I first heard about Hipgnosis from a pal of mine, who spent a long afternoon late last year being chased around the internet by Miley Cyrus. Specifically, her cover of Blondie’s “Heart of Glass.” He laughed it off at first, but as Miley returned for the third, fourth, and fifth go-round on YouTube’s “Next Up”—razzing him with that infamously long and sinuous tongue—he began to feel like the joke was on him. When ads for the song appeared on Facebook, Twitter, and Reddit, bemusement gave way to panic: it seemed that no matter where he fled she would follow him, “riding high on love’s true bluish light,” demanding that he subject himself to her brayed imitation of a fossilized pop standard.
My friend, whose music taste is (in his own words) “extremely Gabber-centric,” swears there was nothing in his browsing history that could account for this bizarre affliction. So what was going on? Some kind of glitch in the algorithm? Once he had regathered his wits, a little frantic googling yielded an intriguing discovery. The rights to “Heart of Glass”—as well as the other 196 songs in Blondie’s oeuvre—had just been purchased by an organization calling itself Hipgnosis Songs Fund Limited. Coincidence? Well, as Blondie told us back in 1979, accidents never happen in a perfect world.
Founded in 2018 by former Sanctuary Records executive Merck Mercuriadis and Nile Rodgers from Chic, Hipgnosis is a UK-based investment fund that treats songs as financial assets. This means raising capital to buy the rights to songs from the people who wrote them, then doing whatever it takes to increase the value of said songs for their new owners, in this case the shareholders of Hipgnosis, many of whom are some of the UK’s biggest asset management firms. Music copyright is a notoriously knotty business, but from the fund’s perspective, owning song rights allows them to do two things. First, to passively collect the royalties that accrue every time the song is digitally streamed or featured in a TV show, film, or advertisement. Second, to actively market their songs to advertisers and producers, as well as to sanction new covers and remixes by pop megastars. To Hipgnosis, these two activities form a virtuous circle. Having acquired a musical property, Hipgnosis is incentivized to squeeze it for all it’s worth: more placements mean more streams. More streams generate more royalties for Hipgnosis, thereby increasing the return yielded by its assets, boosting its share price, and making more money for its investors. This is what Mercuriadis and his colleagues call “song management.” As he puts it, “We treat every song as if it was a business in its own right.”
Hipgnosis, for all its bombastic claims of benevolent disruption, is really just a parasite feeding on a parasite.
And as of late, Hipgnosis has been on a helluva buying spree. In January, they purchased the rights to the music of Colombian pop singer Shakira, 50 percent of Neil Young’s catalogue, as well as Jimmy Iovine’s production royalties from albums by U2, Dire Straits, Tom Petty, and others. Hipgnosis holds an interest in music by Ed Sheeran, Timbaland, and Barry Manilow. They own slices of “Uptown Funk,” “Go Your Own Way,” “Super Freak,” and “Don’t Stop Believin’.” (Part-ownership is less than ideal for Hipgnosis, since it restricts their ability to arrange covers and synchs, but the fund is quite happy to passively accrue royalties when the numbers are big enough.) All told, they’ve spent over $1.67 billion to build a stash of nearly fifty-eight thousand songs, including 2,845 chart-toppers. Between April and September of last year, their net income was just over $62 million—and, for now, that figure seems set to grow.
While they may be the most ostentatious, Hipgnosis is far from the only institution currently pursuing this investment strategy. Round Hill Music, another specialist music rights holder, had its IPO last November, while another, Primary Wave, has a longstanding relationship with gargantuan global index fund BlackRock. Meanwhile, major label Universal Music Group made the largest single acquisition of recent years when it purchased the entirety of Bob Dylan’s back catalogue for a rumored $450 million in December. There are even signs that more established Wall Street players are looking to get in on the game. On January 13, the asset manager Kohlberg Kravis Roberts bought a majority stake in the music of Ryan Tedder, singer in the band OneRepublic and a writer for Adele, Beyoncé, and the Jonas Brothers.
As David Turner points out in his blog Penny Fractions, the financialized trade in music rights goes back at least as far as the 1960s, when small independent music publishers started being swallowed up by big global firms. And yet there seems to be something new in the scale and intensity with which Hipgnosis and their ilk are currently expanding their portfolios. As the incomes of working musicians become increasingly precarious, truly disturbing quantities of capital are now being funnelled into the monetization of forty-year-old hits. In a culture industry already powered by the nostalgic repackaging of retro signifiers, music funds and their investors are trying to shape a future in which every tomorrow sounds more and more like yesterday.
If you believe Merck Mercuriadis, the founding of Hipgnosis was driven by “an ulterior motive” (ulterior to the primary goal of making a shitload of cash, you understand). His mission, as he puts it, is to “empower” the artist “by improving their place in the economic equation.” Now, the notion that artists are empowered by surrendering control of their work to an investment firm may seem a little counterintuitive at first blush, but to be fair, the music industry has never exactly been known for treating its cash cows with care and dignity. Everybody knows most musicians are not well-served by the present arrangement, from exploitative record contracts to the piddling incomes offered by streaming platforms like Spotify.
Mercuriadis claims he’s here to address these injustices by offering songwriters a square deal: cash on the barrelhead with no strings attached. Hipgnosis reportedly tends to pay around sixteen times the “value” of the songs it acquires, although the details of specific transactions are not generally disclosed. Against the backdrop of a system in which even relatively successful musicians can struggle to pay the bills, Mercuriadis and co. style themselves disruptive upstarts rousting out the complacent barons of a corrupt industry. “I think publishing is a broken model,” he declared in an interview with Complex, “and, quite frankly, I should say, I want to obliterate it. I don’t want it to exist anymore.”
How far should we credit this self-presentation? Well, a quick flick through the Hipgnosis portfolio is all it takes to see precisely what kind of artist they’re interested in empowering. Now, I don’t doubt that the likes of Mark Ronson or Dave Stewart have been on the raw end of a deal or two in their time, but it’s still my bet that the “economic equation” was working out pretty okay for them before Mercuriadis and co. entered the picture. The majority of Hipgnosis’s beneficiaries are figures like this—either the writer-producers of modern megahits or legacy acts like the Eurythmics and Blondie, for whom Mercuriadis’s offer is the equivalent (and I mean this in the kindest possible way) of cashing in their pension. What exactly is so revolutionary about shoveling mountains of cash into the laps of millionaires, many of whom released their best stuff more than forty years ago?
At this point, we must remind ourselves that Hipgnosis is an investment fund: their sole job is to maximize value and minimize risk for their shareholders. And the best way to do that it is to bet on a sure thing. This means, in their own words, seeking to acquire “proven hit songs with a track record of success and cultural impact,” songs that are “culturally influential and therefore likely to be continuously played and/or covered by new recording artists.” In short, Hipgnosis is only interested in artists and songs that have attained the degree of commercial success necessary to suggest they will go on making money well into the future.
This means, of course, that their profits are entirely dependent on the operations of the very industry they are claiming to disrupt—the record companies who front the capital to finance new “hit songs,” the troupe of variously abused and exploited workers (musicians, producers, writers, roadies) who create them, and distributors like Apple or Spotify, who pipe the merchandise into the consumer’s ears. Hipgnosis, for all its bombastic claims of benevolent disruption, is really just a parasite feeding on a parasite. Its business model only makes sense because it exists downstream of the forces that actually establish the worth of its assets; its dividend is the last oozing residue of value that can be wrung out of a musical property after Sony, TikTok, and whoever else has had their way with it. A culture vulture in the most literal sense of the word, Hipgnosis feeds on the dead flesh of another’s kill.
If Hipgnosis had their way, the history of music would have ended somewhere between the death of Napster and the Spotify IPO—and in fact, who’s to say that it didn’t?
This puts them in a curious position with regard to “new music,” which they must perforce view with a combination of avarice, suspicion, and fear. Every original song that gains cultural traction drains potential listeners—and therefore revenue—away from the Hipgnosis portfolio, diluting the value of their assets. Of course, they can always seek to acquire the catalogues of up-and-coming musicians, but such purchases cannot be countenanced until the artist has achieved fame and sales sufficient to be considered a solid investment. Buying high on this year’s WU LYF might not be good for their share price in the long run. However, the real nightmare scenario for Hipgnosis would be a mass change in listening habits so profound and widespread that it renders their whole portfolio worthless overnight—something akin to the very cultural transmutations (rock and roll, punk, hip-hop) which established the cachet of their assets in the first place. In their ideal world, therefore, there are no original songs, no fresh styles or hybrid genres—nothing, in short, which might lure listeners away from the necrotic embrace of “Can’t Touch This.”
If Hipgnosis had their way, the history of music would have ended somewhere between the death of Napster and the Spotify IPO—and in fact, who’s to say that it didn’t? This was the position of critic and theorist Mark Fisher, who pinpointed the year 2005 (the release of the fifth generation, 60GB iPod) as the moment we slipped over the cultural event horizon. Popular music in the twenty-first century, he argued, has lost its ability to break with its own past. Digital storage media (and later, streaming services) have rendered culture non-biodegradable—the sounds of bygone decades are now an imperishable presence in our lives, just like the microplastic particles scientists are now finding everywhere from Alpine snowcaps to the tissues of our internal organs.
Meanwhile, forty-odd years of neoliberalism have wrecked our ability to imagine a future distinguishable from what has come before. Austerity and corporate globalization have erased the social niches in which radical cultural movements once germinated, while portents of ecological disaster and sociopolitical collapse smoulder on the immediate horizon. No wonder, then, that our cultural economy should be more disposed to recycle the dynamism of its greatest hits than to reckon with what it will mean to live through the coming decades. As the future disintegrates before our eyes, the past bears down on us with terrifying velocity.
Whether or not we buy into Fisher’s programmatic cultural pessimism, one thing is certain: Hipgnosis is banking on him being correct. In fact, their business model demands not just the continuation, but the intensification of these trends. Their promise to their investors, after all, is not just that an artifact like “Heart of Glass” will hold its value, but that it will actually increase over time. They are staking millions on a future in which we’re all keeping Journey, Shakira, and Vanilla Ice on infinite repeat. This sounds, on the face of it, completely fucking insane. But Hipgnosis shareholders should be reassured—Mercuriadis and co. aren’t simply crossing their fingers and hoping things work out for the best.
It might seem like the technostructure of the modern music economy has made Hipgnosis’s dream of absolute cultural stasis impossible to realize. After all, with the entirety of all recorded music now available for $10 a month, it has never been easier for people to simply choose not to listen to Maroon 5 or Barry Fucking Manilow. And yet, as Liz Pelly and others have so thoroughly documented, music consumption today is more managed and homogenized than ever before. A platform like Spotify offers the illusion of limitless choice whilst actually delivering an experience which is, as Pelly wrote in these pages, “tightly controlled . . . and dictated by the interests of major labels, brands, and other cash-rich businesses who have gamed the system.” Automated recommendations and corporate synergy ease listeners into a passive relationship with whatever chill background noise the platform has summoned for them. Under these circumstances, there are plenty of opportunities for a company like Hipgnosis to ensure its properties reach the right set of ears.
Worried that the downstream effects of hundreds of thousands of preventable deaths might take a bite out of your stock portfolio? Fear not—great songs are always being consumed.
On streaming services, a song’s rights holder gets paid for every play, no matter if the song was released yesterday or in 1973. Just like that, a billion old songs suddenly become fresh revenue streams, and while the streaming revenues of most individual musicians add up to a pittance, when you’re an investment fund with a swelling portfolio, the pennies start piling up fast. Spotify has facilitated the financialization of music by consolidating a new network of actors around the exploitation of these rights; its platform is an infernal crossroads where different markets—for consumer data, song royalties, attention, ad space—converge and fuse. Automated systems for the collection of digital music royalties are laid side-by-side with programmatic ad exchanges; corporate-branded playlists coexist with deals for data on consumer’s listening habits. As an owner of the commodity which drives all this business, Hipgnosis squats at the very center of the web, collecting rents on its properties, gathering data-driven market intelligence, and using its power as an IP holder to ensure that its products circulate throughout the network.
Not content merely to passively accrue rent on their portfolio, Hipgnosis aspires to a level of control which will allow them to guarantee the value of their assets into the future. This means using their ownership of “hit songs” to set themselves up as brokers of fame and success, as Mercuriadis explains:
Today 90 percent of the artists that are being signed are really talented people but ultimately the end game is fame and whether that fame comes from singing someone else’s song or singing a co-written song, or whether it comes from social media . . . If you’re Zara Larsson and you have access to hit songs, you’re top of the charts. If you’re Iggy Azalea and five years ago you had the biggest song in the world with a song called “Fancy” but if for whatever reason you no longer have access to hit songs, you’re nowhere.
This is the context in which to understand my buddy’s experience with Miley Cyrus and “Heart of Glass.” Hipgnosis granted Miley “access” to “Heart of Glass,” while Miley provided Hipgnosis with the double service of creating a fresh revenue stream from “Heart of Glass” and introducing the song to a new audience who might otherwise have been occupying themselves with original music. Hipgnosis seals the deal by driving an advertising campaign so aggressive that it ends up bombarding the social media feeds of a thirty-something technohead in rural mid-Wales. It’s win-win-win all round.
Miley is the Trojan horse of Hipgnosis’s asset development strategy, juicing the profitability of their latest acquisition by getting it in front of a fresh audience segment. This is not the same as saying that she is an unwitting pawn. In fact, the reverse is far more likely: Miley Cyrus has clearly grasped the upside of the Hipgnosis proposition for a star of her magnitude. Mercuriadis’s fund does not tie artists to complex, long-term contracts; they deal in agile, instantaneous transactions which afford considerable latitude for an established performer to wheel and deal on their own account. The news that Miley is apparently working on an album of Metallica covers (who themselves started their own song investment fund, Worldwired IP, last July) serves as evidence that she and her team understand this as well as anyone.
As they acknowledged in a report to investors published at the start of December 2020, the plague year has been good to Hipgnosis. National lockdowns have meant more people stuck at home listening to streaming services; however, Mercuriadis and co. are keen to press the that the pandemic has not only affected how much music is being consumed but also what kind. Their report approvingly cites a study from the University of Leuven that found “more listeners [are] reaching for tracks that evoke nostalgia” during the pandemic. This proposition is supported by Spotify’s figures from last spring, which show that streams of new music actually fell, while songs recorded before the 2000s surged in popularity along with “nostalgia-themed” playlists. Since last March, “Don’t Stop Believin’” has supposedly been streamed around ten million times a week worldwide. In short, Covid-19 may have bent the arc of music consumption in the direction of the Hipgnosis portfolio. And would this be any wonder? Confined to quarters and gazing out on a future whose only guarantee seems to be the promise of further and more catastrophic crises, why wouldn’t people look to songs to connect them with a time when it was still possible to believe that the world as it was would, as it were, go on and on and on and on?
For Mercuriadis and co., this serves as a complete vindication of their value proposition. Since 2018, they have been arguing that “hit songs” should be seen as an “uncorrelated asset,” a commodity whose price remains stable regardless of the wider market fluctuations which might be produced by, let’s say, an international public health crisis. Mercuriadis likens it to gold—only better “because when something crazy happens in the marketplace, or Donald Trump does something stupid or Boris Johnson does something stupid, the price of gold or oil are affected. Great songs are always being consumed.”
Worried that the downstream effects of hundreds of thousands of preventable deaths might take a bite out of your stock portfolio? Fear not—great songs are always being consumed. Looking for somewhere safe to park your dollars during the incineration of the biosphere? Oceans may boil and deserts may freeze, but nevertheless, great songs are always being consumed. Hipgnosis has repurposed Spotify’s mood management on a different scale, developing an entire investment strategy predicated on a rising global wave of Preapocalyptic Ennui. By betting big on the growth of nostalgia-driven music consumption, and then using their strategic position within the market to accelerate that trend, they have found a way to generate an income stream from our collective feelings of doubt and anxiety in the face of chronic uncertainty.
As has happened with energy, transportation, elder care, and even environmental conservation, Hipgnosis has used systemic dysfunction within a particular sector of our society as a pretext for swooping in with a fat wedge of investor- and debt-backed capital, buying up a host of assets which will then be used as a basis to extract rents and pursue financial speculation. In the long run, however, their accumulation strategies can only lead to the intensification of the morbid symptoms they claim to address. Hipgnosis’s policy of purchasing “proven hit songs” will inevitably concentrate more wealth in the hands of a superelite of millionaire megastars, while their attempts to aggressively push their assets to new audiences will, to the extent that they are successful, make it even more difficult for new artists and styles to find a place in the hyper-managed digital music economy.
To an extent, the avaricious disaster capitalists running Hipgnosis are right: if we’re going to survive what’s coming in the next fifty years, we’re going to need great songs to get us through. There’s no reason, however, for us to take things on their terms. In fact, if we accept their premise that as an uncorrelated asset, music exemplifies a human need that transcends the vagaries of markets and capital, then all the more reason for us to remove it altogether from these extractive and exploitative systems. Hipgnosis deserve due credit for showing us one of our possible futures: a world of absolute cultural necrophagy, where listeners and investors gorge themselves endlessly on the bloated carcasses of “Love Shack” and “Livin’ On a Prayer.” In so doing, they have clarified the task that lies ahead of us—to find ways to create and share the songs we need that support and nourish the lives of the musicians, performers, writers, and technicians who make them, instead of lining the pockets of rent-seeking financiers.