Hipgnosis bows to pressure to disclose how songs are performing 

The FTSE 250 company owns the rights to the back-catalogues of artists including Blondie 

Music IP owner Hipgnosis has bowed to mounting pressure over transparency disclosures, and pledged to provide more information on how its song catalogue is performing following a flurry of swoops on hits by the FTSE 250 firm. 

Hipgnosis, which raises money from investors to buy the intellectual property rights to songs, currently owns rights to the back-catalogues of artists including Neil Young, Take That and Blondie. 

Despite recently emerging successful in the scramble to secure the rights to hits by some of the best-known artists, concerns have been growing among analysts over the lack of clarity on how its portfolio of songs is performing. 

Numis said it was "difficult to assess the risk-return profile of the portfolio", whilst Liberum had said "the company needs to improve disclosure on the portfolio valuation".

Hipgnosis said it had decided to provide a "rich analysis as we present like-for-like data points over time". It said it would start laying out more details on how songs were performing compared to how it expected them to, called "variance against forecast", as well as providing pro-forma annual revenue. 

This latter metric would make it easier to compare between years, and would work by detailing how much royalty revenue the company had earned in any calendar year from the portfolio of songs it held IP rights to at one specific date, even if it hadn’t owned the rights to some songs over the whole year.

Merck Mercuriadis, who founded Hipgnosis and previously was a manager for Elton John, said: "As we approach our third annual report since launch in 2018, we are committed to providing additional disclosure to our shareholders which seeks to look through our rapid growth, and give a consistent basis to evaluate our performance and prospects."

It will be rolling out the new performance metrics following a spate of deals, which included an estimated $150m (£110m) agreement to buy the rights to Neil Young’s entire songbook in January.

The boom in streaming on sites such as Spotify and Apple Music is changing how songwriters can profit from their earlier hits, and a host of major names have scrambled to cash in on their back-catalogues by selling the intellectual property rights. For investors, songs which have an enduring appeal are able to provide steady returns.

Before the latest string of deals at the start of this year, Hipgnosis had spent more than £1bn on 57,000 songs since September 2019.