Merck Is Back! Hipgnosis Founder is Plotting a New Venture

Merck Mercuriadis, the architect behind Hipgnosis’s transformation of music rights into a mainstream asset class, is making a high-profile return to the music industry.

After stepping down from Hipgnosis following its $1.6 billion sale to Blackstone and a turbulent period of boardroom drama, Mercuriadis is launcing a new venture under the Hipgnosis branding. The new Hipgnosis will focus on a partnership model, bringing together artists and their managers as co-owners. Mercuriadis says his goal is to amass “five or six really important management companies, all of which have superstar artists and managers to go with them.”

Mercuriadis says this new Hipgnosis venture is about artists and managers making the majority of money, rather than labels. The approach reflects the shifting dynamics of the music industry, where artists with massive social media followings hold increasing leverage. Mercuriadis says he sees a ‘value shift’ underway, moving equity and income away from traditional music companies and keeping it with creators and their teams.

Mercuriadis’s original vision for Hipgnosis was sparked by the rise of streaming. He says he came up with the idea in 2009 when he saw the growing popularity of Spotify. A U.S. platinum record used to mean selling one million copies in a country that has nearly 340 million people. Mercuriadis says streaming “gave the other 339 million people a reason to pay for music.” Now with streaming subscription revenue flatlining—the music industry is set to pivot yet again.

Under his stewardship, Hipgnosis spent over $2 billion acquiring catalogs from stars including Shakira, Mark Ronson, the Red Hot Chili Peppers, Justin Bieber, Christine McVie, Neil Young, and many more. Despite criticism that he overpaid for these catalogs, Mercuriadis says the catalogs will only become more valuable over time. “You’re only ever going to be able to buy the Red Hot Chili Peppers once,” Mercuriadis told the Financial Times.

Mercuriadis says his new Hipgnosis venture has already secured investor commitments in the ‘hundreds of millions’ and is in talks for its first acquisitions. He also detailed plans to create a songwriters’ guild. “It all starts with the song… yet these people continue to be the lowest paid people in the room. It’s these people who helped make me who I am…and I want to keep giving back.”