Richie Sambora!!!

JackieBlue · #**1361** 03-30-2020, 10:50 PM

Quote:

Originally Posted by Thinny

From what I can gather they help artist make money from their song writing, by promoting their songs to people that need music for TV, or promo etc an make sure that the writer gets the royalties that they feel they are due. It's really not very clear, and I've read a few articles about the company, but for some reason it all seems very vaugue. A lot of what they do seems to be along the same lines as a music publisher, but a more hands on version. So expect that the deal was up with whoever owned Richie's publishing right and he sold the publishing rights to this company, who are a more modern take on the publisher. I think. I could have it wrong...

Yeah, it seemed vague to me, too. I assumed Richie's share of the publishing rights had previously been managed by his own company, 'Sambora Songs'. But one article I read said that, with a catalog acquisition, 'the purchaser "owns" the copyrights'. With 'owns' in quotes I wasn't sure if that meant Richie no longer owns his share of the songs, altogether; or if it meant that they were in some kind of partnership arrangement where Hipgnosis also owns the copyrights, in that they could approve licenses for commercial use of the songs to allow for further distribution or promotion.

According to Hipgnosis' Investment Advisers' Report:

Quote:

The Company’s investment policy is to diversify risk through investment in a Catalogue of Songs and associated musical intellectual property rights.

The Company will seek, but is not required, to acquire 100 percent of a songwriter’s copyright interest in each song, which would comprise their songwriter’s share, their publisher’s share and their performance rights.

In appropriate cases, however, the Company may not acquire all three elements of the songwriter’s interest and may also acquire peripheral interests such as producer royalties on a songwriter’s copyright interest.
...
The Company will, directly or indirectly via collection agents, enter into licensing agreements, under which the Company will receive payments attributable to the copyright interests in the Songs which it owns. Such payments may take the form of royalties and/or licence fees, including:

• mechanical royalties – when a copy of a song is made, whether physical (e.g. CDs, DVDs) or digital (e.g. permanent downloads, streaming, webcast);

• performance royalties – when a song is performed live or broadcast on TV or Radio, or when a song is streamed online; and

• synchronisation fees – when a song is used in another form of media (e.g. movie, TV show, video game, advertisement).

The Company will focus on delivering income growth and capital growth by pursuing efficiencies in the collection of payments and active management of the Songs it owns.

The Company may acquire Songs for consideration consisting of cash, Shares or a combination of cash and Shares, and payment of part of the consideration may be on deferred terms.

Whilst theCompany does not intend to sell the Songs it owns, it may make disposals of Songs where it considers such a disposal to be in the best interests of Shareholders.

It sounds like Hipgnosis is (partially?) banking on the ability to pursue other licensing even tho Richie is only co-writer, especially on the biggies. Maybe they assume that any of his co-writers would be open to any use of the songs that would increase revenue.

Anyway, I was just curious about the practical implications of all that jargon. 'Cause, as Old Joysey used to say, "I'm curious as a cat."

Johny · #**1362** 03-30-2020, 11:44 PM

Does it mean he has to pay royaltie if he wants to play (that's up the promoter usually) or release some of his songs?

I really don't understand this business. In my naive way of thinking, the writer should always be the "owner" of the song. For me it's a thing you can't just buy. You know, if I listen to a song written by Richie Sambora, I want him to have a profit from it, if there's any. Not some suits in a business company. There shouldn't be other people deciding what is going in with someone else's music.

Maybe I have it all confused with owning the master recordings - that was the case of Def Leppard at some point. Again, in my opinion, that is something that belongs to the artist. Of course with some given profit to those who made it possible to record the records.

Walleris · #**1363** 03-30-2020, 11:50 PM

Thanks JackieBlue!

Interesting note on them not intending to dispose of their investments (which debunks one of my theories). In that case, they probably expect the royalty cash flows (and other related income) to be enough to cover the acquisition cost (13 times on its annual earnings, on average) during the lifetime of the investment, which brings me to my next question - given that they're still in early stages of expanding their portfolio, in how many years do they expect to break even from such investments? In theory, songs have an infinite useful life, but Hipgnosis is listed on the London Stock Exchange and has several institutional investors, and I would guess they expect quicker returns than waiting over 13 years (if we were to assume that royalty revenue grows in line with inflation), it's probably closer to the 3-5 year range, but then you are really dependent on (I) the growth of streaming in the next few years; (ii) your ability to increase other revenue streams (synchronisation fees?) and "efficiencies in collecting payments", whatever that means; and iii) (I'm really talking out of my ass here) potentially using leverage (from having so many songs under management) to negotiate with other players in the supply chain (e.g. labels, performing artists, etc.)?

Sorry for spamming this thread with finance talk, but I see I'm not the only one who finds this stuff fascinating.

Thinny · #**1364** 03-30-2020, 11:56 PM

Quote:

Originally Posted by Walleris

I think you are quite wrong here. I haven't done a lot of research myself either, but what I read gives me a very different view.

To me, this appears to be a classic investment fund business model. Hipgnosis acquires an artist's music catalogue for a large amount of money (avg. 13 times the annual earnings of that catalogue) and then either profits from an expected increase in asset value of the catalogue (if they sell) or/and future cash flows from its sales, streams, and other revenue streams, which they expect to increase in the future as music streaming continues to grow.

Whether they intend to eventually start selling parts of their portfolio many years down the line, after the increase in value (like a private equity fund would, for example) or are cash flows from royalties while holding the asset are enough to make the investment profitable, is unclear to me. Also, what's unclear is, whether the original songwriters (who have sold) retain a percentage of those earnings, do they get additional commission (based on how well those songs do, e.g. Rick Astley's Never Gonna Give You Up became a lot more valuable after the Rickroll meme in 2007 (20 years after the original release) than it was before) or do they surrender royalties completely. This is where spreadsheets are built and I've nowhere near enough understanding of the music business to make even an educated guess.

While they have an operational / management function that you mentioned (publishing, advertising and royalties, etc.), this seems secondary to the fund business. Especially, as Captain_jovi pointed, given how most of those songs (esp. the valuable ones) are co-written and they only own Richie's share of the pie, I don't think they have much power to dictate the strategy of how to use that catalogue to make those revenues bigger than they would be otherwise if Richie was still holding it.

Based on this, I would guess that Richie needed/wanted cash and was willing to sell the ownership of his work for a large amount, rather than keep collecting periodic payments for royalties.

Thanks Walleris, that make a lot more sense, even if it is still somewhat confusing. I was looking at it from a Music Publishing angle rather than a finanancial investment angle.

I'm not sure about how viable this model will be in the long run, but I hope it works out for them....

Walleris · #**1365** 03-31-2020, 12:03 AM

Quote:

Originally Posted by Johny

I really don't understand this business. In my naive way of thinking, the writer should always be the "owner" of the song. For me it's a thing you can't just buy. You know, if I listen to a song written by Richie Sambora, I want him to have a profit from it, if there's any. Not some suits in a business company. There shouldn't be other people deciding what is going in with someone else's music.

The said "suits in the business company" paid a good price to the writer to earn that money in the future.

Just for the sake of the example, let's say Richie earned $1m last year from all the digital and physical sales, streaming, performance fees, synchronization etc. for all the songs he has written (and thus owns). If things stay the way they are, he will earn the same 1m next year (slightly more due to inflation and expected increase in streaming counts, etc.), the same the year after, etc. OR he can choose to earn $13m right now instead. In the end, same writer (that you want to support) gets his support upfront, because he wants more money now. It's his body of work, who are we to say that he shouldn't do it? I think this is great for older artists (Richie will turn 61 this year and has lived fast & hard, as we all know) to profit more in their lifetime.

richiefan95 · #**1366** 03-31-2020, 12:24 AM

I am absolutely no expert but I to me it seems strange to sell his catalog because he has more than enough money and publishing rights are a good investment. Remember that Michael Jackson bought the beatles catalog for about 50 million and 50% of this catalog were sold in 2015 for 750 million.

JackieBlue · #**1367** 03-31-2020, 01:28 AM

I know jack about how this all works, obviously; but I also wonder if a continued royalty of some percentage might have been included in the negotiations, in exchange for outright ownership. Or if he got shares in the company to hedge his bets.

This article from Rolling Stone makes more sense of it, in layman's terms, than anything I've read so far.

https://www.rollingstone.com/music/m...riadis-975148/

steel_horse75 · #**1368** 03-31-2020, 10:41 AM

Thats why Motley Crue got such a good deal when the split from their label. Think they got all the publishing rights which is unheard of.

QUceK1WV8 · #**1369** 04-01-2020, 11:11 PM

Quote:

Originally Posted by richiefan95

I am absolutely no expert but I to me it seems strange to sell his catalog because he has more than enough money and publishing rights are a good investment. Remember that Michael Jackson bought the beatles catalog for about 50 million and 50% of this catalog were sold in 2015 for 750 million.

We don't know how much money Richie has. There can be educated guesses and it can't be disputed that he has made tons. How much of it remains is another thing, completely. Quite a few stars are broke. There is income in publishing rights, sure - but he just received 13 years worth of it. Investing that - disregarding the current global crisis - should give him both more flexibility now and secure income later on.

There are sites that estimate the values of celebrities. They are complete bollocks and based on nothing but hoping that people click. Just a week ago I bumped into an estimation that put Ori slightly above Richie and both around 50 millions in net value. Now, my educated guess is that the lady is closer to -49.9M than +50.. and Richie has lived on the fast lane himself.

Say what you want about Richie, I do think he has enough sense to get good advice on matters of like this. This is probably a good thing for him and hopefully a good thing for us. The better he is, the more likely it is that we are going to get more music.

Yeah. I have one of my optimistic weeks going on.

Captain_jovi · #**1370** 04-01-2020, 11:42 PM

I genuinely like Ori and as crass as it is to make guesstimates about money, her having $50m in the bank....I just don't see it. I'd assume her biggest paycheck is from playing with Alice and that's a huge chunk of money to come from that. Just my opinion, but I don't think she has anywhere close to the network Richie does.

Richie Sambora!!!

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