Church of England reaping rewards for early investment in popular music fund
The Church of England is reaping the rewards of its investments in the unlikely field of popular music. Through her investments in funds managed by independent investment firm CCLA, she was an early investor in Hipgnosis Songs Fund, a company that acquired the intellectual property rights to over 60,000 popular songs from select from the biggest names in the industry.
Hipgnosis uses investor money to purchase the rights to between 50 and 100 percent of all future royalties for a substantial lump sum. He didn’t buy from record companies, but from songwriters themselves, who received royalties primarily from album sales and airing when a new record came out, and were often at a disadvantage compared to to artists.
But music streaming, in which digital services like Spotify and Apple Music give subscribers access to millions of songs, is credited with changing the face of an industry that has fought for decades against piracy. Music can now be licensed in multiple ways, including streaming, and for films, television and video games, commercials and merchandise, which has increased both songwriters’ revenues and their music. negociation power.
The company’s founder and CEO, Merck Mercuriadis, is an industry veteran, who previously managed top names like Guns N ‘Roses, Elton John and BeyoncÃ©. He describes himself as an advocate for artists and songwriters, and told the magazine Rolling stone in an interview last year: âAs songwriters, they actually give their children to surrogate parents. They know they can trust me and that I will respect their art, and only use the songs in a way that suits them. “
The Church of England uses independent investment firm CCLA, which manages Â£ 12.6 billion in assets for charities, religious organizations and the public sector. Hipgnosis, launched in July 2018, was CCLA’s first specialty entertainment copyright company, and its fund was one of 38 original investors.
An in-depth analysis of the publishing industry helped create a picture of opportunity, said CCLA portfolio manager Solomon Nevins. “We are always on the lookout for asset classes that bring some diversification within our portfolios,” he said on Tuesday.
âWhat we love are investments where we can be sure they can make money for our customers in a more delicate economic environment, and what we know about music is that people there ‘listen when they are happy or sad. Demand is very stable throughout the cycle.
Despite the general financial crisis, the subscription-based music access model has developed in all its forms and has proven to be less sensitive to the downside than the purchase of CDs or DVDs. âOne of the key theses this brings up is that once people start a streaming subscription like Netflix or Spotify, it becomes quite difficult to give it up. It’s good value for money, with monthly subscriptions usually close to the price of a single CD, and almost all the music you can get.
Mr. Mercuriadis had demonstrated his enthusiasm and knowledge of the industry, and had taken steps to build a team with solid financial background around him, said Mr. Nevins. “We were very happy with the way he was able to deliver and build this.”
CCLA’s investment of just under 1% in the business generated a 26% three-year return, annualized at 9.5%. The investment had been a “particularly bright spot” over the past year, Mr Nevins said, as people had been forced to stay at home and turned to entertainment to convey them.
It is recognized that the investment landscape is changing: fossil fuel companies are among those no longer considered to have sustainable business models. “We are the stewards of our clients’ assets, and our clients trust us to invest responsibly to generate sustainable financial returns,” said CCLA Head of Ethical and Responsible Investments Dr. James Corah.