I have to wonder though, why are these musicians selling the rights to their music. Isn’t that akin to cashing in on your pension early?
I think in a lot of case it’s record companies rather than musicians that own the rights, and that are selling them
Could be that they do not want to be involved in hassle of managing the rights and ensuring that they are receiving the money owed to them
Maybe as they are getting older they are looking to cash out?
I also read somewhere it can help with reducing the taxes on their estate
B2B music streaming provides higher royalties for artists. Could this have a positive impact on Hipgnosis’ earnings in the long term?
Edit - Meanwhile:
Round Hill trust launch creates Hipgnosis music royalties rival - Citywire
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Publishing rights in the news again - Vine appear to be an investment management company but not publicallly traded (yet maybe?)
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Big acquisition announced today - little impact on the share price
Latest quarterly dividend of 1.3125 pence per Ordinary Share will be payable to Shareholders on the register as at 06 November 2020 with an associated ex-dividend date of 05 November 2020 and a payment date of 30 November 2020.
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I’m not going to comment on Hip solely as I have potentially sensitive information on it, but to me its interesting that deals are heating up in this industry. A lot of the investment is being based on greater future multiples and earnings largely thanks to recent piracy issues and streaming respectively but will that actually hold long-term? Are hundreds of millions of people still going to be paying 9.99 a month to stream in 2030? I don’t know - what do people think?
I hope they are paying more than 9.99 a month in 2030 - there needs to be a redistribution to ensure a more equitable distribution to the artists.
I believe people will pay for the convenience of a good app and maybe more for good hi-res product.
However when added to the other services (Sky, BT Sport, Netflix, Amazon Prime/Kindle, Readly to name a few I currently use and Freetrade Plus of course!) maybe something will have to give in time.
Using Spotify to find new music and follow up after listening to new artists and bands from some of the live streams. Already have a lot on the ‘to watch live’ list for whatever post C19 world we have.
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There’s something about turning an artform like music into an investable bundle that makes me very itchy. Then again I suppose a lot of modern music, and bands, are already products rather than ‘art’ so hey-ho!
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Would investments like Hipgnosis be ultimately classed as ‘defensive’ since people will listen to /download/stream music regardless of what’s happening in the economy/stockmarkets?
And Mariah’s Christmas tune (whether you like it or not) is a guaranteed play every year around the world.
I would say probably not yet, but possibly in the future if they end up with huge reliable recurring revenues from royalties
It’s going to be interesting to see if they start trying to bully the streaming platforms. That said, music royalties are so obscenely complicated that perhaps they don’t own the rights to revenue from streaming? Maybe that’s split off to someone else.
I think it will be a foolish player that breaks from the 9.99 a month streaming model. I’d say it’s just at the sweet spot of being low enough for people whilst not being so high as to encourage them to return to the days of piracy.
My opinion would be that music rights are quite diversified defensive income streams in the present, especially with catalogues this big. Whether it stays that way is anyone’s guess. I’d say youre right @CashCow it does seem like the industry is staying away from the fragmentation of VOD streaming which is positive.
This is a useful little chart from Hipgnosis’ last AR showing the main sources of royalties. You also have two main rights in publishing (the composition itself) and master (the recording, usually owned by the label) - I’m not sure what the exact split Hip has right now but I think most of the catalogues are from songwriters and Merck has said he wants to increase the share songwriters get.
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They can’t each set there own prices like video services because they both essentially offer exactly the same catalog at this stage. Their products aren’t sufficiently different to be able to set different prices. Most people aren’t paying 9.99 - I think Spotify have started price rises in the family plans in certain markets
Also ‘contemplating’ an equity raise of an additional £1 Billion for further catalogue acquisition in another RNS this morning
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At least someone’s written a bear case, if only there were more.
I would say though that his comparison to Neil Woodford is a bit strange. Song funds aren’t trying to pick n flick startups, they’re investing in rights that will hold favourable returns in a low interest rate environment with legislative reform and the growing recurring nature of streaming supporting their value as an asset.
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The management fees are a little eyewatering but assume that is paid for his connections and ability to get the people/bands to sign up.
Do not profess to understand the NAV issues amd the valuation but the company that Hipgnosis used to carry this out are discussed in the article
Not sure what impact the recent Bob Dylan and Stevie Nicks catalogue valuations will have; maybe increase expectations of others. Can the likes of SONG & RHM can compete with the deep pockets of the private investment funds and major labels who also invest in this area.
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