As reported last month, the UK-listed firm’s previously published preliminary annual financial filing revealed that its catalog has been independently valued at $2.2 billion.
In the company’s annual report published today (July 5), Hipgnosis repeated its headline revenue numbers from its preliminary results, which showed that its net revenue increased by 66% in the year ended March 31, 2021, to $138.4 million, up on the prior year’s net revenue figure of $83.3m.
Hipgnosis‘s EBITDA in the 12 months ending March 31, 2021, increased by 49.8% to $106.7m (up on the $71.2m EBITDA published the prior year.)
Elsewhere, Hipgnosis provided an update on the total number of songs in its portfolio, confirming today that it contained 64,098 songs across 138 catalogs as at March 31, 2021, an increase of 50,807 songs and 84 catalogs respectively, year-over-year.
Those 84 new catalogs acquired by the company in the 12 months to end of March 2021 were bought for an aggregate purchase price of $1.089 billion, the company said today.
The company’s total spend on song and catalog acquisitions since its IPO in 2018 is approximately $1.94bn.
Hipgnosis’s catalog acquisitions during the 12 months in question include Neil Young, Lindsey Buckingham / Fleetwood Mac, Steve Winwood, Blondie’s Debbie Harry and Chris Stein, and The Pretenders’ Chrissie Hynde.
“These are Catalogues that I believe are going to significantly appreciate in consumption, revenue and value for a long time to come.”
Merck Mercuriadis, Hipgnosis
Commenting on this series of acquisitions during the year, Hipgnosis founder Merck Mercuriadis writes in the introduction for the company’s Annual Report published today (July 5) that, “These are Catalogues that I believe are going to significantly appreciate in consumption, revenue and value for a long time to come, not only from the growth in streaming and the narrowing of the discount rate as a result of the certainty of earnings that it affords, but also from our Song Management and the efficiencies we bring to collections”.
He added: “Having now grown Hipgnosis to a $1.8 billion market cap FTSE 250 company and invested almost $2 billion in iconic songs that are a part of the fabric of our society, which have just been independently valued at $2.2 billion, it is worth re-stating our ambitions when we listed three years ago, which were to: 1. Establish Songs as an asset class; 2. Use the influence of our Fund and the great Songs in our Catalogue to be a catalyst to change where the Songwriter sits in the economic equation for the benefit of the Songwriting community and our Shareholders; and 3. To replace the broken traditional publishing model with Song Management and add value.”
MBW pored over the company’s annual report, and pulled out the following stats:
36 songs on Spotify‘s new Billions Club playlist have had involvement from Hipgnosis songwriters
Within Hipgnosis’s annual report, the company reveals that (as at June 23) it “has 36 out of the 156 Songs” in Spotify’s recently-launched Billions Club playlist, which contains all the tracks that have more than 1bn streams on the platform.
Amongst Hipgnosis’s tracks appearing on the playlist are 5SOS’s Youngblood, via Grammy-winner songwriter Andrew Watt, from whom Hipgnosis acquired 105 songs in May, and Ariana Grande’s No Tears Left To Cry via Savan Kotecha (catalog acquired by Hipgnosis in December 2019).
Lady Gaga and Bradley Cooper’s hit Shallow is also on the list, via Mark Ronson, who sold 70% of his publishing and writer’s share interest in his catalog, which comprises 315 songs, to Hipgnosis in April this year.
New Rules by Dua Lipa is also on the list. Written by Ian Kirkpatrick and Caroline Ailin, the track has now reached 1.54 billion streams on Spotify, making it the third most streamed solo track by a female artist in the platform’s history, said Hipgnosis today.
Of those 36 tracks, two have more than 2bn streams, including The Chainsmokers’ Closer (ft. Halsey) via Andrew Taggart and Ed Sheeran’s Shape Of You via Johnny McDaid. At the end of 2019, Hipgnosis bought 100% of McDaid’s interest in his catalog of songs released before April 1, 2019 – a total of 91 compositions.
Hipgnosis owns 3,738 songs that have held No.1 positions in global charts
Hipgnosis reports today that it now owns 3,738 songs that have held No.1 positions in charts around the world.
It also owns 13,968 Songs that have held Top 10 positions in global charts and 151 Grammy award-winning Songs.
Elsewhere, Hipgnosis reports that seven out of the Top 20 Best Selling Albums in the UK (based on half year UK album sales as of June 2021) have involvement from Hipgnosis’ Songwriters.
Hipgnosis’ Songwriters are also involved in four out of the “Top 5 Billboard Songs of the Decade” including, at No.1, Uptown Funk! by Mark Ronson feat. Bruno Mars (via Mark Ronson and Jeff Bhasker) and at No.3, Ed Sheeran’s Shape Of You (via Johnny McDaid).
Meanwhile, 12 out of Spotify’s Top 30 most Played Songs of all Time and 45 of the Top 200, also have involvement from Hipgnosis songwriters.
Streaming is driving Hipgnosis’s revenue growth
The company reported today that its revenues from streaming accounted for 32% ($43.65m) of its total FY2021 net revenues of $138.4 million.
Income from streams on Spotify et al increased by 18.4% across all catalogs in the six months to end of March 31 compared to the previous six-month period.
Income from Hipgnosis’s “steady state” catalogs increased by 24.3% in the six months to end of March 31, compared to the same six-month period in 2020.
Based on global streaming revenues growing 19.9% during the year, (according to IFPI) Hipgnosis says that its “steady state” catalogs are “outperforming the market growth of streaming”.
Hipgnosis also states that the “acceleration of changing consumer behaviour will lead to higher streaming earnings in future years than previously expected”.
“Music has gone from being a discretionary or luxury purchase to very much being a utility.”
Merck Mercuriadis, Hipgnosis
Writing in the introduction for the annual report, Merck Mercuriadis states that, “Music has gone from being a discretionary or luxury purchase to very much being a utility.”
He added: “This is a result of the convenience and access afforded by streaming. You can listen to everything from Bach to The Beatles and Chopin to Chic in one place, it doesn’t take up space on your phone or computer and you have access in your home, car, the office, the beach etc. for only $10 per month or $120 per year. By the time we get to the end of the decade it is predicted we will have 2 billion paid subscribers worldwide.
“Timing is everything and this is the context in which we have established Songs as an asset class. We have given our loyal investors access to some of the most extraordinarily successful and culturally important songs of all time at a point when almost all consumption is now paid for in an industry that was previously littered with piracy and illegal consumption.”Music Business Worldwide