Hipgnosis Songs Fund founder Merck Mercuriadis doesn’t love the phrase “music publisher” – his business, he says, sees itself in the business of “song management”.
Either way, Hipgnosis has just become a “proper” music publisher in the traditional sense, with the acquisition of Los Angeles-based Big Deal Music Group for an undisclosed sum.
As well as bringing 4,400 copyrights into Hipgnosis – including cuts on hits by the likes of Shawn Mendes, Panic! At The Disco and One Direction – the deal also sees Hipgnosis acquire Big Deal Music Group’s US-based publishing admin business, Words & Music.
Hipgnosis believes that putting its catalog through the latter operation in the US will bring a host of benefits to its existing catalog (and investors), including:
- Greater control of, and reduced, third party administration costs;
- Faster collection of royalty income;
- Creation of a direct relationship with Digital Service Providers (such as Spotify, Apple Music, Tencent Music, etc.) allowing Hipgnosis to leverage its portfolio and obtain better rates;
- Receiving credit for the Hipgnosis portfolio’s market share in royalty settlements (e.g. Peloton / Facebook) and “black box income”. Hipgnosis’ share of settlements is currently bundled into third-party administrators’ market shares.
In addition, Hipgnosis says the buyout means it will be signing – and advancing money to – songwriters in connection to the creation of future song rights for the first time.
Hipgnosis’ board believes that “whilst this [frontline A&R activity] will be a small part of Hipgnosis’ overall business, it is highly complementary of the company’s core activity of acquiring existing copyrights and will deliver attractive shareholder returns”.
The entirety of Big Deal Music, including Words & Music, will be rebranded to Hipgnosis Songs Group effective immediately.
Founded in 2012 by the highly regarded trio of Kenny MacPherson, Jamie Cerreta and Dave Ayers, Big Deal Music Group has built a songwriter roster that includes Teddy Geiger, Julian Bunetta, John Ryan, Joe London, Kamasi Washington, Sharon Van Etten, Sylvan Esso, Jake Sinclair, Dan Wilson, St Vincent and My Morning Jacket.
Big Deal founder Kenny MacPherson will now act as CEO of Hipgnosis Songs Group and will report directly to Hipgnosis Songs’ founder and CEO Merck Mercuriadis.
MacPherson is joined by Co-Presidents Casey Robison and Jamie Cerreta and Executive Vice President Dave Ayers (New York) as well as Senior Vice President Pete Robinson (Nashville) all of whom have signed new five-year contracts.
Big Deal Music owns copyright interests in global hit songs including Shawn Mendes’ Stitches and Treat You Better, One Direction’s Story of My Life, Panic at the Disco’s High Hopes, Niall Horan’s Slow Hands and Thomas Rhett’s Die a Happy Man.
“With this acquisition, and following the appointment of Ted Cockle and Amy Thomson earlier this week, the scale and quality of people working with me to drive shareholder returns reaches new heights.”
Merck Mercuriadis, Hipgnosis Songs Fund
The consideration for the acquisition is to be funded from the proceeds of Hipgnosis’ equity fundraise in July 2020 (in which it raised ≈$250m) and through the issue of 17,609,304 new Ordinary Shares issued at a price of 120.65p per Ordinary Share (raising an additional ≈$27m).
Merck Mercuriadis said: “Over the last two years it has been my privilege to assemble and work with a world class team of individuals of the highest calibre.
“With this acquisition, and following the appointment of Ted Cockle and Amy Thomson earlier this week, the scale and quality of people working with me to drive shareholder returns reaches new heights and sets our company on the path for the next chapter of its growth.
“This is a best in class team and we now have the resource to be on top of every song’s destiny all day every day and I’m delighted to welcome Kenny, Casey, Jamie, Dave, Pete and the other 30 plus new team members into the Hipgnosis Family.”
In addition to in-house administration for Big Deal Music’s catalogue, Words & Music is responsible for US administration for several significant third party catalogues including Beggars Music, Mushroom Music Publishing, Gary Numan, Notable Music, Native Tongue, Goo Goo Dolls, Hottie & The Blowfish and Underworld.
The acquisition includes Big Deal’s ongoing joint ventures with The Big Family – with Julian Bunetta, John Ryan and Damon Bunetta; Nice Life – with Ricky Reed, Larry Wade and Brad Haering; Mad Decent – with Diplo and Kevin Kusatsu; and the And The Writer Is podcast – with Ross Golan, Joe London and Megahouse Music.
Big Deal Music’s catalog includes songs achieving 5 Grammy Awards, 126 NMPA, BMI and ASCAP awards, and 27 Recording Industry Association of America (RIAA) Certifications.
Hipgnosis Songs Fund Limited was represented in the acquisition by RBC Capital Markets, LLC lead by Kent Savagian and Agnes Kacicki, Nigel Farr and Adam Hickey at Herbert Smith Freehills, Tim Mandelbaum and Loren Danzis at Fox Rothschilds, Ogier and Deloitte.
Big Deal Music Group was represented in the transaction by Shot Tower Capital led by David Dunn and Rob Law; Wallace E. Christner and Rebecca J. Newman at Venable LLP and Elliot Groffman and Paul Gutman at Carroll Guido Groffman Cohen Bar & Karalian, LLP.
Merck Mercuriadis further commented: “Big Deal Music has become one of the most important boutique song companies in the world over the last eight years. They identify exceptional songwriters at a very early stage, make a modest capital investment and then work hard to put them in rooms with the best established songwriters and artists in the world resulting in placements, hits and exceptional returns.
“Inherent within this endeavor is a proven team of 35 people operating at the height of their powers on what I call Song Creation, Song Administration and Song Management who are now going to be working hard on the Hipgnosis Songs Catalogue 24/7 delivering efficiencies, expertise and opportunities in conjunction with our global team.”
Merck Mercuriadis, Hipgnosis
“This has resulted in a very attractive catalogue that complements our existing acquisitions perfectly. Inherent within that endeavor is a proven team of 35 people operating at the height of their powers on what I call Song Creation, Song Administration and Song Management who are now going to be working hard on the Hipgnosis Songs Catalogue 24/7 delivering efficiencies, expertise and opportunities in conjunction with our global team. It’s no surprise that we have found this perfect complement with Kenny MacPherson who has been one of the finest executives and advocates for the songwriting community for more than 35 years. He is an exceptional addition to our global team as are Casey Robison, Jamie Cerreta, Dave Ayers and Pete Robinson.
“They are a team with real chemistry that has been firing on all cylinders for more than a decade. I have always been clear that I believe we have an important responsibility with regard to our culturally important songs and the gold standard songwriters that have entrusted them to us. We shall now take what is the broken traditional music publishing model and replace it with our concept of Song Management where we nurture, love and get the most out of our songs by putting the most into them. Kenny and his team are enthusiastic about our Song Management philosophy and our mutual passion and expertise is a perfect storm when combined with our evergreen catalogue.
“This is an important move in the evolution of Hipgnosis Songs in our ability to deliver on the promise of Song Management not only globally but now in the heart of the world’s biggest music market. I’m very excited about not only the results but also the transformation in the Song community that will be delivered by Kenny, Casey, Jamie, Dave and Pete along with Ted Cockle and Amy Thomson. This is a truly special team.”
“What Hipgnosis has assembled in such a short time is truly remarkable – a catalogue of over 13,000 compositions from some of the most important creators in the history of music. My team and I look forward to bringing all of our experience to bear to unlock more value in these catalogues.”
Kenny MacPherson, said: “Collectively my partners and I have spent our careers identifying and nurturing some of the most iconic songwriters in contemporary music and creating value for our investors. Over the last eight years at Big Deal Music my partners and I built a meaningful cultural legacy by assembling an incredible group of artists and label partners and world class songwriters.
“We look forward to bringing those creators and their enormous talent with us as we join Merck and his team at Hipgnosis. What Hipgnosis has assembled in such a short time is truly remarkable – a catalogue of over 13,000 compositions from some of the most important creators in the history of music. My team and I look forward to bringing all of our experience to bear to unlock more value in these catalogues and continue to build on the amazing work that Merck and his team have already done at Hipgnosis.”Music Business Worldwide