Merck Mercuriadis: the mogul shaking up the music business
Merck Mercuriadis has been spending millions snapping up the rights to hit songs and turning them into an income stream for investors. Can the good times last?
Few have shaken-up the music industry quite as effectively as Merck Mercuriadis, says The Guardian. In less than three years, the 57-year-old Canadian behind the Hipgnosis Songs Fund has become “the most disruptive force” in the business. London-listed Hipgnosis has been at the vanguard of the music rights gold rush – raising money from investors to acquire the intellectual property to popular songs.
After a barnstorming year of acquisitions in 2020, Mercuriadis’s portfolio of “evergreen” hits now stands at around 61,000 – encompassing artists from Bon Jovi to Barry Manilow. Investors have bought into the idea, says The Times, and a “flood of capital is heading for song funds”. In December, Hipgnosis – which has a market cap of around £1.26bn – announced plans to raise a further £1bn to spend on its Songs Fund.
Predictable income in a changing world
A classic song, says Mecuriadis, is a source of predictable income in an unpredictable world – a “more reliable” asset class than oil or gold because demand is unaffected by economic and political upheavals. And in the streaming economy, it keeps on giving – particularly when the value is maximised via “synching” arrangements with films and TV shows and so on.
In a fast-growing market, what sets the former Elton John manager apart from a growing army of competitors is his “bona fides” as a veteran A&R man, says The Guardian. He’s also a music nut. His father was a former professional footballer from Greece who moved to Northern Quebec to work in the iron-ore industry – later relocating to Nova Scotia, where the family opened a diner. Mercuriadis, born in 1963, spent his formative years helping out there while the jukebox played.
He landed his first job in the marketing department of Virgin Records in Toronto at 19 after pestering the label with letters, says the Evening Standard. Quickly emerging as an energetic executive with an “encyclopedic knowledge of music”, Mercuriadis honed a reputation that has stuck as “a champion of the artist”. In 1986, he moved to London to work for Sanctuary, the label founded by Iron Maiden’s managers, and stayed for the next 21 years, before moving to New York in 2000 where he helped relaunch the Rough Trade label. He teamed up with a musician – the disco pioneer and producer Nile Rodgers – to launch Hipgnosis in 2018.
A paradigm shift
Unlike the stereotypical music mogul, Mercuriadis has spartan tastes, says The Guardian. “The only material thing I really care about is vinyl…and Arsenal football club,” says the buff, teetotal vegan. He may look like a bouncer, but, according to Mark Ronson, Mercuriadis is “the smartest guy in the room”. He’s certainly prepared to take on all comers when it comes to arguing the merits of a model that many believe could end in tears, says Music Business Worldwide. Hipgnosis’s rapid growth has drawn considerable “behind-the-curtain industry sniping”.
There’s good reason to be sceptical about Hipgnosis’s seductive tune, says The Times. The Song Fund’s “annuity-type returns” look fabulously appealing, but songs “are extremely difficult to value” and Hipgnosis’ valuations could prove “ludicrously optimistic”. Mercuriadis is defiant. “I think we will see 40-times multiples in this business before the next five years are over,” he told Music Business. “The paradigm is already shifting”; that “scares some people.”