Song rights pioneer Hipgnosis faces an uphill battle to keep playing music

Massarsky responded by accusing Stifel of making “a number of flawed statements about methodology” and said there was no intention to “increase” the value.

Mercuriadis told the Telegraph at the time that Stifel had been “naive and obtuse” in his analysis and was trying to get “a spotlight on himself” by downgrading the company.

Despite the unease, investors remain enticed by the potential of the history of music streaming and Hipgnosis’s position in the market.

As music is increasingly purchased through subscription services like Spotify and Apple Music, royalties are becoming more predictable. And there are no clear signs that that momentum is slowing down as TikTok, the app for sharing videos with millions of UK users, relies on music videos to drive its growth.

The service has been identified as a way for young users to increasingly discover music. Fleetwood Mac’s Dreams skyrocketed the Spotify charts last September when a video of a skateboarder riding the song while sipping cranberry juice went viral.

JP Morgan’s Christopher Brown, however, says the headwinds are strengthening as Spotify struggles to maintain growth in the U.S. and European markets, as podcasts vie for public attention.

It also highlights the emerging market for live music streaming, which has the potential to attract new audiences and increase payments for publishers.

A more worrying issue for Mercuriadis could stem from a soured regulatory environment for music streaming on both sides of the Atlantic.

Last Friday, Kevin Brennan, Labor MP and member of the Culture Committee, introduced a private member’s bill to Parliament with the aim of rebalancing the wealth of music streaming to artists.

The move comes after the committee heard complaints from songwriters and musicians, who struggled to live on the fraction of a dime they earn from every stream of their work on Spotify, Apple Music and Youtube.

The concerns of the group of MPs prompted the British competition regulator to take the first steps towards regulatory action by launching a market study on the dominance of the majors.

Yet not everyone in the music industry agrees with this sentiment. The BPI record company association has said the Brennan Bill will put the UK music industry in red tape and curb innovation and investment by record companies.

“It completely ignores the music industry today and the value that labels bring to find and nurture talent,” the industry body added.

“Labels are committed to ensuring artists are rewarded for their streaming success, but just as UK music finally emerges from its long recession, this flawed and outdated regulation would be a detrimental step backwards, eroding the foundations of extraordinary worldwide success in music.

For Mercuriadis, the question is whether it will be able to continue its momentum regardless of the competition and regulatory pressures to come.

Investors name him as one of the main reasons Hipgnosis has built a strong position and remains a draw for artists, producers and songwriters looking to sell.

He has proven he can catch the streaming wave with the dizzying rise of the Hipgnosis song fund. Now he must prove that he can keep rolling while feeding the appetite of a global investment giant.

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