Hipgnosis, which owns the rights to 65,000 songs by artists from Neil Young to Beyoncé, has increased its dividend as it expects the pandemic-fueled streaming boom to continue as listening increases on the services digital devices such as TikTok and Peloton.
The London-listed company, which makes money every time one of the songs it owns the rights to is played, nearly doubled revenues from $ 82 million to $ 160 million over the course of the year. year until the end of March.
This was fueled by a $ 1bn (£ 722m) spending spree on evergreen hits during the pandemic, with Hipgnosis having purchased the rights to 84 song catalogs last year, including those of artists such as Shakira and Debbie Harry.
The company increased its pre-tax year-over-year operating profit from $ 41.5 million to $ 44.5 million and raised its annual dividend target from 5% to 5.25 per year because she expects the streaming boom to continue.
Merck Mecuriadis, founder and CEO of Hipgnosis, said the pandemic has accelerated the change in listening to streaming, with 443 million users of subscription services such as Spotify, Apple Music and Amazon Music. By the end of the decade, that number is expected to reach 2 billion.
“It turned music from a discretionary or luxury purchase into a utility because of the convenience and access that streaming offers,” he said. “Going forward, this accelerated streaming will be enhanced as revenue from TikTok, Peloton, Triller, Roblox and other emerging digital platforms begins to be paid. We are entering an era where now, for the first time, almost all music consumption is paid for. “
Hipgnosis said streaming revenue grew 18.4% in the second half of its fiscal year, compared to the first six months. The company’s portfolio of 138 song catalogs is valued at $ 2.2 billion, which is 10% more – about $ 265.6 million – than it cost to acquire.
Hipgnosis is increasingly focusing on classic hits, with the proportion of songs over 10 years old making up 60% of its total portfolio, up from 32.5% at the end of March last year. Two years ago, this proportion was only 10%. Just under half of Hipgnosis’s portfolio (46%) is pop music, with rock the second-largest genre at 27%.
Mercuriadis said the wave of offers – in December Bob Dylan sold his entire catalog of hits, including Blowin ‘in the Wind to Universal Music for more than $ 300 million – was in part driven by musicians. older looking to cash in towards the end of their careers.
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“Great designers have all matured to a place where they start from natural causes, so a lot of them dot the Is and cross the Ts of their estate planning and want to make sure not only their families are okay. cared for but their songs are also well cared for, “Mercuriadis said in an interview on BBC Radio 4’s Today program.” These songs are available at attractive prices. We believe the net asset value of these songs will triple by the end of the decade. “
The streaming boom is benefiting companies in the music industry. Warner Music, the third largest music company in the world, home to artists including Ed Sheeran, went public last June and its share price has risen by a quarter in the past 12 months to give it a market value of nearly $ 19 billion. Its owner, Len Blavatnik, paid $ 3.3 billion for the company in 2011.
Vivendi – owner of the world’s largest music company, Universal Music, which houses the artists and rights from Lady Gaga to the Beatles – is expected to go public in Amsterdam in September with a valuation of more than 35 billion euros (30 billion pounds).
