erck Mercuriadis had a good Christmas. On Christmas Day, the No 1 song in the UK was LadBaby’s Don’t Stop Me Eatin’, a novelty cover version of Journey’s 1981 soft-rock anthem Don’t Stop Believin’. It replaced Mariah Carey’s All I Want For Christmas Is You, which had topped the chart 26 years after its original release. Both songs are unkillable, evergreen hits, which are closing in on 1 billion Spotify streams apiece. Both songs are among the 61,000 owned, in whole or in part, by Mercuriadis’s investment company, Hipgnosis Songs Fund, and epitomise the thesis that has made the 57-year-old Canadian, in less than three years, the most disruptive force in the music business. Put simply, Hipgnosis raises money from investors and spends it on acquiring the intellectual property rights to popular songs by people like Mark Ronson, Timbaland, Barry Manilow and Blondie. In a fast-growing market, what sets Hipgnosis apart from competitors is its founder’s bona fides as a veteran A&R man, manager and record label CEO. Like an old-school music mogul, Mercuriadis sells his brand by selling himself. Unlike those moguls, he’s a buff, teetotal vegan with spartan tastes. “The only material thing that I really care about is vinyl,” he says. “And Arsenal football club.” He looks rather like a rock-concert security guard: shaven head, burly torso, plain black T-shirt, hawkish gaze. Mark Ronson calls him “the smartest guy in the room”. Every weekday, he gets up at 5am, answers emails, works out for 90 minutes and then spends hours on video calls with musicians, investors and employees. Largely based in west London since 1986, he is now stranded in Los Angeles by lockdown regulations, which means he has to rise even earlier to speak to investors in the UK. His Zoom background is an array of inverted elephants: the Hipgnosis logo. Mercuriadis has given his sales pitch to investors so many times that his spiel feels automatic. It’s a simple concept but, until recently, a radical one. Songs, he says, are an asset class more reliable even than oil or gold because demand is impervious to economic and political upheavals. When you’re feeling happy, you play music to celebrate; when times are hard, you play music to cheer yourself up. A classic song, he says, is a source of “predictable, reliable income” in an unpredictable world. Unlike a traditional music publisher, which takes a 10-25% cut for administering songs, Hipgnosis buys the rights to 50-100% of all future royalties from songwriters for a substantial lump sum. There’s a lot of money in songs (the three major publishing companies pulled in more than £2.3bn in 2019) and Mercuriadis believes there could be a great deal more. Under the old, pre‑digital model, songwriters earned most of their royalties from record sales and airplay in the initial phase of a song’s life. In the streaming economy, however, a popular song generates money every day, even decades later. Mercuriadis wants to replace old-fashioned music publishing with “song management”, which maximises the value of songs by proactively pursuing “syncs” (placements in movies, TV shows, computer games and adverts), samples and cover versions. (Two songs in Hipgnosis’s catalogue, Maroon 5’s Girls Like You ft Cardi B and Shawn Mendes’s My Blood, were recently covered in the Netflix show Bridgerton.) Starting in 2016, Mercuriadis made this pitch to 177 investors. A handful told him to never darken their doorstep again; 38 (including the Church of England) backed him; the rest said that they were intrigued but didn’t want to be his guinea pigs. Hipgnosis went public on 11 July 2018. Mercuriadis walked into the IPO ceremony at the London Stock Exchange with Terius “The-Dream” Nash, the writer-producer behind Rihanna’s Umbrella and Beyoncé’s Single Ladies (Put A Ring On It) – his first A-list acquisition. “I didn’t want to walk into that ceremony empty-handed,” he says. “I wanted to say, ‘Let’s get started.’” Hipgnosis, which employs 65 people in London and LA, has now raised more than £1.5bn, and spent it fast. In December and January alone, the fund announced deals with Neil Young, Shakira, Fleetwood Mac’s Lindsey Buckingham, the Kaiser Chiefs, and producers Jimmy Iovine and Jack Antonoff. Hipgnosis has a stake in around 3,000 No 1 hits and five of the songs in Billboard’s Top 10 of the last decade, including Ronson’s Uptown Funk and Ed Sheeran’s Shape Of You. Around 50 of the investors who told Mercuriadis they would wait and see have since come on board. “Everything I’ve ever told my investors has either come true or been exceeded,” he says. “When Merck’s talking to artists and investors, they have to believe in a system that they’ve never encountered,” says Chic’s Nile Rodgers, a longtime friend who sits on Hipgnosis’s advisory board, The Family (Music) Limited. “They have to believe that he’s sincere, smart and has good instincts. The success of a business is basically because of the person running the business.” Companies have been quietly acquiring song catalogues for years, but never on this scale. Thanks to Hipgnosis, demand is running red hot, with growing competition from rival funds and major publishers who have been spooked into chasing prize properties. Last December, Universal acquired all of Bob Dylan’s songs in what was said to be one of the biggest ever deals of its kind. For Mercuriadis, who had been negotiating with Dylan’s representatives for two years, it was a rare disappointment. “We were ready to make a deal and then [Universal] made an offer that we couldn’t possibly compete with,” he says. “You’d have to be a company of that size to absorb the price they paid.” It was, he says, much higher than the £225m reported at the time. “I would love the Bob Dylan catalogue but it wasn’t the right deal for us.” Universal’s big swing for Dylan – using money that could have been spent on developing new artists – is a sign of Mercuriadis’s Richter-scale impact on the music business. “The whole business is running scared,” says Ted Gioia, a music historian with a business background. “In the current environment, owning the rights to old, proven songs is viewed as the last safe investment in music.” Mercuriadis has even bigger plans. He wants to rewrite the music industry’s decades-old economic equation, which means that a recording earns around five times more than a composition. This ambition combines self-interest (Hipgnosis would get more money) with a sense of justice (so would all songwriters across the board). It makes him a headache for the big three record labels (Sony Music Entertainment, Universal Music Group, Warner Music Group) and their publishing arms (Sony Music Publishing, Universal Music Group Publishing and Warner Chappell Music). I ask him if he has made enemies. “None of this is personal,” he says. “The people who work at Universal, Warner and Sony are great people who love music. It’s not them that I have a problem with; it’s the paradigms that have existed for 75 years.” He laughs. “Behind my back, I’m sure they’ve got a picture of me on a dartboard. And there’s a lot of forehead to throw darts at.” hen Hipgnosis bought a 50% share of Neil Young’s catalogue, it acquired half of the first album that Mercuriadis ever loved: 1972’s Harvest. Like Young, Mercuriadis is a product of small-town Canada. In his case, the towns were very small indeed. He was born on 2 October 1963. His father was a former professional footballer in Greece who moved to Schefferville, an isolated mining town in northern Quebec, to work in the iron-ore industry and start a family. When Mercuriadis was five, his family moved to the similarly tiny Middleton, Nova Scotia, where they opened a diner. Mercuriadis would help out behind the till, chatting to high school students as they pumped coins into the jukebox. “Songs became your friends because there are only so many things that you can experience in these very little towns,” he says. “My first experience of empathy was listening to Elvis sing In The Ghetto on the jukebox.” As he began collecting albums, he became entranced by the far-out album sleeves of Pink Floyd and Led Zeppelin. The designers were called Hipgnosis, meaning “hip knowledge”. (Much later, Mercuriadis managed co-founder Storm Thorgerson, asked him for permission to use the name, and commissioned him to design the fund’s logo.) As a teenager, Mercuriadis did what small-town kids tend to do – drink too much, take drugs, get into trouble – until his best friend died in a car crash. “That had a big effect on me. That was the beginning of me going, ‘OK, I’ve got to get out of here.’” Devouring rock biographies and music magazines, Mercuriadis knew he lacked the musical talent to be the next Neil Young, but thought he could emulate his legendary manager, Elliot Roberts. “I can’t play that instrument, I can’t sing that song, I can’t write that song,” he says. “Responsibility is the only quality that I bring to the party. I never let anyone down.” After his family relocated to Halifax, Nova Scotia, Mercuriadis started writing letters to Simon Draper, the co-founder and A&R visionary of Virgin Records, whose signings included Mike Oldfield, the Human League and Culture Club. “I love this, I hate that, Virgin’s the most artist-friendly label in the world” is Mercuriadis’s summary. Eventually, aged just 19, he was offered a marketing job at Virgin’s Toronto office. “I remember him as a real enthusiast, a total music fanatic, and he’s stayed that way,” says Jeremy Lascelles, who ran Virgin’s A&R operation in London. “He has an incredible, encyclopaedic knowledge of music and a huge record collection. When [we both] lived in west London, I used to see him in Rough Trade, buying 40 records.” At Virgin, Mercuriadis helped to develop the cult Canadian singer-songwriter Mary Margaret O’Hara and to launch Simple Minds in North America. “It was his energy and commitment that saw us go from gold to multi-platinum in Canada, and then achieve similar in the States,” says Simple Minds frontman Jim Kerr. “He was great to hang out with. I recall him securing the best seats for us all to go see a Springsteen show. I had the impression that, for him, working with music was some big, exciting adventure.” In 1986, Mercuriadis moved to London to work for Sanctuary, the management company and, later, record label founded by Iron Maiden’s managers Andy Taylor and Rod Smallwood, and stayed there for the next 21 years. “He was like three people rolled into one,” Smallwood remembers. “He knew all the music, he was up on the news and gossip in the business, and he had his management day job. Being a teetotaller probably helped. That was unusual in the business at that time.” When Mercuriadis married in 1989, his best man was Iron Maiden’s Bruce Dickinson. His three daughters all work for Hipgnosis while his son, a Brit school graduate, is “the only one in the family who has musical talent”. In 2000, Mercuriadis moved to New York to run Sanctuary Records’ North American operation. He helped to relaunch the Rough Trade label, propelled by the Strokes and the Libertines, while his management roster included Elton John and Beyoncé. He had a particular talent for working with artists who were infamously hard to handle, such as Axl Rose and Lou Reed. “His management style was very much to get into the head of the artists and try to understand what they wanted to achieve,” says Taylor. “He has a bond with creative people.” Mercuriadis jokingly calls himself a “horse whisperer”. “I listen to the artist to find out what’s important to them, and then I try to make that happen,” he says. “The truth is, success is not difficult when you’re talented. What’s difficult is having the success that you want, and that means you have to be incorruptible.” When Mercuriadis became CEO in 2004, Sanctuary was the UK’s largest independent label as well as the world’s largest management company and biggest independent holder of song catalogues – but then it all fell apart, and fast. After a period of rapid expansion, Sanctuary was hit especially hard by free filesharing services such as Napster and collapsing album sales that plunged the whole industry into an existential crisis. Nile Rodgers remembers feeling anxious for Sanctuary when he visited the label’s extravagant new offices. “It was real Hollywood. I was like, ‘Woah, what happened?’ I knew that was the beginning of the end.” A painful period of downsizing and refinancing wasn’t enough to save Sanctuary, which went to Universal Music Group for a fire-sale price of £44.5m in 2007. In the process, Mercuriadis lost most of his management clients. At 44, after more than two decades of unbroken success, he was poleaxed by his first major reversal of fortune. “I withdrew,” he says. “I was still managing people like Morrissey and Diane Warren, but I knew there was something missing. I’d built something with my partners that was best in class and to me it all felt like a failure. After 21 years, I had nothing to show for it.” He rubs his skull. “I never went for a diagnosis, I’ve never taken medication, but if you asked my wife, she’d probably say that I was depressed.” Looking back, he thinks that he lost discipline and focus, and vowed that would never happen again. “The ego, as everyone discovers at some point in their life, is a terrible thing.” ipgnosis flowed from the merging of two distinct ideas during Mercuriadis’s fallow decade. First, he realised in the early days of Spotify that streaming would save the music industry by activating a vast number of passive listeners: people who had never bought an album would happily pay £120 a year for a Spotify subscription. “Music has gone from being a luxury purchase to being a utility purchase,” he says. Not only would streaming expand the overall revenue pool; its granular data would quantify the value of every song. At the same time, Mercuriadis believed that songwriters deserved a better deal. Out of every pound spent on streaming, around 58p goes to artists and record labels for the recordings, while only 12p goes to songwriters and publishers for the songs. This inequity, enshrined in the industry for decades, was being highlighted by the growing importance of professional songwriters. The last Billboard No 1 album not to feature a single additional songwriting credit was Bob Dylan’s Tempest, in 2014; Beyoncé’s Lemonade, by contrast, featured almost 40. “Songwriters are delivering the most important component, yet getting the smallest cheque,” Mercuriadis says. Everybody knows this is unfair, but there is little incentive to rebalance the equation, because the three major publishers are owned by the same people as the big three record companies. “I wanted to change the system, but I realised that I didn’t matter as an individual,” Mercuriadis says. “I might manage some great clients, I might have money in the bank, but I could still be swatted like a fly. I recognised that I would need leverage if I was going to have any impact.” Hipgnosis gives him that leverage by increasing the income and bargaining power of songwriters. Mercuriadis says that song management is partly a question of manpower: a staffer at a publisher might handle 20,000 songs, whereas a Hipgnosis employee will be responsible for no more than 2,000, so that each one gets serious attention. “The amount and the quality of placements has gone up,” says Nile Rodgers, whose 1979 hit We Are Family, which he co-wrote and produced for Sister Sledge, recently featured in the Super Bowl trailer for Eddie Murphy’s Coming 2 America. “So far, everybody seems happy. I haven’t encountered people who have said, ‘I’m sorry I did this.’” Not so long ago, it was taboo to sell the rights to your songs. “The number one rule in music always used to be: never sell your publishing,” says Mark Ronson. “But Merck has upended that entire way of thought.” The financial landscape of music has changed, too. Artists who toured harder in order to offset losses from falling album sales now find themselves stuck at home due to Covid-19. “If you are a pop star living a lavish lifestyle, your alternatives are stark: either downscale or sell out,” says Ted Gioia. “Guess which one they choose?” Mercuriadis concedes that the pandemic has made older artists in particular more anxious to sell. “Many of them are at a point in their life when they may never go back on tour again and are dotting the Is and crossing the Ts on their estate planning.” When songwriters sell to Hipgnosis, they surrender their legal right to veto placements or “syncs”, so Mercuriadis has to convince them that he will be a righteous custodian of their life’s work. He argues that handling songs with care isn’t just morally right; it’s good business. “I know that a big part of the value of Neil Young songs is the way that Neil has conducted himself. You’ve got to protect that value.” In his 1988 song This Note’s for You, Young boasted: “Ain’t singin’ for Pepsi/ Ain’t singin’ for Coke/ I don’t sing for nobody.” Mercuriadis tells me that he turned down a seven-figure offer from McDonald’s for Sweet Dreams (Are Made Of This) by Eurythmics, which is one of the most streamed songs from 1983. “What’s a great way to kill off what is special about that song? Put it in a McDonald’s commercial.” LadBaby’s naff Journey parody was a rare exception. “If I’m honest, I wouldn’t normally have approved it because I don’t like the idea of treating songs that way,” he says, but adds that it was for charity. “Hipgnosis is run by a real music person first and foremost,” says the writer-producer Tim “Timbaland” Mosley, whose biggest hits include Justin Timberlake’s SexyBack and Nelly Furtado’s Promiscuous. “More than money, that was the key factor in my decision to do my business with them.” Fleetwood Mac’s Lindsey Buckingham, whose Go Your Own Way is one of the most streamed songs from 1976, has a similar line: “I am confident that my body of work will be curated with great heart and insight.” Some observers, however, think that the size of Mercuriadis’s cheques is more decisive than his superfandom. Apart from The-Dream, who was proud to publicise his £16.6m payout, most Hipgnosis clients bury their figures under NDAs. But the deals are believed to be between 10 to 20 times larger than a catalogue’s annual income. Neil Young’s payout has been estimated at £110m. “It’s very, very competitive, and Merck’s beating everyone hands down – because he’s paying more,” says one music industry veteran on condition of anonymity. “When you’re selling your house, do you sell to the person you really like, who respects the decor, or do you sell it to someone who’s offering more money?” Mercuriadis, predictably, denies this. He attributes complaints to sour grapes from rival funds who have lost out to Hipgnosis. “What are you going to say to investors? You’re not going to say he has a better proposition. You’re going to say he’s paying too much.” (This is, of course, his own explanation for why he lost Bob Dylan.) Far from overpaying, he says, Hipgnosis is snapping up bargains before growth in streaming subscriptions and new services that rely on licensing music, from TikTok to Peloton, push the price even higher. “There’s a sweet spot,” he says. The current pace of acquisitions is certainly unsustainable. Pretty much every songwriter or estate that wants to sell a catalogue is in the process of doing so, which means the big deals will dry up sooner rather than later. Mercuriadis gives it two years. “If I achieve everything I want to achieve, you won’t remember that Hipgnosis had this incredibly acquisitive streak. What you’ll remember is that Hipgnosis was the company that established song management.” It will take many more years before we’ll know whether Mercuriadis’s bet on the immortality of classic songs has paid off. He is bullish (“You and I know that Neil Young songs and Nile Rodgers songs are going nowhere”), but Gioia is sceptical. “Songs are a depleting asset. Eventually the copyright expires and the cashflows stop.” That usually means 70 years after the author’s death, but, adds Gioia, “before that happens, the public’s changing tastes destroy much of the financial value in old music. I know music fans believe their favourite songs will never fade away, but the reality is that even a superstar artist has a limited shelf life.” For now, though, Hipgnosis has the numbers on its side, and you don’t have to understand its work to have encountered it. While writing this piece, I watched the episode of The Crown in which Emma Corrin’s Princess Diana ballet dances to the 1983 Eurythmics song Love Is A Stranger. It works as a period-accurate reflection of Diana’s isolation, introduces a new generation to the song, and makes older viewers (including me) want to play it for the first time in years. That, Mercuriadis says as proudly as if he had written it himself, is a Hipgnosis song.  Money makers: 10 of the most popular tracks in the Hipgnosis catalogue Ed Sheeran Shape Of You (2.72bn streams on Spotify) Dua Lipa New Rules (1.47bn) Mark Ronson Uptown Funk ft Bruno Mars (1.26bn) Journey Don’t Stop Believin’ (995m) Mariah Carey All I Want For Christmas Is You (913m) Bon Jovi Livin’ On A Prayer (695m) Eurythmics Sweet Dreams (Are Made Of This) (650m) Lady Gaga Bad Romance (509m) Fleetwood Mac Go Your Own Way (486m) Al Green Let’s Stay Together (282m)