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.”

Recommended

Why investment advice could be about to get a lot cheaper
Investment strategy

Why investment advice could be about to get a lot cheaper

Vanguard, the world’s second-biggest asset manager, is launching its own cut-price financial advice service. It’s something the industry badly needs, …
20 Apr 2021
Moderna’s Stéphane Bancel: the maths nerd who struck vaccine gold
People

Moderna’s Stéphane Bancel: the maths nerd who struck vaccine gold

A decade ago, Stéphane Bancel took a gamble and joined a fledgling start-up working on an unproven new technology. The gamble paid off with the rise o…
17 Apr 2021
Lab-grown meat: how “moo’s law” will drive innovation
Soft commodities

Lab-grown meat: how “moo’s law” will drive innovation

Jim Mellon and Anthony Chow, co-founders of Aim-listed Agronomics, explain why they believe that “cellular agriculture” will benefit from massive long…
16 Apr 2021
Four investment trusts for income investors to buy now
Investment trusts

Four investment trusts for income investors to buy now

Some high-yielding listed lending funds have come through the crisis with flying colours. David Stevenson picks four of the best.
12 Apr 2021

Most Popular

China owns a lot more gold than it’s letting on – and here’s why
Gold

China owns a lot more gold than it’s letting on – and here’s why

In a world awash with money-printing, a currency backed by gold would have great credibility. And China – with designs on the yuan becoming the world’…
21 Apr 2021
“Joke” cryptocurrency dogecoin goes to the moon. What’s going on?
Bitcoin

“Joke” cryptocurrency dogecoin goes to the moon. What’s going on?

Dogecoin – a cryptocurrency created as a joke – has risen by more than 9,000% this year alone. Saloni Sardana looks at how something that began as an …
19 Apr 2021
House prices in the UK are still surging – here’s why it’ll probably continue
Property

House prices in the UK are still surging – here’s why it’ll probably continue

The latest UK house price data shows no letup in the country’s booming property market, with the biggest yearly rise since 2014. And there’s no end in…
22 Apr 2021