It is rare that the music industry attracts much attention in the wealth management industry, but this week it has begun to make headlines. Hipgnosis Songs Fund found itself at the centre of a bidding war between Apollo-backed Concord Chorus and Blackstone.
It has since accepted a $1.51 billion offer from Concord Chorus. Those invested in Hipgnosis will likely be enjoying the process, given the heightened interest has led to a jump in its share price. Shareholders will receive $1.25 for each share held through the deal.
Many may be surprised that the home to a catalogue of artists such as Shakira, Red Hot Chili Peppers and Neil Young has attracted such interest. However, royalty investing can prove lucrative for investors.
This is despite the woman of the moment – Taylor Swift – arguably having a significant impact on investing in music.
Her decision to re-record her music after it was revealed Scooter Braun – the original owner of her music - had sold her master recordings to US private equity firm Shamrock Capital in a deal reportedly worth more than $300 million, shocked many when it was first announced in 2021.
For those that invest in the song recording itself, this may have led to a large fall in their portfolios, with media outlets and her fans now only playing “Taylor’s version” of all songs.
However, most music investors, including Hipgnosis Songs Fund, invest in the actual composition rather than the sound recording, protecting itself from re-recordings. Indeed, an additional recording – or more traditionally a cover of a song - could actually increase yields if it leads to more streams.
Investing in Taylor Swift’s compositions may prove very lucrative. Not only is she one of the most streamed artists globally with over 100 million monthly listeners on Spotify, but she is also one of the most productive. Just last week she released not one, but two albums totalling 31 songs.
This means there is a significant catalogue to choose from and an awful lot of royalties to be earnt.
Even more impressively, this double album was written, produced and recorded in the middle of her global tour, while her turbulent personal life was plastered over the tabloids and social media on an almost daily basis.
Most in the wealth management industry may think they could never relate to a billionaire global popstar. However, the vast majority will have experienced managing a demanding workload while going through a personal crisis of some kind and the feeling of needing to stay productive and engaged throughout.
Conversations about wellbeing in the workplace may be improving this slightly, but, in a world of deadlines and demanding clients, many will still have to struggle through difficult periods.
Sadly for most of us, this results in burn out and poor outcomes rather than a bestselling album. I don’t have an answer to improving this, just a hope that a more empathetic and understanding workplace can evolve in the future.
Whether you can relate or not, it may be worth considering investing in her music if you’re looking to boost returns…
