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Hipgnosis Songs Fund Limited
Annual Report
For the year ended 31 March 2022
Hipgnosis Songs Fund Limited Annual Report For the year ended 31 March 2022
2
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
Hipgnosis Songs Fund is the first UK investment company offering
investors a pure-play exposure to Songs and associated musical
intellectual property rights. Our focus is building a diversified Portfolio,
acquiring Catalogues that are built around proven hit Songs of
cultural importance by some of the most talented and important
Songwriters globally.
Our shares listed on the Main Market of the London Stock Exchange
in July 2018 and transferred to the Premium Segment of the Main
Market in September 2019. Since March 2020, Hipgnosis Songs Fund
has been a constituent of the FTSE 250 Index.
STRATEGIC REPORT
3 Introduction From Merck
Mercuriadis
8 Financial and Operational
Highlights
10 Portfolio at a Glance
11 The Chair’s Statement
15 Investment Adviser’s Report
36 The Advisory Board
38 Financial Review
47 Our Market
52 Our Purpose, Business Model,
Culture and Values
58 Our Objective, Strategy and
Investment Policy
63 Our Resources and Relationships
68 The Hipgnosis Song Management
Team
69 Our Senior Management Team
70 Our Principal Risks and Uncertainties
74 Key Statements
74 Viability Statement
76 Going Concern
76 Section 172(1) Statement
GOVERNANCE
78 Chair’s Introduction
79 Compliance Statement
80 Application of AIC Code Principles
84 Board Leadership and Company
Purpose
86 Division of Responsibilities
90 Composition, Succession and
Evaluation
91 Board of Directors
94 Report of the Nomination
Committee
97 Audit, Risk and Internal Control
98 Report of the Audit and Risk
Management Committee
104 Report of the Management
Engagement Committee
106 Report of the Portfolio Committee
108 Directors’ Remuneration Report
111 Report of the Directors
115 Directors’ Responsibilities
Statement
INDEPENDENT AUDITOR’S REPORT
117 Independent Auditor’s Report
FINANCIAL STATEMENTS
126 Consolidated Statement
of Profit and Loss
127 Consolidated Statement
of Comprehensive Income
128 Consolidated Statement
of Financial Position
129 Consolidated Statement
of Changes in Equity
130 Consolidated Statement
of Cash Flows
131 Notes to the Consolidated
Financial Statements
ADDITIONAL INFORMATION
164 Alternative Performance
Measures
166 Glossary of Capitalised
Defined Terms
170 Directors and General
Information
171 Corporate Summary
172 Advice to Shareholders
173 Hipgnosis Playlists
CASE STUDY
20 Bringing Songs Back
to Life: Talking to the
Moon, by Bruno Mars
SUPERSTARS • SUPER SONGS
13 Mariah Carey
14 Beyoncé/Destiny’s Child
33 Ariana Grande
34 Ed Sheeran
46 Lady Gaga
51 Ha rr y St yl es/One D irec ti on
56 Enrique iglesias
61 Justin Bieber
62 Bruno Mars
STRATEGIC REPORT
3
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
Introduction From Merck Mercuriadis
STRATEGIC REPORT
Introduction and overview
When I started Hipgnosis four years ago, no one could
have predicted where we would be today.
Despite the challenges the world has faced due to the
COVID-19 pandemic and macroeconomic conditions
that have ensued, Hipgnosis, and our investment thesis,
has not only been proven by these challenges, but after
an incredible 2021/2022 is in its most exciting position yet.
With proven Songs firmly established as an asset class,
no investment portfolio is truly complete without at
least some exposure to the predictable, reliable and
uncorrelated revenues they generate.
In 2021/2022, the music industry has gone from strength
to strength. We have seen a continued acceleration of
the adoption of paid for Streaming. Global Streaming
revenue growth rates of 24.3% in 2021 exceeded all
expectations (IFPI). This led Goldman Sachs to further
increase their forecast Streaming revenue growth
rates to 12% per annum for the rest of the decade in
their updated 2022 gold standard Music In The Air
report. There are now 523 million users of paid music
subscription services globally and the market is well on
its way towards 2 billion in the coming decade.
Technological innovation has also continued to create
new ways of consuming and monetising music. Emerging
technologies such as TikTok, Roblox, Social Media and
Peloton not only have provided additional revenue
streams to copyright owners such as Hipgnosis, but have
also created a platform where we can introduce great
hit songs from the past to new generations of listeners.
Music Performance income recovered strongly from
the impact of various global COVID-19 lockdowns in
2021. Live music venues are full, and booked into 2024,
whilst bars, pubs and restaurants have reopened and
are playing music again. As a result, industry experts are
expecting a near complete recovery in Performance
income in 2022.
During COVID-19, Hipgnosis’ resilience against the
challenging market proved the reliability of our income.
In the second half of our fiscal year 2021/2022, as most
global restrictions have eased and market growth has
returned, we have now also shown that our acquisition
strategy and disruptive Song Management approach
leaves us well positioned to outperform. Our strategy to
acquire only the most successful and culturally important
Songs, including 67 of the 271 Songs that have been
played over 1 billion times on Spotify, has delivered like-
for-like Streaming growth of 19% in the second half of our
fiscal year alone.
This Streaming growth outperformed our Independent
Valuer’s expectations, and together with the first time
recognition of the value of revenue generated from
the now established digital lifestyle platforms that have
4
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
emerged, led to an annual increase in our Operative
NAV of 9.9% to $1.8491 per share.
Providing uncorrelated income has always been an
important part of our thesis. However, from inception,
we have emphasised that even more significantly, the
opportunity for value growth would deliver an exceptional
total shareholder return. This period’s Operative NAV
growth is an important step on that journey, which will
be fully delivered as paid-for subscriptions continue to
grow and the utility-like income this produces becomes
recognised and valued by investors globally.
Together with our fully cash-covered dividends of
5.25p per share, we have delivered a Total NAV Return
for the 12-months ending 31 March 2022 of 14.2% to
our Shareholders. This takes our Total NAV Return since
inception four years ago to 59.1%.
These returns would not have been possible without our
responsible approach to Song Management which has
the resource and bandwidth to manage great Songs to
their full potential and add significant value.
This year our Song Management team has had
some great successes placing our songs in films,
television shows and adverts; we have worked with
our Songwriters, producers and artists to maximise the
impact of anniversaries and milestones of culturally
important releases; fixed copyright breakages to deliver
new revenues to Hipgnosis which were never built
into our forecasts at the time of acquisition; as well
as negotiated and moved catalogue administration
deals, ensuring we get paid faster while being charged
lower administration fees. In July 2022, we have taken
this one-step further, announcing a ground breaking
new direct administration agreement with Sacem, the
French PRO. Under this first-of-its-kind deal, Sacem will
directly collect and pay digital rights for writers’ share,
primarily in the UK and the EU, eliminating a link in the
royalty collection process. This will materially reduce
third party administration and collection fees and the
length of time it takes to collect digital revenues.
Most notably however, our Song Management team
has continued to embrace new technologies to
promote our incredible songs to new audiences. TikTok
has become an increasingly important channel, with
over 1 billion active users, and has the capacity to
introduce our iconic songs to a new younger audience,
deepen the engagement of a Song and bring hit Songs
back into the mainstream all over again, extending their
life for generations to come. Our team has believed
in the potential of TikTok for a number of years and
focused on using this platform to promote our Songs.
We now have over 2.1 million followers across our TikTok
accounts, well above most traditional publishers, and
have helped deliver huge viral successes for our iconic
Songs. Our early commitment to emerging platforms
such as TikTok positions Hipgnosis perfectly to benefit
from the expected rise in revenues from these emerging
platforms, which are predicted to be as much as 12% of
global music revenues by 2030 from 5% today.
I can’t talk about 2021/2022 without discussing the
progress made in our ulterior motive: to use the
influence of Hipgnosis and our great Songs to be a
catalyst to change where the Songwriter sits in the
economic equation, for the benefit of the Songwriting
community and our Shareholders. When a Catalogue
is acquired our Shareholders sit directly in the shoes of
the Songwriter so there is complete alignment between
the Songwriting community and our Shareholders. This is
unique, as what’s in the best interest of the Songwriters
is also in the best interest of the Company.
The Song is the currency of our business; without the
Song we simply have no music business. Yet for too
long the songwriter – who delivers the most important
component to the success of a record company, digital
service provider, music merchandiser, live promoter
etc. – is the lowest paid person. We aim to take the
Songwriter from the bottom to the top of the economic
equation and our advocacy on this issue, including with
the UK Department for Digital, Culture, Media and Sport
(DCMS), the Competition and Markets Authority (CMA)
and the US Copyright Royalty Board (CRB), is being
felt at every level and is not only gaining support but
provoking real thought and change.
Most importantly, we have helped deliver the
recent decision of the US Copyright Royalty Board
(CRB) to disallow the appeal by various Streaming
services against the CRB III determination to increase
mechanical Streaming royalty rates for songwriters and
publishers. We still have plenty of room for improvement
before we have a rate that’s genuinely fair and
equitable but this is an important step on the road to
finally, properly recognising the value that Songwriters
bring to the industry and the lives of the billions of
people all over the world who rely on great songs to
enrich their lives. The CRB delivered a strong message
STRATEGIC REPORT • INTRODUCTION FROM MERCK MERCURIADIS
STRATEGIC REPORT
5
1-800-273-8255
• Logic • Andrew Taggart
2002
• Anne-Marie • Benny Blanco, Nelly
A Thousand Years
• Christina Perri • Christina Perri
All I Want For Christmas Is You
• Mariah Carey • Walter Afanasieff
Blueberry Faygo
• Lil Mosey • Kenneth Edmonds
Castle On The Hill
• Ed Sheeran • Benny Blanco
Closer (feat. Halsey) *
†
• The Chainsmokers • The Chainsmokers,
Isaac Slade, Joe King
Cold Water (feat. Justin Bieber & MØ)
• Major Lazer • Benny Blanco, Jamie Scott
Despacito – Remix
†
• Luis Fonsi, Daddy Yankee, Justin Bieber
• Poo Bear
Don't Let Me Down (feat. Daya)
• The Chainsmokers • Andrew Taggart,
Scott Harris
Don’t Stop Believin’
†
• Journey • Jonathan Cain, Neal Schon
Eastside (with Halsey & Khalid)
• Nathan (Happy) Perez
Galway Girl
• Ed Sheeran • Johnny McDaid
Girls Like You (feat. Cardi B)
†
• Maroon 5 • Starrah
Halo
• Beyoncé • Evan Bogart
Happier
• Ed Sheeran • Benny Blanco
Havana (feat. Young Thug)
†
• Camila Cabello • Andrew Watt, Starrah
Heat Waves
†
• Glass Animals • HSG Admin
Hey, Soul Sister
• Train • Espionage
High Hopes
• Panic! At The Disco • Sam Hollander
Hips Don’t Lie (feat. Wyclef Jean)
• Shakira, Wyclef Jean • Shakira
I Don't Wanna Live Forever
(50 Shades Darker)
• ZAYN, Taylor Swift • Jack Antonoff
In the end
• Linkin Park • Andy Wallace
In The Name Of Love
• Martin Garrix, Bebe Rexha • Ilsey Juber
Issues
• Julia Michaels • Benny Blanco
It Ain't Me (feat. Selena Gomez)
• Kygo • Andrew Watt
Just The Way You Are
• Bruno Mars • Ari Levine
Lean On (feat. DJ Snake & MØ)
†
• Major Lazer, MØ, DJ Snake
• Martin Bresso
Let Me Love You (feat. Justin Bieber)
†
• DJ Snake • Andrew Watt
Locked out of Heaven
• Bruno Mars • Ari Levine
Love Yourself
†
• Justin Bieber • Benny Blanco
Maps
• Maroon 5 • Ammar Malik
Me, Myself & I
• G-Eazy • TMS
Memories
†
• Maroon 5 • Stefan Johnson, Jordan
Johnson, Jon Bellion
Mercy
• Shawn Mendes • Teddy Geiger,
Ilsey Juber
Needed Me
• Rihanna • Starrah
New Rules
†
• Dua Lipa • Caroline Ailin, Ian Kirkpatrick
Nice For What
• Drake • Robert Diggs
no tears left to cry
• Ariana Grande • Savan Kotecha
Numb
• Linkin Park • Andy Wallace
Payphone
• Maroon 5 • Ammar Malik
Photograph *
†
• Ed Sheeran • Johnny McDaid
Rockabye (feat. Sean Paul &
Anne-Marie)
• Clean Bandit • Ammar Malik
Scared to Be Lonely
• Martin Garrix, Dua Lipa
• Giorgio Tuinfort, Kyle Shearer
Señorita *
†
• Shawn Mendes, Camila Cabello
• Andrew Watt
Shallow
†
• Lady Gaga, Bradley Cooper
• Mark Ronson
Shape Of You *
†
• Ed Sheeran • Johnny McDaid
Sign Of The Times
• Harry Styles • Jeff Bhasker
Smells Like Teen Spirit
• Nirvana • Andy Wallace
Something Just Like This
†
• The Chainsmokers, Coldplay
• Andrew Taggart
Sorry
†
• Justin Bieber • Julia Michaels, Skrillex
Stitches
†
• Shawn Mendes • Teddy Geiger
Sugar
†
• Maroon 5 • Jacob Kasher Hindlin
Symphony (feat. Zara Larsson)
• Clean Bandit • Ammar Malik
Titanium (feat. Sia)
• David Guetta, Sia • Giorgio Tuinfort
The Middle
• Zedd, Maren Morris, Grey
• Stefan Johnson, Jordan K. Johnson
There's Nothing Holdin’ Me Back
†
• Shawn Mendes • Teddy Geiger,
Scott Harris
Treat You Better
†
• Shawn Mendes • Teddy Geiger,
Scott Harris
Uptown Funk (feat. Bruno Mars)
†
• Mark Ronson • Mark Ronson,
Jeff Bhasker
What Do You Mean?
• Justin Bieber • Poo Bear
What Lovers Do (feat. SZA)
• Maroon 5 • Starrah, Elina Stridh,
Victor Rådström
WHEN I WAS YOUR MAN
• Bruno Mars • Ari Levine
Without Me
• Halsey • Timbaland
Wolves
• Selena Gomez, Marshmello
• Andrew Watt
Young Dumb & Broke
• Khalid • Joel Little
Young, Wild & Free (feat. Bruno Mars)
• Snoop Dogg, Wiz Khalifa • Ari Levine
Youngblood
†
• 5SOS • Andrew Watt
When I Was Your Man
• Bruno Mars • Ari Levene
Spotify’s Billions Club
Hipgnosis has 67 out of 271 Songs
that by June 2022 had surpassed the
Billion Streams mark on Spotify
Song Title • Artist(s) • Hipgnosis contributor(s)
Over 2 billion streams † 100 most-streamed songs on Spotify
Source: Spotify, 8 July 2022
The Chainsmokers
6
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
Hipgnosis has 52 of Rolling Stone’s The 500 Greatest Songs of All Time
5
Smells Like Teen Spirit
• Nirvana • Andy Wallace
228
Single Ladies (Put a Ring on It)
• Beyoncé • The-Dream,
Tricky Stewart
390
Enter Sandman
• Metallica • Bob Rock
8
Get Ur Freak On
• Missy Elliot • Timbaland
238
Are You That Somebody?
• Aaliyah • Timbaland
394
Grace
• Jeff Buckley • Andy Wallace
25
Runaway
• Kanye West feat. Pusha T
• Jeff Bhasker, Emile Haynie,
Pusha T
259
Heart Of Gold
• Neil Young • Neil Young
401
Go Your Own Way
• Fleetwood Mac
• Lindsey Buckingham
30
Royals
• Lorde • Joel Little
274
Love And Happiness
• Al Green • Al Jackson Jr.
414
Dreaming
• Blondie • Debbie Harry,
Chris Stein
38
(Sittin’ On) The Dock
of the Bay
• Otis Redding • Al Jackson Jr
281
Grindin’
• Clipse • Pusha T
417
Uptown Funk
(feat. Bruno Mars)
• Mark Ronson • Mark Ronson
56
Work It
• Missy Elliot • Timbaland
285
Say My Name
• Destiny’s Child • Rodney
Jerkins
418
Green Onions
• Booker T and the MGs
• Al Jackson Jr
68
Good Times
• Chic • Bernard Edwards,
Nile Rodgers
290
Yeah! (feat. Lil John &
Ludacris)
• Usher, Lil Jon, Ludacris • Sean
Garrett
427
Rapper’s Delight
• The Sugarhill Gang
• Bernard Edwards, Nile
Rodgers
79
Back To Black
• Amy Winehouse
• Mark Ronson
300
Rock Lobster
• The B-52’s • The B-52’s
428
Sign Of The Times
• Harry Styles • Jeff Bhasker
84
Let’s Stay Together
• Al Green • Al Jackson Jr
309
Ain’t No Sunshine
• Bill Withers • Al Jackson Jr
444
In Da Club
• 50 Cent • Curtis Jackson
107
C.R.E.A.M.
• Wu Tang Clan • RZA
322
After The Gold Rush
• Neil Young • Neil Young
450
Powderfinger
• Neil Young • Neil Young
114
Toxic
• Britney Spears • Christian
Karlsson
328
Under The Bridge
• Red Hot Chili Peppers
• Red Hot Chili Peppers
453
The Rain (Supa Dupa Fly)
• Missy Elliot • Timbaland
127
Waterfalls
• TLC • Sleepy Brown
332
Umbrella (feat. Jay-Z)
• Rihanna • The-Dream,
Tricky Stewart
456
Summertime Sadness
• Lana Del Ray • Emile Haynie
133
Don’t Stop Believin’
• Journey • Jonathan Cain,
Neal Shon
337
Believe
• Cher • Paul Barry, Brian
Higgins
457
Livin’ On A Prayer
• Bon Jovi • Richie Sambora
136
Try a Little Tenderness
• Otis Redding
• Al Jackson Jr
353
Sweet Dreams (Are Made Of
This)
• Eurythmics • David A. Stewart
467
Come As You Are
• Nirvana • Andy Wallace
138
Heart Of Glass
• Blondie • Debbie Harry,
Chris Stein
358
Because The Night
• Patti Smith • Jimmy Iovine
482
Bad Romance
• Lady Gaga • RedOne
153
Super Freak
• Rick James • Rick James
368
Black Hole Sun
• Soundgarden • Chris Cornell
497
Truth Hurts
• Lizzo • HSG Admin
167
Lose Yourself
• Eminem • Jimmy Iovine
385
I’m Coming Out
• Diana Ross • Bernard
Edwards, Nile Rodgers
217
Edge Of Seventeen
• Stevie Nicks • Jimmy Iovine
389
Brass In Pocket
• Pretenders • Chrissie Hynde
Song Title • Artist(s) • Hipgnosis contributor(s)
Source: Rolling Stone, Sep 2021
STRATEGIC REPORT
7
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
not only to the digital service providers like Spotify
but also to the recorded music companies about
the importance of the Songwriter in our industry. We
congratulate all of the incredible Songwriters that have
entrusted us with their incomparable Songs, as well as
each and every songwriter that goes to work each day
to write great songs and make the world a better place.
This is a victory for all of you. We are prepared for CRB
IV and the challenges it will bring and we will advocate
and fight on behalf of the Songwriting community and
our investors until we have a fair and equitable result.
In October 2021, the Investment Adviser (Hipgnosis Song
Management, formerly known as The Family (Music) Ltd),
was appointed to act for a second fund (Hipgnosis
Songs Capital, which invests funds managed by the
global alternative investment manager, Blackstone).
Additionally, Blackstone has taken an ownership stake
in the Investment Adviser.
We see this investment as a major vote of confidence
for Hipgnosis Songs Fund, Hipgnosis Song Management,
the asset class we have established and our
investment strategy. Additionally, the investment that
Blackstone has made has already enabled us to make
considerable additional investment in the Investment
Adviser’s most important capabilities, including data
analysis, investment processes, Song Management and
communications. Hipgnosis Songs Fund Shareholders
will benefit directly from these upgraded capabilities.
Concurrently we worked closely with the Board to
ensure that the interests of the Company’s Shareholders
were fully protected and agreed a comprehensive co-
investment policy. All investment opportunities identified
by the Investment Adviser are offered to both funds on
identical terms with the Board of the Hipgnosis Songs
Fund having a co-investment right to participate in 20%
of any catalogue purchased. This reflects the expected
investment capital available to both funds.
With the Board, we believe that this will enable the
fund to participate in a wider range of purchases than
would have been possible on a standalone basis and
is an arrangement which is beneficial to Shareholders
in Hipgnosis Songs Fund. The Board has not exercised
any co-investment rights to date as prior to the last
equity raise in the summer of 2021, a strategic decision
was taken, in consultation with our brokers and after
discussion with our major Shareholders, that the
Company did not intend to offer further shares for cash
consideration until after publication of the Net Asset
Value per share as at 31 March 2022 which is outlined
in this report. We now hope that the current challenges
facing the markets will settle in due course so that we
can raise new funds and continue to give Hipgnosis
Songs Fund Shareholders access to the incredible
pipeline of iconic songs we have assembled.
Despite the current challenging macro-economic
environment, with expectations of high inflation and
a squeeze on consumer spending, having built an
incomparable portfolio of iconic songs that yield
uncorrelated income we go into 2022/2023 extremely
confident of our growth prospects. Great songs are
not just entertainment; they are the soundtrack of our
lives and people turn to them for comfort and escape
equally in times of hardship as they celebrate with them
in times of prosperity. As a result, music revenues have
been historically uncorrelated to economic conditions,
and we strongly believe that Streaming growth will
continue uninterrupted over the coming years. Streaming
remains the cheapest form of entertainment, provides
one of the highest quality offerings of all entertainment
subscription services, and has low penetration rates
with significant room for growth in both the developed
markets as well as emerging markets. This view is shared
by the leading voices in our industry including Goldman
Sachs, who are forecasting 9% annual global music
revenue growth through to 2030.
Finally, in a period when both global recorded music and
music publishing grew at the fastest rate in history, it’s
important to emphasise that for the first time ever almost
all consumption of Music is now paid consumption.
It remains only for me to thank you for your continued
support and to also thank our Board, led by Chair
Andrew Sutch, and the incredible Songwriters who have
entrusted us with their incomparable Songs.
Best wishes,
Merck Mercuriadis
Founder, Hipgnosis Songs Fund Ltd and
Founder/CEO, Hipgnosis Song Management Ltd.
13 July 2022
STRATEGIC REPORT • INTRODUCTION FROM MERCK MERCURIADIS
8
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
Total NAV Return since inception
5
59.05%
(31 March 2021: 40.66%)
Financial and Operational Highlights 
Year ended 31 March 2022
As at 31 March 2022, the Company had raised a total of over £1.3 billion (gross equity
capital) through its Initial Public Offering on 11 July 2018, and subsequent placings
in April 2019, August 2019, September 2020, February 2021 and July 2021, as well as
C-Share raises in October 2019 (which converted in January 2020) and July 2020
(which converted in December 2020). Our revolving credit facility stands at $600 million,
and is fully drawn.
As at 31 March 2022, the Company had deployed approximately $2.2 billion in total
since IPO on 146 Catalogues and 65,413 Songs.
STRATEGIC REPORT
IFRS NAV
2
$1,582.4 million
(31 March 2021: $1,462.8 million)
IFRS NAV per Ordinary Share
$1.3065
(31 March 2021: $1.3628)
Operative NAV
3
$2,239.6 million
(31 March 2021: $1,806.5 million)
Operative NAV per Ordinary Share ($)
$1.8491
(31 March 2021: $1.6829)
Operative NAV per Ordinary Share (p)
4
140.79p
(31 March 2021: 122.50p)
Share Price (Discount/Premium)
6
(14.2)%
(31 March 2021: 2.4%)
12-Month Total NAV Return
14.19%
(31 March 2021: 11.44%)
STRATEGIC REPORT
9
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
EBITDA
$129.9 million
(31 March 2021: $106.7 million)
Catalogues acquired during the period
Catalogue Acquisition Date
Interest
Ownership
Total
Songs
Red Hot Chili Peppers 14 Jul 2021 100% 220
Kaiser Chiefs 15 Jul 2021 100% 136
Christine McVie 21 Jul 2021 100% 115
Jordan Johnson 22 Jul 2021 100% 58
Stefan Johnson * 22 Jul 2021 100% 58
Rhett Akins 23 Jul 2021 100% 564
Ann Wilson 29 Jul 2021 50% 152
Elliot Lurie 24 Aug 2021 100% 70
Total Songs acquired during the period 1,315
* Not counted in total song count
1. A number of Alternative Performance Measures are used within the Report and
details can be found on page 164.
2. Catalogues of Songs are classified as intangible assets and measured
at amortised cost or cost less any impairment in accordance with IFRS.
3. The Directors are of the opinion that an Operative NAV provides a meaningful
alternative performance measure and the values of Catalogues of Songs are
based on fair values produced by the Portfolio Independent Valuer.
4. Based on the Sterling to Dollar exchange rate at 31 March 2022 of 1.31338
5. Since IPO on 11 July 2018. See page 165 for definition.
6. Calculated using the middle market share price (SONG) of 120.80p on
31 March 2022 (31 March 2021: 125.50p).
7. Adjusted EPS excludes Total Amortisation, depreciation, impairments, FX losses and
provision for HSG advances. See page 164 for definition.
Ongoing charges figure (%)
1.58%
(31 March 2021: 1.59%)
Total dividends paid
in respect of the period (p)
5.25p
(31 March 2021: 5.125p)
Net Revenue
$168.3 million
(31 March 2021: $138.3 million)
Leveraged Free Cash Flow
$84.7 million
(31 March 2021: $82.1 million)
EPS (cents)
(1.65)¢
(31 March 2021: 4.72¢)
Adjusted EPS (cents)
7
9.09¢
(31 March 2021: 12.41¢)
10
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
Portfolio at a Glance
STRATEGIC REPORT
0
20
40
60
80
100
FY 22FY 21FY 20
Portfolio by age (%)
(based on fair value)
 0-3 years
 3-10 years
 10+ years
Portfolio PFAR* income
by source (%)
 Other Income
 Digital
Downloads
 Mechanical
 Producer
Royalties
 Masters
 Synchronisation
 Performance
 Streaming
* Pro-Forma Annual Revenue (PFAR)
– see Glossary page
166
† For the 12 months to
0
20
40
60
80
100
Dec 21Jun 21Dec 20
†
Jun 20
 Soul
 Hip-Hop
 Christian
 Disco
 Country
 Latin
 Dance
 R&B
 Pop
 Rock
0
20
40
60
80
100
Portfolio by genre (%)
(based on fair value)
FY 22FY 21FY 20
Catalogues
146
+8
Songs
65,413
+1,315
+ Change in portfolio since 31 March 2021
Operative NAV
$2.24bn
+$0.43bn
Net Revenue
$168.3m
+22%
Weighted Average
Acquisition Multiple
15.93x
+0.61x
Grammys
156
+5
Number 1s
3,854
+116
Top 10s
14,381
+413
Andrew Sutch, Chair
STRATEGIC REPORT
11
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
The Chair’s Statement
Introduction
In our short history,
Hipgnosis Songs Fund
Limited has grown rapidly,
raised £1.3 billion of
equity and invested in
over 65,000 Songs and
nearly 150 Catalogues.
Since inception we have
cumulatively paid 17.69p
per share to Shareholders in
dividends and led the campaign for songwriters to be
rewarded fairly for the crucial contribution they make
not only to the music industry but to our quality of life.
Many individuals and businesses have been impacted
by the COVID-19 pandemic over the last two years.
Remembering those whose lives ended prematurely or
who are suffering the long-term impact of catching the
virus puts into context the challenges which have been
caused to businesses, including the Company, during
that period.
COVID-19 is the first time that the music royalties asset
class has been tested under a stressed situation and I
believe that these results continue to confirm the quality
of earnings that music royalties offer and the robustness
of Hipgnosis’s business model. Today, with venues
reopened, live music returned and concerts resumed,
Hipgnosis is benefitting from the impact of a sustained
recovery.
In October 2021 our Investment Adviser (Hipgnosis Song
Management, formerly known as The Family (Music)
Ltd), was appointed to act for a second fund (Hipgnosis
Songs Capital, which invests funds managed by the
global alternative investment manager, Blackstone).
Additionally, Blackstone has taken an ownership stake
in the Investment Adviser.
Your Board sees this investment as a major vote of
confidence in Hipgnosis Song Management, our asset
class and our investment strategy. Additionally, the
investment that Blackstone has made in the Investment
Adviser has already enabled it to make considerable
additional investment to its core capabilities,
including data analysis, investment processes, Song
Management and communications. Hipgnosis Songs
Fund Shareholders will benefit directly from these
upgraded capabilities.
Whilst welcoming this investment, your Board and the
Investment Adviser were determined to ensure that the
interests of Hipgnosis Songs Fund Shareholders were
fully protected and appropriate governance practices
put in place. All investment opportunities identified by
the Investment Adviser are offered to both funds with
Hipgnosis Songs Fund having a right to participate in
any transaction on identical financial terms to Hipgnosis
Songs Capital, with a right to invest in 20% of any
catalogue purchased.
Your Board believes that this will enable the Company
to participate in a wider range of purchases than would
have been possible on a standalone basis and is an
arrangement which is beneficial to Shareholders in
Hipgnosis Songs Fund. The Board has not exercised any
co-investment rights to date.
Fundraising
In July 2021, Hipgnosis raised £156 million ($215 million)
in a placement. This takes the total amount raised by
the Company in investment to date to £1.3 billion in
equity and $600 million in debt. These recent funds
were used to acquire eight more Catalogues for a total
consideration of c.$265 million, including Red Hot Chili
Peppers and Christine McVie of Fleetwood Mac.
Prior to the July 2021 equity raise, a strategic decision
was taken, in consultation with our brokers and after
discussion with our major Shareholders, that the
Company did not intend to offer further shares for cash
consideration until after publication of the Net Asset
Value per share as at 31 March 2022 (in this report).
During the year, the Company fully drew down on
its $600 million Revolving Credit Facility, taking Net
Debt as at 31 March 2022 to 25.4% of Operative NAV
(31 March 2021: 25.7%). Since the year end, the
Company has experienced an increase in borrowing
costs as a result of rising interest rates. The Board,
together with the Investment Adviser, is in the process
of a review of its leverage structure with a view to
reducing interest rate risk and control costs for the
Company.
Performance
The IFRS Net Asset Value (NAV) per share as at 31 March
2022 was $1.3065 which is a 4.1% decrease from $1.3628
as at 31 March 2021.
STRATEGIC REPORT
12
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
The Board considers that the most relevant NAV for
Shareholders is the Operative NAV which reflects the
fair value of the Company’s Catalogues as valued by
the Portfolio Independent Valuer and adds back the
amortization charge.
The Operative NAV per share increased by 9.9% to
$1.8491 during the year (31 March 2021: $1.6829), which,
when including dividends paid, represents a Total $ NAV
Return of 14.2% for the year and of 59.1% since IPO on
11 July 2018.
Dividends
During the 12-months ended 31 March 2022 the
Company paid a total of 5.25p in interim dividends per
Ordinary Share. Despite the challenges presented by
COVID-19, the cost of these dividends was covered from
leveraged free cashflow.
Since the period end, on 12 May 2022, the Company
declared a further interim dividend of 1.3125p per share
which was paid on 15 June 2022.
The Board’s current intention is to continue to target a
total of 5.25p in interim dividends per Ordinary Share in
relation to the new financial year ending
31 March 2023.
Going forward, the Company intends to better align
dividend payment dates with revenue receipts and to
pay interim quarterly dividends to Ordinary Shareholders
on or around the last working day of October, January,
April and July of each year, with the dividends declared
in the month prior to payment.
The Board
Vania Schlogel joined the Board as an additional non-
executive director on 11 June 2021. Based in the US,
Vania has considerable experience of private equity,
media and entertainment businesses.
I would, once again, like to place on record my thanks
and appreciation to my fellow Directors for their
diligence and dedication over the last year.
In addition, I would like to thank Merck Mercuriadis
and the whole Hipgnosis team for their hard work.
When I visit the office, I get a true sense of their passion
for music and the effort they put in on a daily basis to
ensure that Hipgnosis Songs Fund Limited performs at its
full potential.
AGM
The Annual General Meeting (AGM) of the Company
will be held at 10.00 BST on 21 September 2022 at United
House, 9 Pembridge Road, Notting Hill, London W11 3JY.
Details of the resolutions to be proposed at the AGM,
together with explanations of the AGM arrangements,
are set out in a separate circular which is sent to
Shareholders with this Annual Report. Members of the
Board and the Investment Adviser will be in attendance
at the AGM and will be available to answer Shareholder
questions.
Outlook
The outperformance of our Portfolio, particularly in the
second half of the year, gives us confidence despite
the challenging macro-economic and geo-political
conditions. The unique quality and cultural importance
of the Songs in our Catalogue provide Hipgnosis
with an unparalleled collection of assets, which are
uncorrelated to the macro-economic environment.
The choice, quality and simplicity of Streaming makes
it, we believe, very attractive to a large number of music
consumers and the Board expects this market to continue
growing despite the slow down in global economic
growth, the rise in inflation and the geopolitical stresses
exacerbated by Russia’s invasion of Ukraine.
Music Streaming represents extremely good value to
the consumer; as such we anticipate that it will continue
to be resilient and that the Streaming providers should
retain pricing power for their services, thus helping to
sustain the Company's royalty income.
Together, this enables the Board to have good
confidence for your Company’s future prospects.
Andrew Sutch
Chair
13 July 2022
STRATEGIC REPORT • THE CHAIR’S STATEMENT
SUPERSTARS • SUPER SONGS
Our Great Songwriters have written Iconic Songs for:
Mariah Carey
All I Want For Christmas
Is You
• Walter Afanasieff
We Belong Together
• J. Austin/K. Edmonds
Obsessed
• The-Dream/Tricky Stewart
One Sweet Day (feat. Boyz
II Men)
• Walter Afanasieff
#Beautiful (feat. Miguel)
• Happy Perez
Touch My Body
• The-Dream/Tricky Stewart
O Holy Night
• Walter Afanasieff
Shake It Off
• Johnta Austin
My All/Stay Awhile
• Walter Afanasieff
It’s Like That (feat. Jermain
Dupri & Fatman Scoop)
• Johnta Austin
I Want To Know What Love Is
• Tricky Stewart
Don’t Forget About Us
• Johnta Austin
Bye Bye
• Johnta Austin
Butterfly
• Walter Afanasieff
Miss You Most (At Christmas
Time)
• Walter Afanasieff
Infinity
• Ilsey Juber
Joy to The World
• Walter Afanasieff
Caution
• No I.D.
Hark The Herald Angels
Sing
• Walter Afanasieff
I Don’t (feat. YG)
• Johnta Austin
Jesus Born On This Day
• Walter Afanasieff
H.A.T.E.U.
• The-Dream/Tricky Stewart
Jesus, Oh What A Wonderful
Child
• Walter Afanasieff
Forever
• Walter Afanasieff
Get Your Number (feat.
Jermaine Dupri)
• Johnta Austin
8th Grade
• Poo Bear
When I Saw You
• Walter Afanasieff
The Art Of Letting Go
• Rodney Jerkins
Cruise Control (feat. Damian
Marley)
• Johnta Austin
I Am Free
• Walter Afanasieff
Whenever You Call
• Walter Afanasieff
Candy Bling
• The-Dream
Close My Eyes
• Walter Afanasieff
Fourth Of July
• Walter Afanasieff
Inseparable
• The-Dream/Tricky Stewart
I’m That Chick
• Johnta Austin
Looking In
• Walter Afanasieff
Love Story
• Johnta Austin
Outside
• Walter Afanasieff
Ribbon
• The-Dream/Tricky Stewart
To The Floor (feat. Nelly)
• Nelly
You’re Mine (Eternal) –
Remix (feat. Trey Songz)
• Rodney Jerkins
Inseparable
• Tricky Stewart
Betcha Gon’ Know (the
prologue)
• The-Dream/Tricky Stewart
God Rest Ye Merry,
Gentlemen
• Walter Afanasieff
Makin’ It Last All Night
(What It Do) – Ultra Album
Version (feat. Jermaine
Dupri)
• Walter Afanasieff/Johnta
Austin
More Than Just Friends
• The-Dream/Tricky Stewart
Standing O
• The-Dream/Tricky Stewart
The Impossible
• The-Dream/Tricky Stewart
Do You Think Of Me
• Walter Afanasieff
Lead The Way
• Walter Afanasieff
Up Out My Face
• The-Dream/Tricky Stewart
MARIAH CAREY FEATURES:
TWISTA
So Lonely (feat. Mariah
Carey)
• Rodney Jerkins
THEDREAM
My Love (feat. Mariah Carey)
• The-Dream
Photo by Romain Maurice/Getty Images
STRATEGIC REPORT
13
SUPERSTARS • SUPER SONGS
Our Great Songwriters have written Iconic Songs for:
Beyoncé/
Destiny’s Child
Halo
• Evan Bogart
Run The World (Girls)
• The-Dream
Irreplaceable
• Espionage
Love On Top
• The-Dream
Single Ladies (Put a Ring on It)
(2x GRAMMY®)
• The-Dream/Tricky Stewart
Partition
• The-Dream
XO
• The-Dream
Countdown
• The-Dream
Sweet Dreams
• Rico Love/Wayne Wilkins
Hold Up
• Emile Haynie
End Of Time
• The-Dream
Dance For You
• The-Dream/Tricky Stewart
Upgrade U (feat. Jay Z)
• Sean Garrett
Diva
• Sean Garrett
Listen (From the Motion Picture
“Dreamgirls”)
• Scott Cutler
Party (feat. André 3000)
• Jeff Bhasker
1+1
• The-Dream/Tricky Stewart
Déjà vu (feat. JAY-Z)
• Rodney Jerkins
All Night
• Ilsey Juber
I Care
• Jeff Bhasker
Jealous
• Lyrica Anderson
6 Inch (feat. The Weeknd)
• The-Dream
Schoolin’ Life
• The-Dream
Freedom
• Jonny Coffer
Ring The Alarm
• Sean Garrett
Smash Into You
• The-Dream/Tricky Stewart
Video Phone (+ Gaga remix)
• Sean Garrett
Video Phone (feat. Lady Gaga)
• Sean Garrett
Hello
• Evan Bogart
Yoncé
• The-Dream
Rather Die Young
• Jeff Bhasker
Flawless
• The-Dream
Radio
• Rico Love
Get Me Bodied
• Sean Garrett
Green Light
• Sean Garrett
Scared Of Lonely
• Rodney Jerkins/Rico Love
Save The Hero
• Rico Love
Daddy
• Mark Batson
World Wide Woman
• Sean Garrett
Check On It (feat. Bun B & Slim Thug)
• Sean Garrett
Grown Woman
• The-Dream
Lay Up Under Me
• Sean Garrett
Lost Yo Mind
• Sean Garrett
Poison
• Johnta Austin
BEYONCÉ FEATURES:
LADY GAGA
Telephone (feat. Beyoncé)
• Rodney Jerkins
J BALVIN
Mi Gente (feat. Beyoncé)
• The-Dream
JAYZ
Lift Off (feat. Beyoncé & Kanye West)
• Jeff Bhasker
JAYZ
Part II (On The Run) (feat. Beyoncé)
• The-Dream
JAYZ
Family Feud ft Beyoncé
• No I.D.
MARY J. BLIGE
Love A Woman (feat. Beyoncé)
• Sean Garrett
DESTINY’S CHILD:
Say My Name
• Rodney Jerkins
Soldier (feat. TI & Lil’ Wayne)
• Sean Garrett
Got’s My Own
• Sean Garrett
Cater 2 U
• Rodney Jerkins
Lose My Breath (2004)
• Sean Garrett/Rodney Jerkins
The Girl Is Mine
• Rodney Jerkins
Brown Eyes
• Walter Afanasieff
T-Shirt
• Sean Garrett
Through With Love
• Sean Garrett
Is She The Reason
• Sean Garrett
Feel The Same Way I Do
• Rodney Jerkins
Game Over
• Sean Garrett
My Heart Still Beats
• Walter Afanasieff
Photo by Kevin Winter/Getty Images
14
Merck Mercuriadis, Founder,
Hipgnosis Songs Fund Ltd and
Hipgnosis Song Management Ltd
STRATEGIC REPORT
15
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
Investment Adviser’s Report
Over the last four years
we have acquired an
incomparable portfolio of
some of the most successful
and culturally important
Songs of all time, now
valued at $2.7 billion. The
unique strength of our
Catalogue is demonstrated
by the 9.9% increase in the
Operative NAV to $1.8491
per share, as reported by
our Portfolio Independent
Valuer. This is largely driven as a result of our iconic
Songs outstripping the general market growth in
Streaming, particularly in the second half of 2021,
providing validation for our investment strategy.
This Operative NAV growth is an important initial step
in our thesis that the value of Catalogues would re-
rate as Streaming income grows and investors come
to recognise the utility-like income this produces.
Since inception, we have emphasised that not only
would iconic Songs produce uncorrelated income,
but that the most significant element in delivering an
exceptional Shareholder return was the growth in the
value of these Catalogues. We acquired Catalogues
coming off the back of 15 years of piracy that left them
as undervalued assets, being managed by traditional
publishers whose model to manage these Catalogues
was strictly passive and not suited for the incredible
digital opportunities that allow Song Management
to add value in a post-Streaming world. We are now
seeing this growth start to come through as paid-for
subscriptions exceed 500 million globally.
Not only has this delivered consistent double digit
music revenue growth, it has transformed the quality
of earnings that Songs produce. Iconic Songs no longer
generate a single physical sale as a discretionary
purchase, but a repeating utility income stream as
fans go back to these Songs of great importance to
them in good and bad times, over and over. You pay
your tenner a month and you can push play as often
as you like and iconic Songs win out. This is starting
to be recognised by investors globally, with some of
the largest private equity investors starting their own
music funds in the last year, including the private fund
Hipgnosis Song Management has with Blackstone. This
is not only a validation of our thesis, but importantly
increased competition for access to a limited number
of iconic Catalogues will re-rate prices and deliver
further NAV growth to our Shareholders.
On top of this, our disruptive Song Management is
built around the Streaming paradigm, focused on
managing and promoting our great hit Songs of the
past which have high demand rather than focusing
on promoting continuous new releases with no track
record. There will never be another Good Times by Chic,
Sweet Dreams (Are Made Of This) by Eurythmics, Heart
of Glass by Blondie, Shape Of You by Ed Sheeran, Heart
Of Gold by Neil Young, Under The Bridge by Red Hot
Chili Peppers, Let’s Stay Together by Al Green or Don’t
Stop Believin’ by Journey. In a month when Kate Bush’s
1985 hit Running Up That Hill reached Number 1 in the
UK singles chart, it is proven that these vintage iconic
Songs can be introduced to and will resonate with new
younger audiences. This increases their consumption
and lifespan to deliver further growth in their income
and value.
Market
2021/2022 has been another strong year for the music
industry. According to the IFPI, global recorded music
revenues grew by an impressive 18.5% year-on-year to
$25.9 billion in 2021, driven in large part by a continued
acceleration in the adoption in paid for Streaming.
523 million subscribers globally now pay for music, up
from 35 million in the US when we started four years ago.
Streaming now contributes about 65% of global industry
revenues, firmly establishing music as a utility income stream.
Whilst Streaming growth is not a new story, 2021/2022
saw some Streaming providers increase certain
subscription prices in test markets. These price increases
led to Spotify’s first increase in Average Revenue Per
User (ARPU) for five years, supporting our view that the
DSPs have pricing power.
This strong Streaming market is reflected in these annual
results, with 19% like-for-like Streaming PFAR growth in
the second half of 2021 in our Portfolio compared with
the first half of 2021, as shown in the PFAR analysis within
the Financial Review.
Streaming remains an extremely attractive consumer
proposition: it has the lowest pricing, provides the
highest quality and depth of content and the highest
level of interaction of all entertainment subscription
offerings. With music revenues historically proven to be
uncorrelated to consumer spending, and relatively low
STRATEGIC REPORT
16
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
penetration rates in both developed and emerging
markets, we continue to believe that this affordability
and convenience of Streaming will continue to grow
global subscriptions and revenues strongly. This view
is shared by leading industry experts, who have in the
last month upgraded global Streaming revenue growth
forecasts, despite the current macro-economic conditions.
Emerging platforms, such as TikTok, Triller and Twitch,
also continue to be an increasingly important part of
the music industry. TikTok, which few of us had heard
of when we launched Hipgnosis in 2018, now has over
1 billion active users and is delivering a new revenue
stream to copyright owners. Record companies and
publishers, who have a shorter time lag on receiving
income than Hipgnosis, received material revenues
from these platforms in 2021. Due to this time lag,
Hipgnosis received almost no revenue from these
platforms in 2021/22, despite them contributing 5% of
global music industry revenues in 2021. The continued
emergence and increasing popularity of these new
platforms is expected to drive strong growth, with
revenues predicted to hit 12% of industry revenues by
2030. We expect material TikTok revenues to be paid
through to us in this current financial year.
Performance income for the market has shown a strong
recovery, driven by the re-opening of bars, shops and
restaurants as well as the return to live performances.
Live Nation has said it experienced its “best first quarter
ever” for 2022. Based on what we are seeing, we share
the view of the industry experts, our Portfolio Independent
Valuer (Citrin Cooperman Advisors LLC, formerly
Massarsky Consulting Inc.) of a near complete recovery
in performance income in the next financial year.
Due to the time lag in collecting income as an IP owner,
which is the time between the consumption of Songs
and the royalty statements being processed, we have
only just started to see the effects of the recovery of
performance income, with a 9% like-for-like PFAR growth
for the second half of 2021 and we expect to see more
growth in the next financial year.
Overall, we remain very positive, with the global music
Streaming market size expected to reach $103.07 billion
by 2030, a CAGR of 9%.
Finally, and possibly most importantly for Hipgnosis,
there is a continued shift in music consumption towards
Catalogue music (defined by the industry as older than
18 months). Catalogue music reached 75% of all music
consumption in the US in 2021, up from 55% in 2016.
With our Portfolio comprised almost entirely of songs
older than 18 months we are well placed to continue
to benefit from this shift, especially when almost all
consumption of music is paid consumption, a marked
contrast to even five years ago when so much music
consumption was still illicit.
Our Portfolio
Proven hits and culturally important Songs are the
heart of our portfolio and the soundtrack of our lives.
They enjoy high levels of Streaming and are played
on the radio, on TV, in adverts and heard at so many
moments in our everyday lives including our commutes,
exercise, video games, social media etc. We listen to
them in times of celebration and reach for them when
we are seeking comfort. As a result, they deliver high
levels of reliable income over their long life cycle, which
historically has been shown to be uncorrelated to
macroeconomic conditions and consumer spending.
This was demonstrated during the COVID-19 pandemic
where income has been resilient, and able to support a
fully cash covered dividend.
We manage these great Songs to enhance their
legacy, introduce them to new audiences, which
creates value for our Shareholders and reinforces their
cultural significance in a virtuous circle. We also
acquire a select group of the most important younger
Songs that are already culturally significant and show
the highest levels of success in the Streaming market.
These Songs are able to deliver exceptional Streaming
growth as shown in their outperformance in the second
half of the year.
Hipgnosis has bought an incomparable portfolio
of iconic Songs demonstrated by co-owning:
• 67 out of 271 Songs in Spotify’s Billions Club,
• 52 of Rolling Stone’s The 500 Greatest Songs of All Time
• 13 of the Top 30 YouTube’s Most Viewed Music Videos
of All Time
• 3,854 Songs that have held Number 1 positions in
global charts
• 14,381 Songs that have held Top 10 positions in
global chart
• 156 Grammy award winning Songs
STRATEGIC REPORT • INVESTMENT ADVISER’S REPORT
STRATEGIC REPORT
17
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
Over the last year, Hipgnosis Songs Fund Ltd closed
eight acquisitions, including Red Hot Chili Peppers,
Christine McVie of Fleetwood Mac, Rhett Akins, The
Monsters & Strangerz (Stefan and Jordan Johnson),
Elliot Lurie, Ann Wilson and Kaiser Chiefs, for a total
consideration of c.$265 million. These were bought
with the proceeds following a successful placing of
£156 million ($215 million) conducted in July 2021. As
a result of these acquisitions, the portfolio as at 31 March
2022 is comprised of 146 Catalogues, 65,413 Songs,
with an aggregate fair value of $2.69 billion (as
determined by the Portfolio Independent Valuer),
reflecting an average fair value multiple of 20.08x
historical annual net publisher share income, compared
to the blended acquisition multiple of 15.93x.
We have showcased a few superstar artists throughout
this report to show the breadth of our many Songwriters
associated with them. Songs performed by globally
successful and culturally important artists include:
2 Pac, 5 Seconds of Summer, 10cc, 21 Savage, 50 Cent, 10,000 Maniacs, A$AP Rocky, AC/DC, Adele,
Al Green, Alan Jackson, Alicia Keys, Aluna George, Amy Winehouse, Andrea Bocelli, Anitta, Anthony
Hamilton, Ariana Grande, Aretha Franklin, AudioSlave, Avicii, B-52s, Baby Bash, Backstreet Boys,
Barbra Streisand, Barry Manilow, Bebe Rexha, Benny Blanco, Beyoncé, Biffy Clyro, Big & Rich,
Big Freedia, Birdy, Blind Faith, Blink 182, Blondie, Bon Jovi, Booker T & The MG’s, Boyz II Men,
Britney Spears, Bruce Springsteen, Bruno Mars, Bryan Adams, Camila Cabello, Carly Simon,
Celine Dion, Charli XCX, Cher, Chic, Chris Brown, Christina Perri, Christopher Cross, Clipse,
Damian Marley, Dave Matthews Band, David Gray, David Guetta, Demi Lovato,
Destiny’s Child, Diana Ross, Dierks Bentley, Dionne Warwick, Diplo, Dire Straits,
DJ Snake, Dua Lipa, Duran Duran, Dusty Springfield, Ed Sheeran, Ellie Goulding, Eminem,
Enrique Iglesias, Erica Banks, Eric Prydz, Ernestine Anderson, Eurythmics, Fantasia, FKA Twigs,
Fleetwood Mac, Florence And The Machine, Flo-Rida, Florida Georgia Line, fun., Galantis,
George Benson, George Thorogood, Gladys Knight, Hailee Steinfeld, Halsey, Harry Styles, Iggy Azalea,
Imagine Dragons, James Bay, James Morrison, Jason Aldean, Jason Derulo, Jay Z, Jennifer Hudson,
Jeff Buckley, Jennifer Lopez, Jess Glynne, Jimmy Buffett, Jodie Harsh, John Legend, John Newman,
Josh Groban, Journey, Juicy J, Justin Bieber, Justin Timberlake, Kaiser Chiefs, Kali Uchis, Kanye West,
Katy Perry, Keith Urban, Kelis, Kelly Clarkson, Kelly Rowland, Khalid, Killswitch Engage,
Kylie Minogue, Lady Gaga, Lana Del Rey, Lara Fabian, Lauv, LeAnn Rimes, Leo Sayer,
Lindsey Buckingham, Linkin Park, Lionel Richie, Little Mix, Lizzo, Lorde, LunchMoney Lewis, M.I.A.,
Madonna, Marc Anthony, Maren Morris, Mariah Carey, Mark Ronson, Maroon 5, Mary J Blige,
Machine Gun Kelly, Massive Attack, Matchbox Twenty, Matt & Kim, MC Hammer, Meatloaf, Meek
Mill, Meghan Trainor, Melissa Manchester, Metallica, Metro Boomin’, MF Doom, Michael Bolton,
Michael Bublé, Michael Jackson, Mick Jagger, Miguel, Miike Snow, Miley Cyrus, Molly Sanden,
Moses Sumney, Mötley Crüe, My Marianne, Natalie Merchant, Nelly, Neil Young, New Kids
On The Block, Nicki Minaj, Nirvana, No Doubt, Ólafur Arnalds, Olivia Rodrigo, One Direction, P!nk,
Paloma Faith, Panic! At The Disco, Papa Roach, Paris Boy, Patti Smith, Paul Anka, Paul McCartney,
Pearl Jam, Pell, Perfume Genius, Phoebe Bridgers, Pitbull, Pop Smoke, Post Malone, Puff Daddy, Pusha T,
Rage Against The Machine, Rebecca Ferguson, Rejjie Snow, Rick James, Rick Ross, Ricky Martin, Rihanna,
Rita Ora, Robbie Williams, Rod Stewart, Rudimental, RZA, Santana, Santigold, Sawyer Brown, Seal,
Selena Gomez, Shakira, Shawn Mendes, Sia, Sigala, Sigma, Silk City, Simple Minds, Sinead O’Connor,
Sister Sledge, Skrillex, Sky Ferreira, Solange, Soundgarden, Spencer Davis Group, Spice Girls,
Steve Aoki, Steve Winwood, Stevie Nicks, Stormzy, Sugarhill Gang, Sum 41, Super Furry Animals,
Swedish House Mafia, SZA, T.I., Taio Cruz, Take That, Taylor Swift, Tchami, Teddy Bears, Teenage Fanclub,
The Chainsmokers, The Editors, The Outfield, The Pretenders, The Wombats, Third Day, Tiesto, Tim McGraw,
Timbaland, Tina Arena, Tinie Tempah, TLC, Toby Keith, Tom Jones, Tom Petty & The Heartbreakers,
The Kid Laroi, The Mindbenders, The Vamps, Theophilus London, Tom Walker, Toto, T-Pain, Tracey
Chapman, Traffic, Train, Trey Songz, Trivium, Troye Sivan, TV On The Radio, Ty Dolla $ign, U2, Usher,
Waka Flocka Flame, Weezer, Westlife, Whitney Houston, Will Ferrell, Wu-Tang Clan, Young The Giant,
Zara Larsson and Zedd.
18
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
STRATEGIC REPORT • INVESTMENT ADVISER’S REPORT
Catalogue
Acquisition
Date
Interest
Ownership
Total
Songs
The-Dream  Ju l  75% 
Poo Bear  Nov  100% 
Bernard Edwards  Nov  38% 
TMS  Dec  100% 
Tricky Stewart  Dec  100% 
Giorgio Tuinfort  Dec  100% 
Rainbow  Jan  100% 
Itaal Shur  Jan  100% 
Rico Love  Feb  100% 
Sean Garrett  Mar  100% 
Johnta Austin  Mar  100% 
Sam Hollander  Mar  100% 
Ari Levine  Mar  100% 
Teddy Geiger  Apr  100% 
Starrah  Apr  100% 
Dave Stewart  May  100% ,
Al Jackson Jr  May  100% 
Jamie Scott  May  100% 
Michael Knox  May  100% 
Brian Kennedy  Jun  100% 
John Bellion  Jun  100% 
Lyric Catalogue  Jun  100% 
Neal Schon  Jun  100% 
Jason Ingram  Jul  100% 
Eric Bellinger  J u l  100% 
Andy Marvel  J u l  100% 
Benny Blanco  Aug  100% 
The Chainsmokers  Aug  100% 
Timbaland  Oct  100% 
10cc  Oct  100% 
Journey (Publishing)  Oct  100% 
John Newman  Nov  100% 
Jaron Boyer  Nov  100% 
Arthouse  Nov  100% 
Fraser T Smith  Dec  100% 
Jack Antonoff  Dec  99% 
Ammar Malik  Dec  100% 
Ed Drewett  Dec  100% 
Kaiser Chiefs (Masters)  Dec  100% 
Catalogue
Acquisition
Date
Interest
Ownership
Total
Songs
Jeff Bhasker  Dec  100% 
Johnny McDaid  Dec  100% 
Emile Haynie  Dec  100% 
Brendan O’Brien  Dec  100% ,
Savan Kotecha  Dec  100% 
Tom Delonge  Dec  100% 
Journey (Masters)  Jan  65% 
Rebel One  Jan  100% 
Scott Harris  Jan  100% 
Brian Higgins  Jan  100% 
Gregg Wells  Feb  100% 
Jonathan Cain  Feb  100% 
Jonny Coffer  Feb  100% 
Mark Ronson  Feb  100% 
Richie Sambora  Mar  100% 
Rodney Jerkins  Jul  100% 
Barry Manilow  Jul  100% 
RedOne  Jul  100% 
Eliot Kennedy  Jul  100% 
Closer (J King & I Slade)  Jul  100% 
NO I.D.  Jul  100% 
Pusha T  Jul  100% 
Ian Kirkpatrick  Jul  100% 
Blondie  Jul  100% 
Chris Cornell  Aug  100% 
Robert Diggs “RZA”  Aug  50% 
Ivor Raymonde  Aug  100% 
Nikki Sixx  Sep  100% 
Big Deal Music “BDM”  Sep  100% ,
Julian Bunetta  Sep  50% 
Chrissie Hynde  Sep  100% 
Steve Robson  Sep  100% ,
Rick James  Sep  50% 
Kevin Godley  Sep  100% 
Scott Cutler  Sep  100% 
Nate Ruess  Sep  100% 
LA Reid  Sep  100% 
50 Cent
 Sep  100% 
Aristotracks  Sep  100% 
Portfolio as at 31 March 2022
STRATEGIC REPORT
19
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
Catalogue
Acquisition
Date
Interest
Ownership
Total
Songs
B-52’s  Sep  100% 
Bonnie McKee  Sep  100% 
Brill Building  Sep  100% 
Christina Perri  Sep  100% 
Dierks Bentley  Sep  100% 
Editors  Sep  100% 
Eman  Sep  100% 
Enrique Iglesias  Sep  100% 
Evan Bogart  Sep  100% 
George Benson  Sep  100% 
George Thorogood  Sep  100% 
Good Soldier  Sep  100% 
Holy Ghost  Sep  100% 
J-Kash  Sep  100% 
John Rich  Sep  100% 
Kojak  Sep  100% 
Lateral  Sep  100% 
Lindsey Buckingham (Kobalt)  Sep  100% 
LunchMoney Lewis  Sep  100% 
Lyrica Anderson  Sep  100% 
Madcon  Sep  100% 173
Mark Batson  Sep  100% 
Mobens  Sep  100% ,
Nelly (Kobalt)  Sep  100% 
Nettwerk  Sep  100% ,
PRMD  Sep  100% 
Rob Hatch  Sep  100% 
Rock Mafia  Sep  100% 
Savan Kotecha (Kobalt)  Sep  100% 
SK Music  Sep  100% 
Skrillex  Sep  100% 
Stereoscope  Sep  100% 
Steve Winwood  Sep  100% 
Tequila  Sep  100% 
Third Day  Sep  100% 
TImeflies (Masters)  Sep  100% 
Walter Afanasieff  Sep  100% 
Wayne Wilkins  Sep  100% 
Yaslina  Sep  100% 
Catalogue
Acquisition
Date
Interest
Ownership
Total
Songs
Sacha Skarbek  Nov  100% 
Tricky Stewart (Masters)  Nov  100% 
Eric Stewart  Dec  100% 
Bob Rock  Dec  100% 
Caroline Ailin (“New Rules”)  Dec  100% 
Nelly  Dec  100% 
Lindsey Buckingham  Dec  100% 
Joel Little  Dec  100% 
Jimmy Iovine  Dec  100% 
Neil Young  Dec  50% 
Shakira  Dec  100% 
Brian Kennedy (Writer Share)  Dec  100% 
Andrew Watt  Feb  100% 
Christian Karlsson  Mar  100% 
Carole Bayer Sager  Mar  100% 
Paul Barry  Mar  100% 
Espionage  Mar  100% 
Martin Bresso  Mar  100% 
Andy Wallace  Mar  100% ,
David Sitek  Mar  100% 
Happy Perez  Mar  100% 
Red Hot Chili Peppers 14 Jul 2021 100% 220
Kaiser Chiefs 15 Jul 2021 100% 136
Christine McVie 21 Jul 2021 100% 115
Jordon Johnson 22 Jul 2021 100% 58
Stefan Johnson* 22 Jul 2021 100% 58
Rhett Akins 23 Jul 2021 100% 564
Ann Wilson 29 Jul 2021 50% 152
Elliot Lurie 24 Aug 2021 100% 70
Total Songs 65,413
* Not counted in total song count
20
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
Talking to the Moon, by Bruno Mars, is an example
of a Song that has been brought back to life; part of
the Hipgnosis Catalogue through both the Ari Levine
(publishing share) and the Jeff Bhasker (writer share of
performance) acquisitions, it was released in April 2011.
Ten years on, following a TikTok ‘moment’ in March 2021,
there has been a marked increase in consumption on
YouTube and on the Streaming platforms.
The Song has seen a notable increase in US Streaming
consumption, starting in March 2021 when a single
TikTok post covering 24 seconds of the Song went viral.
Since then, creators globally have started their own
trend using a clip from the Song: there are now over
460,000 TikTok posts associated with Talking to the
Moon, with surges coinciding with the release of
new content.
For example, a dance remix version ended up on
YouTube, which, to date has been viewed more than
29 million times alone. The original clip that went viral in
March 2021 has now been viewed 49.1 million times.
Talking to the Moon entered new charts in 2021 and
also entered the Billboard Global 200 chart where it
spent 27 weeks, peaking at Number 57 in May 2021, an
impressive feat for a 2011 song. It has now been listened
to over 750,000 times on Spotify alone.
In early November 2021, Sam Tompkin’s cover of Talking
to the Moon was sampled by rapper, Jnr Choi. The
sampled version, To The Moon, went viral on TikTok as
well as topping Spotify’s Viral Hits playlist and landing
a Top 10 spot on the Billboard Hot R&B/Hip-Hop Songs
Chart. The original Bruno Mars song peaked once again
at almost 7 million weekly streams across all DSPs in the
US alone [below].
Hipgnosis has its own TikTok channel and has created
a platform in which to showcase the Songs and their
creations.
STRATEGIC REPORT • INVESTMENT ADVISER’S REPORT
Case Study – Bringing Songs Back to Life:
Talking to the Moon, by Bruno Mars
TikTok has the capacity to expose songs, extend their life for new generations to come
and make them hits all over again by introducing them to a new audience.
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
20212020 2022
Weekly US On-Demand Steams
US Streams for Talking to the Moon and To the Moon
Source: Luminate, Weekly US On-Demand Streams
 Talking to the Moon, by Bruno Mars

To The Moon, sampled by Jnr Choi
A video sampling
the song appears
on TikTok
Release of
Jnr Choi’sand
Sam Tompkin’s
To the Moon,
on Spotify
Talking to the Moon
certified 2x platinum
RIAA
Sam Tompkins
posts cover version
of Talking to the
Moon on TikTok
Talking to the Moon by Bruno Mars was released
in April 2011 and is part of the Hipgnosis Catalogue
though both the Ari Levine and Jeff Bhasker
catalogues.
STRATEGIC REPORT
21
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
By owning a share of the publishing
and writers share, Hipgnosis benefits
from royalty receipts generated by the
success of sample and cover versions
of the 2011 original.
Cumulative Spotify Streams (m)
0
100
200
300
400
500
600
700
800
Weekly Streams (’000s)
0
250
500
750
1000
1250
1500
1750
2000
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
20212020 2022
May
Global Spotify figures for Talking to the Moon
Source: Chartmetric
 Cumulative Spotify Streams – LHS
 Weekly Streams – RHS
Cumulative TikTok Posts (’000s)
0
100
200
300
400
500
Weekly Posts
0
2,000
4,000
6,000
8,000
10,000
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
20212020 2022
May
TikTok activity for Talking to the Moon
Source: Chartmetric
 Cumulative Posts – LHS
 Weekly Posts – RHS
22
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
Song Management
We continue our focus on proactively managing the
iconic Songs we have acquired.
Song Management is a new paradigm that we have
created at Hipgnosis Song Management, where we
manage proven hit Songs with responsibility and ensure
that they’re being put into movies, TV commercials,
video games, on playlists and on TikTok so that new fans
discover them, that new artists are covering them and
that new Songwriters are interpolating them. This adds
significant value for our Shareholders and enhances the
legacies of the great Songwriters that have entrusted us
with their work. In addition to Streaming, the beauty of
today’s environment is that almost all consumption of
music is being paid for.
Song Promotion
Given Hipgnosis acquires proven, timeless, globally
iconic Catalogues, the Song Management team is able
to leverage off the high concentration of platinum-level
hits in our portfolio. We have a relatively small Portfolio
of Catalogues with a very high ratio of extraordinarily
successful hits within it, which is unparalled in today’s
music business.
The team works with all the traditional outlets as well as
established and emerging areas of digital platforms,
social media, video games and life-style outlets creating
and taking advantage of natural opportunities to
constantly refresh and increase the profile of our Songs.
All of which fuels consumption and Streaming growth
and increases the value and opportunity for licensing
our Songs to film, television, gaming and advertising.
As explained previously, an example of a new emerging
opportunity is TikTok, which has over a billion active
users. Hipgnosis has been proactive in building a presence
to promote our artists and Catalogues and our channel
@Hipgnosissongs has rapidly built a following of over
2.1 million users, considerably more than most traditional
publishers. Early in 2022, we launched three splinter
TikTok channels focusing on Rock (@Tok.Rok), Country
(@Whiskey.Nation) and Gaming (@Joy.Pad), each
already have over 100K followers.
Activity on TikTok leads directly to YouTube views and
additional Streaming of Songs, making it an entirely
connected ecosystem. TikTok has the capacity to
introduce our iconic Songs to a new younger audience
and deepen the engagement of a Song bringing hit
Songs back into the mainstream all over again and
extending their life for generations to come.
As a Short Video Clips content platform, TikTok’s
capacity to amass interest in music of all vintages is
seemingly limitless. According to a recent study by
Luminate, who provide the information for the Billboard
music charts, 66% of Gen Z TikTok users discover new
music via Short Video Clips, making it the Number 1
music discovery source for this group. Creating a viral hit
on TikTok leads to users discovering songs on other Digital
Service Providers (DSPs) and this, in turn, drives Streaming
consumption for both Catalogue and frontline releases.
TikTok is a launch-pad for proven hits of yesterday both
organically and as an industry standard promotional tool.
It is also a platform that has been demonstrated to
extend the lifespan of a song or even reinvigorate songs
which were not successful when they were first launched.
This is a similar trend to the one seen for the Amazon-
owned livestreaming platform Twitch. According to a
study by Luminate, one in three music listeners in the US
now discover new music through Twitch.
We explore in more detail the resurgence in the
consumption of one of our Songs: Talking to the Moon
by Bruno Mars (Ari Levine and Jeff Bhasker Catalogues)
on pages 20-21.
Another classic example is Truth Hurts by Lizzo. The Song,
which Hipgnosis Songs Group administers, was released
in September 2017. It did not chart at the time and only
rose in popularity in 2019 when TikTok users started using
her lyrics (which include “I just took a DNA test, turns
out I’m 100% that b****”) to create new content in a
DNA Test Challenge. Following this, the song reached
Number One on the Billboard Hot 100. It spent seven
weeks at Number One becoming the longest-running
number one for a female solo rapper, earning her a
Guinness World Record. It was also nominated for three
Grammy awards in 2020 and certified 7x platinum by
the RIAA. In 2021 it was included in Rolling Stone’s 500
Greatest Songs of All Time.
The Song Management team actively promotes and
showcases albums by our Songwriters when they celebrate
major anniversaries working with industry partners to secure
the re-release of classic albums, helping to deliver on
the creative and drive supporting marketing activities.
This is proven to deliver significant uplifts in interest in
STRATEGIC REPORT • INVESTMENT ADVISER’S REPORT
Star Power 7
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23
We congratulate Shakira, who was awarded the prestigious Special International Award at the
at the Ivor Novello Awards with Apple Music, in May 2022. Hipgnosis Songs Fund bought her
Catalogue in December 2020.
24
We congratulate Richie Sambora who, together with Jon Bon Jovi, was awarded the prestigious
Special International Award at the Ivor Novello Awards with Apple Music in September 2021.
Hipgnosis Songs Fund bought his Catalogue in March 2020.
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an artist and their songs, both by reconnecting to the
fans and introducing their music to a new audience. Vinyl
re-releases we have helped to promote in 2021 include
Nirvana’s Nevermind, Journey’s Escape and Shakira’s
Laundry Service.
Nirvana re-released Nevermind in November 2021,
mixed by Andy Wallace. Analysis of the US album sales
(Luminate) shows that their excess sales, i.e. sales over
and above their baseline, jumped ten-fold in the week
of its release and have stayed at a high level ever since.
In fact, for the following 26 weeks, the excess sales have
been equivalent to an additional 12 months of normal
level of sales. The activity and interest around an album
re-release can also drive an uptick in Streaming for the
artist’s music, which is not captured in this analysis.
Journey’s re-release of their Escape album, in the form
of a coloured vinyl, saw strong demand resulting in
the exclusive retailer ordering additional pressings.
A black vinyl release is now planned for August 2022.
Both Nirvana and Journey have a solid baseline
of on-going vinyl sales. However, even where an
artist’s fanbase may be of a demographic which is
not traditionally made up of vinyl purchasers, a high
quality, proactive marketing campaign to promote
an anniversary vinyl can be very successful. This was
the case with Shakira’s Laundry Service where sales
surpassed our expectations.
Additionally, when a strong Synch is placed in a TV
show or film, this can have an impact on all types of
consumption with the power to push a song up to the
top of the charts and create opportunities for more
Synchs.
When Something in the Way, also from Nirvana’s
Nevermind album, enjoyed a prominent feature in the
latest Batman franchise film, The Batman, the level of
consumption via Streaming rose significantly. To complete
the circle, Hipgnosis further boosted the Song using its
TikTok channel. Something in the Way re-entered the
charts, entering the Billboard Hot 100 at number 46, and
it also made the Top 40 in several countries.
Following the excitement around the Journey album
re-release, their Song Separate Ways (World Apart) was
selected for use in the trailer to season 4 of the Netflix hit
series Stranger Things, a major Synch success.
Synch
With our vision of a global, in-house ‘24/7’ Synch
licensing operation now a reality, our executives are
able to respond to the opportunities being generated
within a matter of minutes, right around the clock.
For the vast majority of our repertoire – regardless of
who administers the Song – we are the sole approval
party for all Synch requests. This has allowed us to
comprehensively slash approval/response times on
some of the world’s most iconic Songs. Music supervisors,
studios and agencies are no longer being made to
wait weeks-on-end for an answer and as a result favour
working with us.
We have a dedicated, in-house sales function, tasked
solely with curating our Catalogue from a Synch
perspective. By comprehensively profiling our Catalogue,
unearthing previously underused repertoire, we are
enabling our global Synch pitching teams to be ahead
of the game and chase down high-profile opportunities.
Our team have direct relationships with the world’s
biggest film studios, advertising agencies, broadcasters
and music supervisors. These relationships and our
efficiency in responding to opportunities are effective
in getting our Songs to the front of the queue in the
creative and commercial decision making process. It
also means that we are not reliant on the administrators
of our Songs to generate opportunities for our Catalogue.
During the year, we have invested in growing our
global Synch team, particularly in London and New
York. Additionally, we have built a comprehensive
international network of Synch agents, providing
coverage across all major markets in Europe and Asia.
This has delivered a 20% increase of formal licensing
requests approved in the 6 months to 31 March 2022
vs the prior half year period. We are starting to see our
increasing Synch activity deliver additional income,
with a +7% increase in Synch PFAR in H2 2021 vs H1 2021.
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STRATEGIC REPORT • INVESTMENT ADVISER’S REPORT
Here are some of our recent Synch successes
from across the Catalogue:
TV and Streaming
• The trailer for season 4 of Netflix’s smash hit ‘Stranger
Things’ features Journey’s song Separate Ways (Worlds
Apart). The trailer gained over 5.8 million views, in the
first 24 hours.
• Three of the 10 songs featured in Season Two of
Netflix’s ‘Bridgerton’ were written by Hipgnosis
songwriters: P!nk What About Us (co-written by Johnny
McDaid), Miley Cyrus’ Wrecking Ball (co-written by
Sacha Skarbek) and Harry Styles’ Sign of the Times
(co-written by Jeff Bhasker).
• Jill Andrews’ recording of Neil Young’s Only Love Can
Break Your Heart features in the latest season of NBC’s
‘This Is Us’. In another episode, Lorde’s Royals (co-
written by Joel Little) was also used.
• Danny Boyle’s Disney+ series ‘Pistol’ – about the story
of the Sex Pistols, featured The Pretenders’ Kid and Brass
In Pocket, both of which were written by Chrissie Hynde.
• Munich (written by Hipgnosis’ Editors) was featured
in Showtime’s breakout critically-acclaimed series,
‘Yellowjackets’.
• Here In Spirit by Jim James featured in Netflix’s ‘Ozark’
season 4. Following this, the song was on Shazam’s
biggest movers around the launch of the season.
• The first episode of CBS’ ‘The Equalizer’ features an
on-screen performance of Neil Young’s timeless song,
Old Man.
• Bad To The Bone by George Thorogood is the
soundtrack to a major promotion for Amazon’s global
Prime Video Streaming platform.
• Ciara’s Girl Gang, written by Tricky Stewart,
soundtracks the trailer for Amazon Prime’s
forthcoming comedy, ‘Harlem’.
• ABC’s brand-new musical drama series ‘Queens’
features Diana Ross’s I’m Coming Out, which was
written by Nile Rodgers & Bernard Edwards.
• HBO Max’s re-boot of ‘Gossip Girl’ features numerous
Hipgnosis songs, including Jessie Ware’s Spotlight and
B.O.M.B. by St. Panther – and a cast performance of
Lady Gaga’s Shallow, which was written with Mark
Ronson.
• Blondie’s One Way Or Another was featured in the
second season of Jerry Bruckheimer’s TV series,
‘H ightown’.
• BBC’s ‘Reclaiming Amy’ documentary about Amy
Winehouse features Back To Black, which was written
by Mark Ronson.
• The trailer for season 3 of Netflix’s ‘Narcos’ Mexico
featured Soundgarden’s Black Hole Sun, written by
Chris Cornell.
• AppleTV’s ‘WeCrashed’ drama series (about the
WeWork organisation), features Katy Perry’s Roar
(co-written by Bonnie McKee), on multiple occasions
throughout the series. The show also features St
Vincent’s New York (Annie Clark), Baauer’s Harlem
Shake (Harry Rodrigues), Nicolar Jaar’s Three Sides of
Nazareth and Odie’s Utopia (Phil Scully).
• HBO Max’s new series ‘Our Flag Means Death’
features both Heart’s Crazy On You, co-written by
Ann Wilson and Blondie’s Atomic, written by Debbie
Harry and Chris Stein.
• The new season of ABC’s ‘Black-ish’ features Dionne
Warwick’s That’s What Friends Are For (co-written by
Carole Bayer Sager).
Film
• Nirvana’s Something In The Way, mixed by Andy
Wallace, enjoyed a prominent feature throughout
the latest instalment of the Batman franchise.
Consumption of the song surged across all major
platforms following the release of the trailer for the film.
• The Spencer Davis Group Gimme Some Lovin is
the soundtrack to the trailer of Warner Bros’ hotly
anticipated ‘Father of The Bride’ – a 2022 re-make
of the iconic Steve Martin film from 1991.
• ‘Sing 2’ – which was the largest animated film of 2021,
featured no fewer than eight of Hipgnosis’ songs.
Shawn Mendes There’s Nothing Holdin’ Me Back, co-
written by Scott Harris & Teddy Geiger, was the main
song in the film and has gone on to secure numerous
ancillary usages relating to the film’s global marketing
campaign.
• Eurythmics’ Sweet Dreams (Are Made of This), co-
written by Dave Stewart, featured in the main trailer
for MGM‘s major worldwide Q4 release ‘House of
Gucci’, directed by Ridley Scott and starring Lady
Gaga and Adam Driver.
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• The initial trailer for the same movie was also
soundtracked by a Hipgnosis song, Heart Of Glass by
Blondie, written by Debbie Harry and Chris Stein.
• The trailer for DC’s hotly-anticipated ‘Black Adam’
was soundtracked by a remix of the Soundgarden
song Black Hole Sun, which was written by Chris
Cornell.
• Love Shack by the B-52’s is featured in Netflix’s hugely
successful and critically acclaimed new musical,
‘Tick, Tick… Boom!’.
• Oscar-winning Will Smith’s film ‘King Richard’ featured
Journey’s Only The Young, which was co-written by
Hipgnosis’ Neal Schon & Jonathan Cain.
• Livin’ On A Prayer by Bon Jovi (co-written by Richie
Sambora) enjoys a key featured usage in the Oscar-
nominated Olivia Coleman movie, ‘The Lost Daughter’.
Advertising
• Amazon’s 2022 Superbowl commercial featured
Fleetwood Mac’s Little Lies (written by Hipgnosis’
Christine McVie).
• 7-Up has selected Bruno Mars’ Uptown Funk, co-written
by Mark Ronson, as the soundtrack to their global 2022
re-launch campaign.
• Carolina Herrera’s new global TV campaign for their
‘Bad Boy’ fragrance, is soundtracked by Mark Ronson’s
Ooh Wee.
• UK retailer Tesco selected Hero by Enrique Iglesias as
the soundtrack to their latest TV advertising campaign.
• Mariah Carey’s All I Want For Christmas Is You,
co-written by Walter Afanasieff, was the focus of
McDonald’s Christmas 2021 campaign.
• Our classic Bond theme Nobody Does it Better by
Carly Simon, co-written by Carole Bayer Sager,
was the soundtrack for DHL’s global advertising
campaign, which was launched in conjunction
with the long-awaited James Bond blockbuster film
‘007: No Time To Die’.
• It’s My Life (written by Richie Sambora) was selected
by German supermarket chain Penny for their
Christmas campaign 2021. The commercial, which
speaks about the difficult times especially teenagers
are going through during the pandemic, went viral
immediately, amassing close to 14 million views on
YouTube alone in the first four weeks after its launch.
• Burberry’s global campaign for their ‘Hero’ fragrance
– starring Adam Driver, featured Two Weeks by FKA
Twigs (written by Emile Haynie) as its soundtrack.
• Hipgnosis songwriter Birdy re-recorded Ivor Raymonde’s
I Only Want To Be With You (which is owned by
Hipgnosis), for a major Deutsche Telekom advertising
campaign.
• Michael Kors’ Christmas commercial for 2021 was
soundtracked by Sister Sledge’s We Are Family, which
was written by Nile Rodgers and Bernard Edwards.
• Wells Fargo selected Fitz & The Tantrums’ HandClap
(written by Sam Hollander) to soundtrack their North
American brand campaign.
• Nelly’s Hot In Here was chosen as the soundtrack for
Burger King’s North American advertising campaign.
• Global car brand Genesis used two of Hipgnosis’
songs for their GV70 and GV80 brand campaigns: FKA
Twigs’ Video Girl (written by Emile Haynie) and Ólafur
Arnalds’ Particles.
• BMW selected Get After It by The Cadillac Three as the
soundtrack for one of their key 2021 brand campaigns.
• In Australia, McDonald’s chose Bon Jovi’s Livin’ On A
Prayer (co-written by Richie Sambora) to soundtrack
their nationwide advertising campaign.
Video Game
• The El-P remix of Supercut by Lorde (written by Jack
Antonoff) features in the soundtrack to EA’s ‘FIFA 22’
video game.
• Hipgnosis has now approved the use of over 70 songs
in the mobile game ‘Beatstar’, which launched
globally in August 2021.
• A number of Hipgnosis songs are currently appearing
in Fortnite, including: Glass Animals’ Heat Waves
(David Bayley), Zella Day’s Dance For Love (Ryan Hahn),
Bruno Mars’ Treasure and Locked Out of Heaven
(Ari Levine), Lennie Squire’s Gold (Bede Kennedy),
Mitski’s The Only Heartbreaker (Dan Wilson) and
Normani’s Motivation (Savan Kotecha).
• Hundreds of songs from across the Hipgnosis catalogue
are also being licensed for use in an array of other
games, including: Grand Theft Auto, Fortnite, The Sims,
Call of Duty, Let’s Sing, NHL ’22, Gran Turismo, WWE 2K22,
Roblox, Beat Saber, Rocket League, Dance Church,
Riders Republic, Rock Band and many more.
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Song Administration
A key part of our strategy is to reduce administration
costs and ensure that these payments from Publishers
are received as quickly as possible. We continue
to revert and renegotiate administration rates on
Catalogues at the earliest possible opportunity (unless
there are compelling reasons to partner with existing
administrators) and we continually look for the best solution.
Our acquisition in September 2020 of Hipgnosis Songs
Group (HSG), formerly Big Deal Music, has been
instrumental in that journey. HSG’s administration
capabilities allow the Fund to benefit from its own
efficient in-house administration function in the US. HSG
now administers a total of 32 of the Fund’s Catalogues
across 60 specific agreements, representing 5,483
compositions. These include the US sourced income
from Catalogues by: Red Hot Chili Peppers, Neil Young,
Benny Blanco, Brian Higgins, Itaal Shur, Johnta Austin,
Sam Hollander, Tom DeLonge and Christine McVie.
We anticipate more catalogues to move across in the
coming months. 
Reverted Catalogues for SONG
As at 31 March 2022
Number of
agreements
Number of
Catalogues
To Kobalt 60 29
To HSG 39 32
To Peermusic 2 2
Overall Catalogues Reverted  34*
*In most instances, Catalogues are reverted to more than one Administrator.
We review all options to ensure the administration of
our Catalogues is carried out as efficiently and cost-
effectively as possible. Following the financial year
end, we have agreed a ground-breaking new deal
whereby Sacem, the French CMO, will collect the
digital rights income for the writers’ share, primarily in
the UK and the EU and pay them directly to Hipgnosis.
This direct collection model eliminates one link in the
royalty collection process, materially reducing third
party administration and collection fees and the length
of time it takes to collect digital revenues. Initially, we
are transferring approximately 30 Catalogues where
the Song Administration rights have fully reverted to
Hipgnosis i.e. where existing administration deals have
lapsed. We are thrilled to be partnering on this direct
collection model with Sacem.
Alongside this, we have also signed a sub publishing
partnership with Peermusic, the world’s largest
independent music publishing and neighbouring rights
administration company, for them to administer specific
Catalogues. Peermusic will collect royalties in territories
not administered by HSG or Sacem, primarily Latin
America and Asia. This deal allows us to help maximise
local Synch markets through their worldwide offices.
Whilst HSG is increasingly administrating the US portions
of our Catalogues, it continues to be a third-party
administrator as well. Noteworthy, this year HSG has
administered Truth Hurts, by Lizzo, as seen earlier, as well
as Glass Animals’ outstanding song Heat Waves. The
latter reached Number One on the US Top 40 Charts
as well as Number One on the Billboard Hot 100 and
Billboard Global 200 Charts, and Number One on both
the Spotify US and Global charts. It also became part
of Spotify’s Billions Club in September 2021.
Song Copyright Management and uplift
Our multi-pronged initiatives within Copyright
Management, which centre on searching for missing
revenues, continue unabated.
This has involved designing an in-house system gathering
data available on every Song that we own, to help us
build a true picture of our Catalogue. This aim serves
various purposes: to make sure our Synch and Copyright
teams have immediate and accurate access to all
relevant information and to give us the ability to search
for missing revenue across some of our major platforms.
Delays in payments occur when the aggregate
compositional shares are greater than 100% within a
song. We flag where this is the case in order to unlock
disputes, which leads to higher revenues for Hipgnosis.
In order to increase monetisation, Hipgnosis has
partnered with a number of third-party providers across
different revenue streams. We set out in the following
table the number of partners that Hipgnosis is working
with. The number depends on the complexities and
opportunities we have identified to seek extra revenues.
Currently all our partners are in a trial period and as
the results come through, we will roll-out successful
partnerships across the Catalogue.
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Third-Party Partnerships
Number of partners
Online Revenues 3 (in trial)
Synch Revenues 1 (in trial)
Mechanical Revenues 4 (in trial)
Neighbouring Rights 1 (in trial)
Writer Share of Performance 1 (in trial)
Live Performance 3 (in trial)
We have partners that are focused on looking for
missing YouTube revenues; in other cases, we are trialling
technology platforms that scan US sports-related
television channels for un-reported Synchronisations.
Preliminary results of the trials are impressive and we are
currently analysing the data in depth.
Our efforts are also centred on maximising revenues
within the payment processing chain. For example,
a variety of services have been commissioned to
search and claim missing royalty streams via The
Mechanical Licensing Collective (The MLC). This involves
identifying registration issues and ensuring revenues are
correctly linked between original and samples, remixes
and cover versions.
The return to Live performances has given us the
chance to trial the PRS Major Concert Service. This
eliminates the standard PRS deductions on gross ticket
sales and speeding up royalty payments.
Song Creation
Song Creation additionally delivers dynamic Catalogue
growth via a stable of active, front-line writers and
artists. Building future assets at a relatively low cost,
providing contemporary context, contacts and
synergistic opportunities throughout the industry is the
strength and ongoing mission of HSG’s Song Creation
team.
The Song Creation team continues to invest in front line
contemporary writers and has invested $13.7 million in
new signings, options and renewals during the financial
year. Highlights from the period include the signings
of Monsters and Strangerz, Normani, as well as a NO ID
Joint Venture.
Highlights from Song Creation
Normani: Within the period, HSG signed six-time BMI
Award winning songwriter Normani, who has also
taken home two iHeartRadio Music Awards, an MTV
VMA and a Soul Train Music Award already.
Jordan and Stefan Johnson (part of the Monsters
& Strangerz) recently had their 4th Top 40 Number 1
with Justin Bieber’s Ghost, and earned a combined
3 Grammy nominations for their work on Bieber’s
album Justice, including one for the single Anyone.
As an example of the opportunities that HSG provides,
Hipgnosis Songs Fund acquired the Catalogue of
Monsters & Strangerz in July 2021 and used the leverage
of that deal to sign the writers for administering their
new songs too. Stand out songwriting involvement
from Monsters and Strangerz includes Dua Lipa’s Break
My Heart which reached Top Ten in 21 countries and
Miley Cyrus featuring Dua Lipa’s Prisoner which hit
Number One slots across Europe. Most recently, their
songwriting involvement with Wild Dreams feat. Khalid,
on Burna Boy’s new album, Love, Damini, is gaining
global traction. The album opened its first week and is
charting at Number 1 in 49 countries and 111 countries
overall on Apple Music.
Jake Sinclair, is one of our publishing Songwriters
and co-wrote all the Songs on Panic! At The Disco’s
forthcoming Viva Las Vengeance album. Their first
single, eponymously titled, has just been released
and went to Number 1 on 30 June 2022 on the US
Alternative radio daily chart.
HSG writers were included in an impressive 18 Grammy
nominations for 2021, and won the following:
• Jon Batiste – Album of the Year for We Are
(Vic Dimotsis/Zach Cooper aka King Garbage,
composers)
• St. Vincent – Best Alternative Music Album for
Daddy's Home
• Angélique Kidjo – Best Global Music Album for
Mother Nature (Shungudzo, composer, guest artist)
• Esperanza Spalding – Best Jazz Vocal Album for
Songwrights Apothecary Lab (Phoelix, producer,
multi-instrumentalist).
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Red Hot Chili Peppers 2022 Tour Dates
2022 Tour Dates City Country Stadium/Venue Venue Capacity
Leg 1 – Europe
4 June Sevilla Spain Estadio de La Cartuja 75,000
7 June Barcelona Spain Estadi Olímpic Lluís Companys 60,713
10 June Nijmegen Netherlands Goffertpark –
12 June Bratislava Slovakia Lovestream Festival – Tehelné Pole 22,500
15 June Budapest Hungary Puskás Aréna 52,000
18 June Florence Italy Visarno Arena 11,000
22 June Manchester England Emirates Old Trafford 50,000
25 June London England London Stadium 80,000
26 June London England London Stadium 80,000
29 June Dublin Ireland Marlay Park 40,000
1 July Glasgow Scotland Bellahouston Park 35,000
3 July Werchter Belgium Festivalpark Werchter 88,000
5 July Cologne Germany Müngersdorfer Stadion 80,000
8 July Paris France Stade de France 100,000
9 July Paris France Stade de France 100,000
12 July Hamburg Germany Volksparkstadion 76,000
Leg 2 – North America
23 July Denver United States Empower Field at Mile High 76,125
27 July San Diego United States Petco Park 42,445
29 July Santa Clara United States Levi’s Stadium 68,500
31 July Los Angeles United States SoFi Stadium 70,000
3 August Seattle United States T-Mobile Park 47,943
6 August Paradise United States Allegiant Stadium 65,000
10 August Atlanta United States Truist Park 41,149
12 August Nashville United States Nissan Stadium 69,143
14 August Detroit United States Comerica Park 41,083
17 August East Rutherford United States MetLife Stadium 82,500
19 August Chicago United States Soldier Field 64,500
21 August Toronto Canada Rogers Centre 53,506
30 August Miami Gardens United States Hard Rock Stadium 65,326
1 September Charlotte United States Bank of America Stadium 75,412
3 September Philadelphia United States Citizens Bank Park 43,305
8 September Washington, D.C. United States Nationals Park 41,313
10 September Boston United States Fenway Park 37,731
15 September Orlando United States Camping World Stadium 65,000
18 September Arlington United States Globe Life Field 40,300
25 September Louisville United States Kentucky Exposition Center 19,196
7 October Austin United States Zilker Park –
14 October Austin United States Zilker Park –
Live Music Is Back!
Photo by David Mushegains
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Red Hot Chili Peppers,
London Stadium 25-26 June 2022
– SOLD OUT, 160,000 people
Hipgnosis owns 13 of the top 30 from YouTube’s
Most Viewed Music Videos of All Time
2
Shape of You
• Ed Sheeran • Johnny McDaid
18
Lean On (feat. MØ & DJ Snake)
• Major Laser, MØ, DJ Snake • Martin Bresso
4
Uptown Funk (feat. Bruno Mars)
• Mark Ronson • Mark Ronson, Jeff Bhasker
21
Waka Waka (This Time for Africa)(The Official 2010
FIFA World Cup
TM
Song)
• Shakira • Shakira
7
Sugar
• Maroon 5 • Jacob Kasher Hindlin
22
Mi Gente
• J Balvin, Willy William • The-Dream
8
Roar
• Katy Perry • Bonnie McKee
27
Baby (feat. Ludacris)
• Justin Bieber • The-Dream, Tricky Stewart
10
Sorry
• Justin Bieber • Skrillex
28
Chantaje (feat. Maluma)
• Shakira • Shakira
13
Girls Like You (feat. Cardi B)
• Maroon 5 • Starrah
30
New Rules
• Dua Lipa • Caroline Ailin
17
Bailando (feat. Descemer Bueno, Gente De Zona)
• Enrique Inglesias • Enrique Inglesias
Song Title • Artist(s) • Hipgnosis contributor(s)
Source: YouTube, 28 May 2022
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STRATEGIC REPORT • INVESTMENT ADVISER’S REPORT
Hipgnosis Song Management
During the period, the Investment Adviser, formerly The
Family (Music) Ltd., changed its name to Hipgnosis Song
Management Ltd (HSM). At the same time, it entered
into an agreement with Blackstone, the alternative
investment manager, with Blackstone taking an
ownership stake in HSM. In addition, HSM is acting as
Investment Adviser for Hipgnosis Songs Capital, a fund
investing on behalf of funds managed by Blackstone.
This was made possible following several months of
extensive negotiations with the Board of Hipgnosis Songs
Fund and discussions with major Shareholders. This has
ensured robust and well thought out co-Investment
and conflicts policies. Under the co-investment policy,
Hipgnosis Songs Fund has the right to participate in 20%
of any Catalogue purchased, alongside the Blackstone
backed fund on identical financial terms. This reflects the
expected deployable capital of the two funds over the
medium term. Further, the new arrangement will (when
funds permit) enable Hipgnosis Songs Fund to participate
in more transactions than would have been the case on
a stand-alone basis.
Upgrading management/capabilities
The investment made by Blackstone into Hipgnosis Song
Management has enabled us to make considerable
investment in people and systems across our Song
Management, finance, investment teams and data
analytic functions. This is enabling us to further improve
the sophistication of our approach to acquiring
Catalogues and ensuring that we maximise the
earnings whilst respecting the artistic integrity of the
songs which we curate.
We believe that the combined benefits of these
investments will be demonstrated in future years by our
ability to correctly price new acquisitions, our ability
to reduce costs by carrying out additional functions
in-house and by increased revenues as a result of our
ability to proactively manage our Catalogue.
Respecting our artists
The removal of Neil Young’s Master Recordings from
Spotify in January 2022, at his request, in protest against
misinformation on the COVID-19 virus on the platform
created much comment.
Hipgnosis’ thesis has always been that the longevity
of a song’s income is determined not only by the music,
but equally by its cultural and emotional importance
to listeners. Neil Young is a perfect example of this and
as a result of always conducting himself with integrity
to ensure that the cultural importance of his music
is preserved, his songs are still popular and still have
meaning over 50 years after their release.
No Tears Left To Cry
• Savan Kotecha
One Last Time
• Giorgio Tuinfort
God Is A Woman
• Savan Kotecha
Break Up With Your Girlfriend,
I’m Bored
• Savan Kotecha
Breathin
• Savan Kotecha
Don’t Call Me Angel (Charlie’s Angels)
(with Miley Cyrus & Lana del Rey)
• Savan Kotecha
Bloodline
• Savan Kotecha
Bad Idea
• Savan Kotecha
Fake Smile
• Happy Perez
Greedy
• Savan Kotecha
Ghostin And Everytime
• Savan Kotecha
Everytime
• Savan Kotecha
Honeymoon Avenue
• Rodney Jerkins
Why Try
• Ammar Malik
Break Your Heart Right Back
• Bernard Edwards
They Don’t Know
• Savan Kotecha
Winter Things
• Thomas Brown/Rodney Jerkins
Bad To You (with Normani &
Nicki Minaj)
• Savan Kotecha
I Don’t Care
• Rodney Jerkins
December
• Thomas Brown/Rodney Jerkins
Only 1
• Rodney Jerkins
Daydreamin’
• Rodney Jerkins
Hands On Me
• Rodney Jerkins
True Love
• Rodney Jerkins
Intro
• Rodney Jerkins
Wit It This Christmas
• Rodney Jerkins
Not Just On Christmas
• Rodney Jerkins
How I Look On You
• Savan Kotecha
Nobody (with Chaka Khan)
• Savan Kotecha
SUPERSTARS • SUPER SONGS
Our Great Songwriters have written Iconic Songs for:
Ariana Grande
Photo by Jon Kopaloff/FilmMagic
STRATEGIC REPORT
33
Photo by Jeff Riedel/Contour by Getty Images
Shape Of You
• Johnny McDaid
Photograph
• Johnny McDaid
Castle On The Hill
• Benny Blanco
Galway Girl
• Johnny McDaid
Happier
• Benny Blanco
Dive
• Benny Blanco
Tenerife Sea
• Johnny McDaid
Supermarket Flowers
• Benny Blanco/Johnny McDaid
What Do I Know?
• Johnny McDaid
Kiss Me
• No I.D.
New Man
• Benny Blanco/Ammar Malik
Bloodstream
• Johnny McDaid
Barcelona
• Benny Blanco/Johnny McDaid
All Of The Stars
• Johnny McDaid
Nancy Mulligan
• Benny Blanco/Johnny McDaid
Hearts Don’t Break
Around Here
• Johnny McDaid
Eraser
• Johnny McDaid
Bibia Be Ye Ye
• Benny Blanco
Afire Love
• Johnny McDaid
Nina
• Johnny McDaid
Take It Back
• Johnny McDaid
New York
• Emile Haynie
English Rose
• Johnny McDaid
I Will Take You Home
• Johnny McDaid
ED SHEERAN FEATURES:
EMINEM
River (feat. Ed Sheeran)
• Emile Haynie
CHRISTINA PERRI
Be My Forever
(feat. Ed Sheeran)
• Christina Perri
WRETCH 32
Hush Little Baby
(feat. Ed Sheeran)
• TMS
SUPERSTARS • SUPER SONGS
Our Great Songwriters have written Iconic Songs for:
Ed Sheeran
34
STRATEGIC REPORT
35
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
Neil Young asking for his music to be removed from
Spotify not only stands by the artistic integrity of his
songs but further adds to their cultural meaning.
The publicity around his decision led to an immediate
jump in consumption of Neil’s music as established fans
returned, demonstrating their love for his music, and
many new music lovers who had not previously found
Neil’s music discovered it for the first time, using one of
the other platforms which still offered Neil’s music.
Writer advocacy
Songwriters deliver the most important component of
a Song but continue to be paid inequitably. Through our
platform and influence, Hipgnosis continues to campaign
for that to change. We aim to take the Songwriter from
the bottom to the top of the economic equation with our
advocacy on this issue. When a Catalogue is acquired,
our Shareholders sit directly in the shoes of the songwriter
so there is complete alignment between the Songwriting
community and our Shareholders. What is in the best
interest of the songwriter is also in the best interest of the
Company.
In the US, rates for royalty payments are set by the
Copyright Royalty Board (CRB), on a rolling five year
period. We have worked closely with both the National
Music Publishers’ Association (NMPA) and the Nashville
Songwriters Association International (NSAI). On 1 July
2022, the US Copyright Royalty Board (CRB) disallowed
the appeal by various Streaming services against the
CRB III determination to increase mechanical Streaming
royalty rates for songwriters and publishers.
The increase, which is incremental over the period
covered by CRB III (1 January 2018 until 31 December
2022) will culminate in a 44% uplift in the “all in”
(mechanical and performance) statutory minimum
rates for Streaming paid in the US, rising from 10.5%
of Streaming revenues prior to 2018 to 15.1% in 2022.
Additionally, in April 2022, the NMPA and the NSAI
representing artists and Sony Music Entertainment, UMG
Recordings, Inc. and Warner Music Group Corp made a
joint proposal to the CRB for a settlement on mechanical
royalties for the CRB IV period, running from 2023-2027.
The proposed settlement, if confirmed by the CRB,
would result in a 32% uplift from 2023 in the mechanical
rate paid to publishers and Songwriters for music
purchased as a physical sale from 9.1¢ per track to
12¢ per track. Additionally, these royalty rates would
increase annually in line with the Consumer Price Index.
This is the first increase in the rate since 2006 and this
is a step in the right direction and has been heavily
influenced by our advocacy.
In the UK, an investigation by the Department for
Digital, Culture, Media and Sport Select Committee
(DCMS), published in the summer of 2021, prompted the
Secretary of State for Digital, Culture, Media and Sport
to refer the dominance of the major music groups to the
Competition and Markets Authority (CMA) for a market
study. Hipgnosis has submitted evidence to the CMA
and continues to meet with them on a regular basis
with the belief that the CMA will launch a full market
investigation. A decision is due by the end of July 2022.
It is worth repeating: the Song is the currency of our
business. Yet the Songwriter – who delivers the most
important component to the success of a record
company, publisher, promoter, manager, agent, music
venue, radio station, broadcaster etc. – is the lowest
paid person in the economic equation.
STRATEGIC REPORT • INVESTMENT ADVISER’S REPORT
36
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
The Advisory Board
The Advisory Board assembled by Merck Mercuriadis assists the Investment Adviser.
Nile Rodgers
Rock And Roll Hall Of Fame and
Songwriters Hall Of Fame Inductee,
Chairman Of The Songwriters Hall
Of Fame. Grammy award-winning
Songwriter, producer and musician.
Founder of the band Chic. Co-
writer and producer of iconic hits
for David Bowie, Madonna, Duran
Duran and Daft Punk.
The-Dream
Grammy award-winning Songwriter,
producer and musician. Wrote and
produced iconic hits for Beyoncé,
Jay Z, Kanye West, Rihanna, Mariah
Carey, Britney Spears and Justin
Bieber.
STRATEGIC REPORT • INVESTMENT ADVISER’S REPORT
Poo Bear
Multi-platinum producer, singer
and Songwriter aficionado, Jason
Boyd, better known to the masses
as Poo Bear, is a five-time Grammy
winning musical force of nature
having sold over 500 million records
worldwide. Best known for his
unforgettable collaborations with
Ed Sheeran and Justin Bieber.
Rodney “Darkchild” Jerkins
Grammy Award winning super-
producer with a trail of outstanding
accomplishments. He has added
to the hit lists of music talents such
as Whitney Houston, Justin Bieber,
Ariana Grande, Drake, Destiny’s Child
and countless others. These artists
know that having the “Darkchild”
touch on their song puts it on the fast
track toward reaching Number One.
STRATEGIC REPORT
37
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
Starrah
Amongst the most important
young Songwriters having written
14 hit singles thus far including the
Number 1 Song Havana by Camila
Cabello and Girls Like You by
Maroon 5. Havana was the biggest
song in the world in 2018.
David A. Stewart
One of the most successful
Songwriters, Artists and Producers
of all time. His work with Eurythmics,
Tom Petty & The Heartbreakers,
Shakespears Sister, No Doubt,
Mick Jagger, Bob Dylan and Eric
Clapton amongst many others
defines its era.
Giorgio Tuinfort
Grammy award winning Songwriter
and one of the most important
pop writers of the last 10 years. The
partner of choice for David Guetta
and Akon. He has written number 1
Songs for Sia, Gwen Stefani and
Ariana Grande.
Ian Montone
Attorney and founder of Monotone
Management. Manager of Jack
White, The White Stripes, Vampire
Weekend, The Shins and Danger
Mouse.
Bill Leibowitz
Attorney, founding partner of
Roberts, Leibowitz and Hafitz
PLLC. Former COO and General
Counsel for The Sanctuary Group.
Specialises in intellectual property
law and during his legal career
of 35 years he has represented
many renowned artists and major
international intellectual property
companies.
0.0
0.5
1.0
1.5
2.0
Operative NAV Bridge ($)
from 1 April 2021 to 31 March 2022
1.6829
0.1685
0.0836 (0.0696)
(0.0107) (0.0056)
1.8491
Opening
Operative NAV
per Ordinary Share
Increase in
fair value
of Catalogues
Net income* Dividends paid FX impact Share issue costs**
Closing Operative
NAV per Ordinary Share
38
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
STRATEGIC REPORT • INVESTMENT ADVISER’S REPORT
Financial Review
NAV
The Company reports two net asset values; an IFRS
NAV which is prepared in accordance with IFRS under
which the Company’s investments in Catalogues are
held at cost less amortisation and impairment, and an
Operative NAV which adjusts the IFRS NAV to reflect the
fair value of the Company’s Catalogues, as determined
by the Portfolio Independent Valuer. The Board and the
Investment Adviser consider that the most relevant NAV
for Shareholders is the Operative NAV.
The Operative NAV per share increased by 9.9% to
$1.8491 during the year (31 March 2021: $1.6829), which,
when including dividends paid of 5.25p per Share (7.26¢
per Share) represents a 12-Month Total $ NAV Return of
14.2%. As a testament to the resilience of the Hipgnosis
Portfolio, despite the significant impact of COVID-19
during the period, the dividends paid of 5.25p per Share
were fully covered by Leveraged Free Cash Flow (1.01x).
Total $ NAV Return to Shareholders is 59.1% since the IPO
on 11 July 2018.
Based on the Sterling to Dollar exchange rate at 31 March
2022 of 1.3134, the Operative NAV presented in Sterling
would be 140.79p per Share (31 March 2021: 122.50p
based on Sterling to Dollar exchange rate of 1.3738).
The growth in the Operative NAV over the year was
primarily driven by a 9.5% like-for-like uplift in the Fair
Value of Catalogues as appraised by the Portfolio
Independent Valuer, Citrin Cooperman Advisors LLC
(formerly Massarsky Consulting Inc.). The strong growth
across the portfolio, but in particular in the contemporary
Catalogues evidences the benefits of the Company’s
acquisition strategy of purchasing incredibly successful
and culturally important songs that are at the heart of
Streaming. This growth in the value of the Catalogues
resulted from:
• Strong Streaming growth across the Portfolio particularly
in the second half of the year, in excess of the Portfolio
Independent Valuer expectations and market growth
rates, resulting in an increase in expected future
Streaming revenues; and
• An increase in expected revenues due from
alternative platform licensing, which refers to licensing
on social media, gaming and other emerging
platforms including TikTok, Facebook and Triller, as
material revenues start to be paid by these sources to
publishers and recorded music companies.
The Portfolio Independent Valuer calculated the
Catalogue Fair Value as at 31 March 2022 using
a discount rate of 8.5% (31 March 2021: 8.5%).
The Portfolio Independent Valuer believes that a
* Net income reflects net revenue less operating expenses (excluding foreign exchange loss and amortisation of catalogues) less tax expense.
** Share issue costs reflect the costs of share issuances during the period, which were fully borne out of the gross proceeds of the respective issue and were fully recouped
through the issue price premium to the latest published Operative NAV per Ordinary Share at that time.
STRATEGIC REPORT
39
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
discount rate of 8.5% is the correct rate within a rising
interest rate environment, and also reflects music’s
stability as an asset class, given its decreased risk
profile compared to other industry sectors, such as
predictability of earnings.
Revenue
Gross revenue increased by 24.7% year-on-year to
$200.4 million (31 March 2021: $160.7 million). Net
revenue of $168.3 million increased by 21.7% year-on-
year (31 March 2021: $138.3 million), this is after royalty
cost deductions of $32.0 million (31 March 2021:
$22.5 million) which relate to contractual royalties due
to writers in HSG and Kobalt Fund One.
The increase in gross and net revenue were primarily
a result of an increase in the number of Catalogues
owned during the period, with the Company investing
$265.1 million into 8 Catalogues in the year, partly offset
by a reduction in Right To Income (RTI) to $17.97 million
(31 March 2021: $66.6 million).
In addition, in order to present comparable accounts
with listed major music companies, the Company has
optimised its accrual process to also more accurately
recognise earnings based on expected usage (where
appropriate), rather than when earnings were paid to, and
being processed by, collection societies, publishers and
administrators. This change in estimate has affected the
timing of the recognition of certain revenues, with a
$36.0 million additional estimate accrual for the current
year, compared to the prior year basis of estimation. This is
not considered to be a change in accounting policy but
a refinement of the estimate methodology. As this refine-
ment was applied this year for the first time, the like-for-like
increase in the revenue accrual from this year to that in the
prior year is not expected to occur in future periods. Further
detail is provided in the Usage Accrual section below.
In order to provide its Shareholders with an
understanding of the like-for-like performance of the
Company’s revenues, by removing the impact of non-
recurring items, including the impact of new Catalogue
acquisitions, RTI and the Usage Accrual, the Company
presents the Pro Forma Annual Revenue (PFAR)
performance measure. This shows the royalty revenue
earned by Catalogues in a calendar year largely based
on royalty statements received, irrespective of whether
the Songs were owned by the Company over the period
analysed. The Company believes this provides a relevant
like-for-like full year income comparison of the Group’s
Catalogues of Songs held as at the year end.
There is a significant time lag for music royalties between
the time a song is performed and when the revenue is
received by the copyright owner. As a result, as set out
in the interim report for the period ended 30 September
2021, the reported Pro Forma Annual Revenue (PFAR)
figure for the 12-months to December 2020 that includes
statements received up to 31 March 2021, of $121.26
million was impacted by the restrictions put in place to
combat the COVID-19 pandemic in 2020.
Lockdowns had a material impact on performance
income (which is driven by songs performed in shops,
bars, restaurants and live music) and the income of
younger Catalogues (<10 years old) which are more
reliant on promotional activities surrounding live shows
and new releases.
The table below shows PFAR at six monthly intervals
for Catalogues owned at 31 March 2022. In order to
give investors greater insight into the recovery from the
impact of COVID-19, the Company has also included
the PFAR for the year to 31 December 2021.
In addition, the PFAR for the year to December 2021,
has been broken down into the first and second six
months. Whilst the full year PFAR to 31 December 2021
($114.86 million) shows a COVID-19 impacted 5.3%
decrease compared to the equivalent period in 2020
($121.26 million), the Company has seen strong like-for-
like growth 11.6% in the second half of 2021. This growth
has been driven by a strong increase in Streaming
Pro Forma Annual Revenue for Catalogues owned as at 31 March 2022
12 months to
Jun 20
$m
12 months to
Dec 20
$m
12 months to
Jun 21
$m
12 months to
Dec 21
$m
PFAR for Catalogues owned as at 31 March 2022 131.68 121.26 115.91 114.86
<10 years 65.84 57.14 50.99 49.32
>10 years 65.84 64.12 64.92 65.54
Note. Older or Younger than 10 years of a Catalogue is calculated as the average release year of a Catalogue as at 1 January 2022 weighted on earnings, at time of acquisition.
40
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
STRATEGIC REPORT • INVESTMENT ADVISER’S REPORT
income together with a partial recovery in performance
income as COVID-19 restrictions eased.
Historically the Company has provided analysis of its net
revenues split by income type however, due to the high
level of RTI in the prior year and the Usage Accrual in the
current year, this analysis does not provide comparable
results in the current period. As a result the Company
has presented the income type split over its six month
pro forma revenues to provide like-for-like analysis of its
growth drivers.
12-month PFAR to December 2021, split by half year
and by income type
Six months
to Jun 21
$m
Six months
to Dec 21
$m
Change
%
Mechanical Income 2.55 2.31
(9.4)
Performance Income 12.16 13.24
8.9
Digital Downloads Income 1.83 1.68
(8.0)
Streaming Income 21.92 26.18
19.4
Synchronisation Income 7.41 7.93
7.0
Producer Royalties 3.76 3.92
4.2
Masters Income 3.75 4.04
7.6
Other Income 0.91 1.27
38.6
54.29 60.57
11.6
This data shows strong Streaming growth, with 19.4%
increase for the half, which compares favourably
against global Streaming annual market growth of
24.3% as disclosed by IFPI. As a result, Streaming income
represented 43.2% of pro forma revenue between
July and December 2021 (Jan-June 2021: 40.4%). The
Company is now seeing a number of contemporary
Catalogues delivering stabilised earnings indicating
the end of their decay cycle ahead of the Portfolio
Independent Valuer’s original expectations.
This strong growth leaves the Company well positioned
to benefit from the continued expected growth in the
Streaming market. In addition, despite strong user levels,
the Company is yet to receive meaningful revenues from
emerging platforms, such as TikTok, and expects this to
be a material source of revenue growth in future periods.
Record companies and publishers, who experience
a shorter time lag on income, are already recognising
significant revenues from these platforms.
Performance income, which is driven by songs
performed in shops, bars, restaurants and live music, and
was therefore materially impacted by various lockdowns
during COVID-19 grew by 8.9% in the second half of the
year. This growth indicates that the Company is now
starting to see the recovery in performance income
from the impacts of various COVID-19 lockdowns. The
major publishers, who experience a shorter time lag on
performance income than Hipgnosis, have now reported
a full recovery in performance income to pre-COVID-19
levels. The Company therefore expects to see strong
growth and a full bounce back in performance income
in the new financial year. This view is shared by our
Portfolio Independent Valuer who is anticipating a full
recovery in the Company’s performance income in the
financial year ending 31 March 2023.
There has also been an increase in the Company’s Synch
PFAR in the second half of 2021, growing by 7.0% partly
driven by one-time settlements from TikTok and Peloton.
Mechanical income, driven by physical sales of CDs
and vinyl relating to our Portfolio, and digital download
income continued to decline as music consumption
continues to transition from discretionary purchases of
music towards Streaming.
Usage Accrual
As noted above, to bring the Group in line with other
major publishers, the Company has updated its revenue
accrual estimates also to reflect revenue at the point at
which usage by the end customer is expected to occur.
Revenues were previously recognised when earnings
were paid to, and being processed by, collection
societies, publishers and administrators. The Group
now also includes an estimation of revenue to include
the expected usage as of the accrual date, which is
expected to trigger a contractual royalty payment
to The Group. This element of the accrual estimate
royalty statement data to calculate the delay between
usage and subsequent payment to collection societies,
publishers and administrators and applies this factor to
our best reliable estimate of revenue for those periods.
This change in estimate has affected the timing of the
recognition of certain revenues, with a $36.0 million
additional estimate accrual for the current year,
compared to the prior year basis of estimation.
Costs
Adjusted operating costs less interest costs increased to
$38.4 million (31 March 2021: $32.4 million). This is driven
by an increase in Investment Advisory fees due to the
STRATEGIC REPORT
41
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
growth of the Company since the prior period, aborted
deal costs and the recognition of a contingent bonus
accrual in relation to specific Catalogue acquisitions.
Ongoing Charges as a percentage of the average
Operative NAV has remained stable at 1.58% for the
year ended 31 March 2022 (31 March 2021: 1.59%),
reflecting the Board’s commitment to control operating
costs and maximise returns to Shareholders. The ongoing
charges include a full year of Hipgnosis Songs Group’s
(HSG) operating costs compared to approximately
seven months in the prior year. HSG has an internal
administration function which enables the Company
to benefit from reduced administration fees and faster
royalty payment processing.
EBITDA
EBITDA for the year ended 31 March 2022 increased by
21.8% to $129.9 million (31 March 2021: $106.7 million),
reflecting the growth in net revenue.
Leverage
Loan interest has increased to $20.4 million (31 March
2021: $7.3 million). The rise in interest costs are due to
the increase in drawn debt as the Company has grown
over the past two years. As at 31 March 2022 gross debt
was $600.0 million (31 March 2021: $577.3 million) and
net debt was $569.9 million (31 March 2021: $464.7 million).
Net debt as a percentage of Operative NAV at 31 March
2022 was 25.4% (31 March 2021: 25.7%).
Leveraged Free Cash Flow was $84.7 million as at
31 March 2022 (31 March 2021: $82.1 million), which covered
dividends paid out during the period by 1.01 times.
The Board, together with the Investment Adviser, is in
the process of a review of its leverage structure with a
view to reducing interest rate risk and control costs for
the Company.
EPS
EPS for the year ended 31 March 2022 is -1.65¢ (31 March
2021: 4.72¢), the year-on-year decrease is largely driven
by the impact of higher RTI in the prior year.
Adjusted EPS, as defined within the Alternative Performance
Measures, removes the impact of Catalogues
amortisation. The Group amortises Catalogues over a
useful life, using a straight-line method of 20 years, which
is in line with industry standard. Adjusted EPS for the year
ended 31 March 2022 is 9.09¢ (31 March 2021: 12.41¢).
Accruals and Receivables
Accrued Income and Receivables at 31 March 2022
were $111.9 million (on a gross basis), a breakdown of
which is set out below:
• $7.2 million receivable representing royalty statements
received in March 2022 with payment received in
April 2022 and May 2022;
• $32.9 million for calendar Q1 2022 earnings where,
due to the time lag in royalty reporting, statements
are not expected to be received until calendar Q3
and Q4 2022;
• $9.7 million for calendar Q4 2021 earnings which are
not reported to the Company until calendar Q2 2022;
• $7.3 million income accrual relating to time-lagged
international reporting on PRO earnings. International
PRO reporting has a significant time lag due to the
additional collection time taken for PROs to distribute
income from territories. The lag is due to the nature
of processing royalties locally, then distributing them
to the domestic PRO, which will in turn process and
distribute these royalties to the Group. Six months of
international PRO earnings are accrued, although can
typically result in an earnings lag of up to 24 months;
• $6.8 million HSG gross revenue accrual, which
includes the accrued PRO lag. Separately, a
$5.6 million royalty creditor representing contractual
royalties due to writers has been recognised;
• $36.0 million income Usage Accrual, see Usage
Accrual section for more details; and
• $12.0 million relating to calendar Q2 2021 to Q3 2021
earnings for Catalogues where royalty reporting is still
in the process of being redirected/switched over to
the Company. These accruals are based on royalty
statements received with invoices due to be raised on
completion of the Letter of Direction.
42
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
STRATEGIC REPORT • INVESTMENT ADVISER’S REPORT
Right to Income (RTI)
On acquisition of a Catalogue, the accounting
policy of the Company is to allocate the full purchase
consideration to the cost of the Catalogues asset.
Income is recognised on acquisition via two separate
mechanisms as follows:
1. Income derived from cash receipts from the Vendor,
representing royalties collected by the Vendor
starting from the date determined by the purchase
agreement, which precedes the date of acquisition;
and
2. Accrued receivables are recognised for any
revenues generated by ownership of the IP to the
extent that these are not yet collected.
If the income due under these mechanisms is for a
period that precedes the start of the financial year
that the Catalogue is acquired within, that income
is booked within the financial year in which the
Catalogue is acquired.
As discussed in the Interim Report, to provide further
clarity to investors on RTI, the Company is providing
additional disclosure of these revenues. In the prior
Annual Report, RTI was solely defined as including
revenue that was recognised on the acquisition of a
Catalogue that preceded the financial year, so that
investors could clearly identify all revenues which were
not from the financial period being reported on. RTI has
been re-defined to show both revenue recognised in
‘Pre-Financial Year RTI’ and ‘Within Financial Year RTI’.
Within Financial Year RTI is considered as recurring as it
relates to a revenue period that will be collected and
received by SONG in the following financial year.
The combined RTI recognised in the period was
$17.97 million (31 March 2021: $66.6 million), of which the
Pre-Financial Year RTI was $14.09 million and the Within
Financial Year RTI was $3.88 million.
The table opposite shows Recurring Revenue vs. Pre-
Financial Year RTI for each financial year to date.
STRATEGIC REPORT
43
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
Financial year revenue ($m)
Recurring revenue
Financial Year Description
No. of
Catalogues
Prior year
(over)/under
accrual Pre-FY (RTI)
Within FY,
pre-acq
(RTI)
Within FY,
Post-acq
Total
revenue
FY19 New acquisitions in year 13 – 2.52 – 6.88 9.40
– 27% – 73% 100%
FY19 Pre-existing Catalogues – – – – – –
– – – – –
FY19 Total 13 – 2.52 – 6.88 9.40
– 27% – 73% 100%
FY20 New acquisitions in year 41 – 13.40 27.57 23.56 64.53
– 16% 34% 29% 79%
FY20 Pre-existing Catalogues 13 1.66 – – 15.88 17.54
2% – – 19% 21%
FY20 Total 54 1.66 13.40 27.57 39.44 82.07
2% 16% 34% 48% 100%
FY21 New acquisitions in year 84 – 28.94 37.6 6 26.16 92.76
– 21% 27% 19% 67%
FY21 Pre-existing Catalogues 54 (4.90) – – 50.54 45.64
(4%) – – 37% 33%
FY21 Total 138 (4.90) 28.94 37.66 76.70 138.40
(4%) 21% 27% 56% 100%
FY22 New acquisitions in year 8 – 14.09 3.88 9.32 27.29
– 8% 2% 6% 16%
FY22 Pre-existing Catalogues 138 (5.21) – – 146.27 141.06
(3%) – – 87% 84%
FY22 Total 146 (5.21) 14.09 3.88 155.59 168.35
(3%) 8% 2% 93% 100%
• Prior Year over/under accrual is the residual amount recognised in each financial year for the unwinding
of estimates made for statements yet to come.
• Pre-FY RTI is revenue recognised in the current financial year where the entitlement to revenue arose prior to the
commencement of that financial year. The pre-FY RTI is recognised on the date on closure of the deal.
• Within FY, pre-acq RTI is revenue recognised in the financial year for periods within the same financial year, but
before the date of acquisition and recognised on the date on closure of the deal.
• Within FY, post-acq is revenue recognised in the financial year for periods after the date of acquisition.
44
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
Outlook
Despite the current challenging macro-economic
environment, with expectations of high inflation and
a squeeze on consumer spending, we believe in the
uncorrelated nature and growth opportunities of music
and we therefore go into 2022/2023 extremely confident
of our future. Great Songs are not just entertainment.
They are the soundtrack of our lives and people turn
to them for comfort and escape equally in times
of hardship as they celebrate with them in times of
prosperity. As a result, music revenues have been
historically uncorrelated to economic conditions, and
we strongly believe that Streaming growth will continue
uninterrupted over the coming years.
Music Streaming remains the most inexpensive form of
entertainment with the highest value return. It provides
one of the highest quality offerings of all entertainment
subscription services and has low penetration rates
with significant room for growth in both the developed
markets as well as emerging markets. The recent 2022
Goldman Sachs update to their Music in the Air series,
which is recognised as the gold standard since its first
iteration almost 5 years ago, concurs with our views.
Add into this the confirmed songwriter royalty rates
uplift from CRB III, the efficiencies that our own US
administration and the new agreements that Sacem
and Peermusic bring to our collections, combined with
the value that’s added as a result of our strong Song
Management focus and Songs as an asset class have
a very bright future.
We will continue to deliver on our promises to you in the
years to come that will leave you singing Sweet Dreams
(Are Made Of This) and Good Times.
Thank you once again to you, our Shareholders for
your tremendous support, to our Board for their tireless
efforts and to the incomparable Songwriters, artists and
producers who have not only entrusted us with their
great Songs but have also helped us make Hipgnosis
the preferred choice of the Songwriting community.
Best wishes,
Merck Mercuriadis
Founder, Hipgnosis Songs Fund Ltd and
Founder/CEO, Hipgnosis Song Management Ltd.
13 July 2022
STRATEGIC REPORT • INVESTMENT ADVISER’S REPORT
31 out of the Top 100 Best Selling Albums in the UK
have involvement from Hipgnosis’ Songwriters
3
SOUR • Olivia Rodrigo
1 Song • Jack Antonoff
55
Best Of 50 Cent • 50 Cent
19 Songs • Curtis Jackson, Mark Batson
5
Between Us • Little Mix
4 Songs • Ed Drewett, TMS
57
Nevermind • Nirvana
13 Songs • Andy Wallace
6
50 Years – Don’t Stop • Fleetwood Mac
50 Songs • Lindsey Buckingham, Christine McVie
58
In The Lonely Hour • Sam Smith
1 Song • Fraser T. Smith
8
Divide • Ed Sheeran
13 Songs • Benny Blanco, Johnny McDaid
59
Greatest Hits • Red Hot Chili Peppers
15 Songs • Red Hot Chili Peppers
9
Curtain Call: The Hits • Eminem
2 Songs • Jimmy Iovine, Mark Batson
66
Justice • Justin Bieber
4 Songs • Jordan K. Johnson, Stefan Johnson
20
23 • Central Cee
1 Song • Bernard Edwards, Thomas Richardson
77
No. 6 Collaborations Project • Ed Sheeran
1 Song • Benny Blanco
21
Rumours • Fleetwood Mac
11 S o ng s • Lindsey Buckingham, Christine McVie
81
21 • Adele
1 Song • Fraser T. Smith
22
Future Nostalgia • Dua Lipa
2 Songs • Grimes, Jordan K. Johnson, Stefan Johnson
83
Get Rich or Die Tryin’ • 50 Cent
21 Songs • Curtis Jackson
35
I Will Always Love You: The Best Of Whitney Houston
• Whitney Houston
5 Songs • Steve Winwood, Rodney Jerkins, Tricky
Stewart, LA Reid
85
Teenage Dream • Katy Perry
11 S o ng s • Tricky Stewart, Bonnie McKee
36
Shoot For The Stars • Pop Smoke
1 Song • Curtis Jackson
86
The Singles Collection • Britney Spears
11 S o ng s • Savan Kotecha, Tricky Stewart, The-Dream,
Rodney Jerkins, Christian Karlsson, Marcella Araica
41
Singles • Maroon 5
5 Songs • Ammar Malik, Savan Kotecha, JKash
95
Back To Black • Amy Winehouse
1 Song • Mark Ronson
42
Dua Lipa • Dua Lipa
5 Songs • Grimes, Ian Kirkpatrick, Caroline Ailin, Ilsey
Juber, Banx & Ranx
96
Without Fear • Dermot Kennedy
7 Songs • Scott Harris, Nate Ruess
43
1989 • Taylor Swift
3 Songs • Jack Antonoff
97
Reputation • Taylor Swift
6 Songs • Jack Antonoff
49
Doo-Wops & Hooligans • Bruno Mars
11 S o ng s • Ari Levine, Jeff Bhasker
99
Greatest Hits • Pitbull
3 Songs • Ilsey Juber, Bernard Edwards, RedOne
51
X • Ed Sheeran
9 Songs • Benny Blanco, Johnny McDaid, Emile Haynie
100
The Stars Beneath My Feet • James Blunt
10 Songs • Mark Batson, Sacha Skarbek, Steve
Robson
52
Lover • Taylor Swift
7 Songs • Jack Antonoff, Joel Little, Scott Harris
Album Title • Artist • Number of Songs • Hipgnosis contributor(s)
Source: Half year UK Album Sales, Official Charts, June 2022
STRATEGIC REPORT
45
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
SUPERSTARS • SUPER SONGS
Our Great Songwriters have written Iconic Songs for:
Lady Gaga
Shallow (feat. Bradley
Cooper)
• Mark Ronson
Million Reasons
• Mark Ronson
Bad Romance
• RedOne
Poker Face
• RedOne
Just Dance
• RedOne
Telephone (feat. Beyoncé)
• Rodney Jerkins
Stupid Love
• Martin Bresso
Applause
• Martin Bresso
Alejandro
• RedOne
Perfect Illusion
• Mark Ronson
Judas
• RedOne
Love Game
• RedOne
John Wayne
• Mark Ronson
A-YO
• Mark Ronson
Joanne
• Mark Ronson
Dancin’ In Circles
• Mark Ronson
Diamond Heart
• Mark Ronson
Monster
• RedOne
Hey Girl (feat. Florence
Welch)
• Mark Ronson
Sinners Prayer
• Mark Ronson
So Happy I Could Die
• RedOne
Come To Mama
• Emile Haynie
Grigio Girls
• Mark Ronson
Boys, Boys, Boys
• RedOne
Sexxx Dreams
• Martin Bresso
Angel Down
• RedOne
Schei(ß)e
• RedOne
Hair
• RedOne
Gypsy
• RedOne
Paper Gangsta
• RedOne
Fashion
• RedOne/Giorgio Tuinfort
Money Honey
• RedOne
Highway Unicorn (Road To
Love)
• RedOne
LADY GAGA FEATURES:
NEW KIDS ON THE BLOCK
• Big Girl Now (feat. Lady
Gaga)
• Redone
46
Photo by Lindsey Byrnes/Contour by Getty Images
STRATEGIC REPORT
47
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
Our Market
STRATEGIC REPORT
Streaming continues to grow
As discussed on pages 3 and 15, 2021 was another
strong year for the music industry. Global recorded
music revenues grew by an impressive 18.5% year-on-
year to $25.9 billion, according to IFPI, driven in large
part by a continued acceleration in the adoption
in paid-for Streaming, where revenues grew by 21%
year-on-year. Overall global Streaming revenues grew
by 24.3% year-on-year. 523 million subscribers globally
now pay for music, an 18.5% increase on last year, with
Streaming now contributing 65% of all revenues; music
is now perceived by many to be a utility.
The US continues to be the largest single market.
US recorded music revenues, as reported by the RIAA,
grew by 24% year-on-year in 2021 to $15 billion, versus
the prior year’s growth of 9% year-on-year. Streaming
growth outperformed, growing at 24% year-on-year in
2021. In the US, over 80% of music is now consumed via
Streaming, with over three-quarters of that being paid-
for Streaming.
US recorded market revenue has now reached the
same level seen in 1999, before the industry was
decimated by piracy and illegal downloading. However,
on an inflation-adjusted basis the industry has only
reached two-thirds of this historic peak suggesting there
is still room for significant revenue growth.
Growth in Streaming is expected to remain strong and
is part of Hipgnosis’ strategy, as discussed on pages 54
and 73. The consumer market company Statista highlights
there are over six billion smartphone subscriptions
worldwide. With 523 million global music subscribers in
2021, market penetration by Streaming of smartphone
owners is under 10%. This figure is expected to more than
double by 2030, according to Goldman Sachs.
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
RIAA US Recorded Music Revenues ($m)
Source: RIAA Vinyl  Tapes  CDs/DVDs  Downloads & Ringtones  Streaming (ad-supported)  Paid Subscription
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
4
7
.
3
9
.
2
9
.
4
4
.
3
2
.
1
1
7
.
7
Global recorded music revenues
by segment 2021(%
)
Source: IFPI

Subscription audio streams

Ad-supported streams

Physical
 Performance Rights
 Downloads & other Digital
 Synchronisation
65.0%
Total Streaming
48
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
In their 2022 Music In the Air report, Goldman Sachs
forecasts global music market revenues will reach
$103 billion by 2030, a 9% CAGR 2021-2030, with
Streaming revenues growing at a CAGR of 12% over
the same timeframe.
Significantly for Hipgnosis, as an older demographic
increasingly embrace Streaming and subscriptions,
the Hipgnosis Catalogue of iconic, culturally significant
Songs is likely to be increasingly in demand as more
casual music lovers become subscribers.
Music publishing
The latest Global Collections Report, published by
The International Confederation of Societies of Authors
and Composers (CISAC) in October 2021, reported that
worldwide royalty collection in 2020 fell by 9.9% as a
result of the pandemic reducing music consumption.
Since then, the music publishing market has seen a
gradual recovery in revenues throughout 2021, driven by
the public performance segment, which has benefited
from the re-opening of public venues. For example,
in the UK, the Collection Society PRS for Music reported
a 59.6% increase in public performance revenues
in 2021 to £137.6 million, even though the UK was in
lockdown for over five months of the year. Despite this,
their revenues are still 38.1% below 2019 levels.
Looking forward, Goldman Sachs predict the global
music publishing market will grow by 6-7% in 2022/23
with a CAGR of 6% through to 2030, reaching a value
of $11.7 billion in 2030.
Consumption of music is evolving
Music is the soundtrack to our lives. Nowhere is this more
clearly demonstrated than in both established and
emerging online platforms.
As with Streaming, as connectivity rises and data costs
reduce, the attractiveness and sophistication of social
media sites increases. When music is used on these sites,
royalties are due to the artists who created the music
and therefore Hipgnosis. Additionally, sites like TikTok,
which has over one billion active users, can be shown to
drive traffic to other Digital Service Providers (DSP) such
as YouTube where users consume more of the music
they have heard.
TikTok’s music 2021 report states that around 430 Songs
reached one billion views on their platform during 2021,
triple the total for 2020, with the most popular Songs
exceeding 20 billion views on videos they soundtrack.
Over 175 Songs that trended on TikTok in 2021 charted
on the Billboard Hot 100, double the 2020 number.
Hipgnosis has been proactive in building a presence
to promote our artists and catalogue and our channel
@Hipgnosissongs has 2.1 million subscribers and
11.3 million likes on TikTok. More details on the impact
of TikTok can be found on page 22.
Importantly, the monetisation of music on emerging
platforms is accelerating. As noted by the Portfolio
Independent Valuer, revenues from these emerging
platforms are increasingly being captured by the music
industry as licences are agreed.
The Directors expect this trend to continue and believe
it is highly likely that new platforms will emerge and
music will become an increasingly important element
of the content on other social media platforms.
Live performance
The pandemic decimated the Live sector in 2020 and
2021. According to the UK’s PRS for Music, royalties from
the Live sector declined further in 2021, and have seen
an overall 85.2% reduction since 2019.
As anticipated in last year’s annual report, the
relaxation or ending of restrictions put in place by
Governments to slow the spread of COVID-19 has seen
a widespread return of live music as artists who had
delayed tours reschedule, new tours are arranged and
music festivals, once again, take place.
For the first quarter of 2022, Live Nation revenues (which
mainly come from concerts) was $1.8 billion (Q1 2021:
$290.5 million), with all leading indicators pointing to
double digit growth in fan attendance at concerts this
year compared to the prior year.
On 24 May 2022, CTS Eventim, a live entertainment
market leader in Europe, announced that “ticket sales
in April 2022 and so far in May too have been well
above the level seen in the same period of 2019, which
had been a record year.”
As a result, the Directors expect 2022 to be a record year
for concerts and festivals with many of our artists such
as Nile Rodgers and CHIC, Blondie, The Chainsmokers,
The Wombats and the Red Hot Chili Peppers touring, the
latter having already sold over a million tickets.
STRATEGIC REPORT • OUR MARKET
STRATEGIC REPORT
49
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
Emerging Markets
The US & Canada is still the biggest music market (c.40%
of the total, source: IFPI).
Elsewhere, the global growth of Streaming has
resulted in an increase in the monetisation of Songs in
jurisdictions in which it has historically been difficult to
recover royalties due to factors including high piracy
rates or poor revenue collection methods.
IFPI saw growth in revenues in Asia of 16.1% year-on-
year, Latin America by 31.2% year-on-year and Middle
East & North Africa by 35% year-on-year.
According to the IPFI Global Music Report 2022,
recorded music revenues grew in every region around
the world in 2021. Both the Middle East and North Africa
region and Latin America enjoyed growth in excess of
30%, with Asia excluding Japan growing at 25%.
Payments to Songwriters
Hipgnosis has been, and continues to, be an advocate
for Songwriters to be fairly rewarded for their work.
Partly as a result of this campaign, in the UK, the
Government asked the Competition and Markets
Authority (CMA) to carry out a market study into music and
Streaming. The CMA is due to announce by the 26 July 2022
whether they will carry out a full market investigation.
In April 2022, in the US, The National Music Publishers’
Association (NMPA) and Nashville Songwriters
Association International (NSAI), representing artists,
and Sony Music Entertainment, UMG Recordings, Inc.
and Warner Music Group Corp have proposed to
the Copyright Royalty Board (CRB) a settlement on
mechanical royalties for the CRB IV period, running from
2023-2027 which would see the mechanical rate paid
to publishers and songwriters for music purchased as
a physical sale increase from 9.1¢ per track to 12¢ per
track from 2023-2027. Additionally, these royalties will
increase annually in line with the Consumer Price Index.
On 1 July 2022, The US Copyright Royalty Board (CRB)
announced it had disallowed the appeal by various
Streaming services against the CRB III determination
to increase mechanical Streaming royalty rates for
songwriters and publishers.
The increase, which is incremental over the period
covered by CRB III (1 January 2018 until 31 December
2022) will culminate in a 44% uplift in the “all in”
(mechanical and performance) statutory minimum
rates for Streaming paid in the US, rising from 10.5% of
Streaming revenues prior to 2018 to 15.1% in 2022.
For most of the period since the appeal was launched
in 2020, the majority of the increased revenue due to
the owner of song copyrights has been withheld and
revenues have been paid off the CRB II rate of 10.5%
in most cases. Hipgnosis will now receive US Streaming
revenues based on the royalty rates set out in CRB III.
In addition, Hipgnosis has not accounted for any
withheld revenue since 2020. This is expected to be
received by Hipgnosis in the coming periods, as money
flows from the Digital Service Providers (DSPs) to the
publishers and then copyright owners.
The Board welcomes the decision of the CRB and
believes that it is a positive indicator of their thinking
as they consider the outcome of all facets relating
to CRB IV. CRB IV, which will determine songwriter
payments for 2023-2027, is currently underway.
4
0
.
0
2
3
.
0
3
.
9
3
0
.
1
0
.
3
2
.
2
0
.
1
Global music revenues by region, 2021(%)
Source: IFPI

USA & Canada

Europe

Asia

Latin America
 Australasia
 Middle East & North Africa
 Sub-Saharan Africa
50
HIPGNOSIS SONGS FUND LIMITED
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2022
Macroeconomic conditions
One of the strengths of Hipgnosis’ investment thesis
is the belief that listening to music and therefore the
revenues this now generates is uncorrelated to macro-
economic conditions.
Streaming revenues make up the largest proportion
of Hipgnosis’ income and the Directors believe that,
notwithstanding current macroeconomic conditions
and given the unsaturated nature of the market,
Streaming subscriber numbers are likely to continue
to grow rapidly. Given the very good consumer value
that Streaming represents, the Directors are optimistic
that, as has been the case in previous economic
slowdowns, consumers will choose to maintain lower
ticket entertainment items (such as Streaming) even if
they need to cut back on more expensive items.
As such, the Directors believe that the DSPs have
significant pricing power which will, over time, offset the
impact of inflation.
Ukraine
When considering the suffering created by the war in
Ukraine, it feels inappropriate to consider the financial
implications.
Hipgnosis is fully compliant with the sanctions
introduced by the US and UK governments. The
Company did not receive any revenues directly from
Russia or Belarus. Revenues received indirectly via
collection societies are immaterial.
At a practical level, the Directors are delighted that
HSM was able to sponsor five Ukrainian refugees to
come to the UK, one of whom, who has considerable
musical knowledge and experience, has been
employed by HSM.
The victory for Ukraine in the Eurovision Song Contest
demonstrates the important role that music can have
in bringing comfort and demonstrating support even in
the most terrible of situations.
STRATEGIC REPORT • OUR MARKET