worth of Neil Younger songs is the method that Neil has carried out himself. You’ve obtained to guard that worth.” In his 1988 tune This Note’s for You, Younger boasted: Ain’t singin’ for Pepsi/ Ain’t singin’ for Coke/ I don’t sing for no person.”

Mercuriadis tells me that he turned down a seven-figure supply from McDonald’s for Sweet Dreams (Are Made Of This) by Eurythmics, which is one in every of the most streamed songs from 1983. “What’s a nice option to kill off what’s particular about that tune? Put it in a McDonald’s business.” LadBaby’s naff Journey parody was a uncommon exception. “If I’m trustworthy, I wouldn’t usually have accredited it as a result of I don’t like the concept of treating songs that method,” he says, however provides that it was for charity.

Fleetwood Mac
Hipgnosis owns rights to Fleetwood Mac’s Go Your Personal Manner. {Photograph}: Michael Ochs/Getty Pictures

“Hipgnosis is run by a actual music particular person initially,” says the writer-producer Tim “Timbaland” Mosley, whose greatest hits embrace Justin Timberlake’s SexyBack and Nelly Furtado’s Promiscuous. “Greater than cash, that was the key think about my choice to do my enterprise with them.” Fleetwood Mac’s Lindsey Buckingham, whose Go Your Own Way is one in every of the most streamed songs from 1976, has a comparable line: “I’m assured that my physique of labor shall be curated with nice coronary heart and perception.”

Some observers, nevertheless, assume that the measurement of Mercuriadis’s cheques is extra decisive than his superfandom. Other than The-Dream, who was proud to publicise his £16.6m payout, most Hipgnosis purchasers bury their figures underneath NDAs. However the offers are believed to be between 10 to twenty instances bigger than a catalogue’s annual revenue. Neil Young’s payout has been estimated at £110m.

“It’s very, very aggressive, and Merck’s beating everybody palms down – as a result of he’s paying extra,” says one music trade veteran on situation of anonymity. “While you’re promoting your home, do you promote to the particular person you actually like, who respects the decor, or do you promote it to somebody who’s providing extra money?”

Mercuriadis, predictably, denies this. He attributes complaints to bitter grapes from rival funds who have misplaced out to Hipgnosis. “What are you going to say to buyers? You’re not going to say he has a higher proposition. You’re going to say he’s paying an excessive amount of.” (That is, in fact, his personal clarification for why he misplaced Bob Dylan.) Removed from overpaying, he says, Hipgnosis is snapping up bargains earlier than progress in streaming subscriptions and new providers that rely on licensing music, from TikTok to Peloton, push the worth even increased. “There’s a candy spot,” he says.

The present tempo of acquisitions is definitely unsustainable. Just about each songwriter or property that desires to promote a catalogue is in the means of doing so, which suggests the large offers will dry up sooner reasonably than later. Mercuriadis offers it two years. “If I obtain all the pieces I wish to obtain, you received’t do not forget that Hipgnosis had this extremely acquisitive streak. What you’ll keep in mind is that Hipgnosis was the firm that established tune administration.”

It’s going to take many extra years earlier than we’ll know whether or not Mercuriadis’s guess on the immortality of classic songs has paid off. He’s bullish (“You and I do know that Neil Younger songs and Nile Rodgers songs are going nowhere”), however Gioia is sceptical. “Songs are a depleting asset. Ultimately the copyright expires and the cashflows cease.” That normally means 70 years after the creator’s dying, however, provides Gioia, “earlier than that occurs, the public’s altering tastes destroy a lot of the monetary worth in previous music. I do know music followers consider their favorite songs won’t ever fade away, however the actuality is that even a famous person artist has a restricted shelf life.”

For now, although, Hipgnosis has the numbers on its facet, and you don’t have to grasp its work to have encountered it. Whereas penning this piece, I watched the episode of The Crown wherein Emma Corrin’s Princess Diana ballet dances to the 1983 Eurythmics tune Love Is A Stranger. It really works as a period-accurate reflection of Diana’s isolation, introduces a new era to the tune, and makes older viewers (together with me) wish to play it for the first time in years. That, Mercuriadis says as proudly as if he had written it himself, is a Hipgnosis tune. 

Cash makers: 10 of the hottest tracks in the Hipgnosis catalogue

Dua Lipa performing on stage
Dua Lipa’s New Guidelines has 1.47bn streams. {Photograph}: Getty Pictures

Ed Sheeran Form Of You (2.72bn streams on Spotify)
Dua Lipa New Guidelines (1.47bn)
Mark Ronson Uptown Funk ft Bruno Mars (1.26bn)
Journey Don’t Cease Believin’ (995m)
Mariah Carey All I Need For Christmas Is You (913m)
Bon Jovi Livin’ On A Prayer (695m)
Eurythmics Candy Goals (Are Made Of This) (650m)
Girl Gaga Dangerous Romance (509m)
Fleetwood Mac Go Your Personal Manner (486m)
Al Inexperienced Let’s Keep Collectively (282m)

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