Assets manager Blackstone eyes content streaming surge with USD1 Bn investment in Hipgnosis Songs Fund

Blackstone would partner with Hipgnosis Songs Fund to acquire music rights

• Investments would be made in songs, recorded music, and related intellectual property and royalties

On Tuesday, Blackstone announced that it would partner with a music investment firm, Hipgnosis Songs Fund Ltd., to invest $1 billion to acquire music rights and manage catalogs. The asset manager hopes to profit from the surge in online streaming.

Blackstone executive Qasim Abbas told Wall Street Journal, “The music industry has been at the forefront of the fast-growing streaming economy and is unlocking new ways of consuming content.”

Investing in music

Led by former pop-star manager, Merck Mercuriadis, Hipgnosis buys artists’ song catalogs and earns revenue when the music is streamed online or used in movies or advertising. Founded in 2018, the company is the largest U.K.-listed investor in music catalogs and royalties with gross assets of about $2.2 billion.

Following the deal, both the companies would invest in songs, recorded music, and related intellectual property and royalties. 

Forbes reported that Hipgnosis’ clientele includes Neil Young, Shakira, Fleetwood Mac’s Lindsey Buckingham, Rihanna, Taylor Swift songwriter Joel Little, and Metallica producer Bob Rock.

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As homebound listeners continue to stream music, the value of song catalogs and the royalty payments they generate continues to rise. Investors see this as a profitable opportunity and are now backing musicians such as Adele and Bon Jovi.

Earlier this year, music streaming service Spotify Technology SA released its third-quarter results. The company added more users than expected and users spent more time listening. Shares of Spotify have risen by 60% this year, and have more than doubled since the start of 2019.

Investors queue

Earlier this year, KKR & Co. Inc. bought a majority stake in a pop-song catalog from producer Ryan Tedder. KKR also plans to invest nearly $1 billion in music-rights investments by launching a partnership with record label BMG.

Last week the credit management arm of Apollo Global Management announced that the company would be backing HarbourView Equity Partner in its plans to accumulate song rights, with a $1 billion investment.

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