Hipgnosis raises dividend expecting music streaming boom to continue

Hipgnosis raises dividend expecting music streaming boom to continue

by Pranali Mehta

Hipgnosis, a music IP investment and song management company that holds the rights to 65,000 songs by artists ranging from Neil Young to Beyoncé, has reportedly increased its dividends, as the company expects the pandemic-driven streaming spike to continue as listening grows on digital services like TikTok and Peloton.

Hipgnosis, a publicly traded corporation in London, which earns royalties whenever one of the songs it owns is played, nearly doubled sales from $82 million to $160 million in the year to the end of March.

This was powered by the company’s $1 billion spending spree on a number of evergreen hit songs during the COVID-19 outbreak, where it bought the rights to 84 song catalogues, including ones from artists such as Debbie Harry and Shakira.

Because the company expects the streaming boom to continue, it has raised its pretax operating earnings from $41.5 million to over $44.5 million. It has also raised its target annual dividend by 5% to 5.25p per share. On Monday, the company's stock price fell 0.4% at 122p.

Merck Mecuriadis, CEO and founder of Hipgnosis, claimed that the pandemic had expedited the move to streaming, with services like Spotify, Apple Music, and Amazon Music, having a collective 443 million users with subscription. This number is expected to reach 2 billion by the end of the decade.

Hipgnosis stated that streaming income increased 18.4% in the latter part of its fiscal year compared to the earlier part. The firm's portfolio of 138 song catalogues has been valued at more than $2.2 billion, which is 10% higher, roughly $265.6 million, than what they cost to purchase.

Hipgnosis is putting more emphasis on classic hits, with the promotion of songs that are over ten years old accounting for 60% of the company's overall catalog, up from 32.5% at the end of March last year. That proportion of that was only 10% two years ago. Pop music accounts for little less than half of Hipgnosis's portfolio at 46%, with rock coming in second at 27%.

Source credit: https://www.theguardian.com/business/2021/jul/05/hipgnosis-dividend-music-rights-neil-young-fleetwood-mac-blondie-barry-manilow

Pranali Mehta

A chemical engineer by qualification, Pranali Mehta dutifully walked down the slated path and worked in a chemical firm for a year. Her passion for writing however, pushed her into experimenting with the same as a career. With over three years of experience in content writRead more...