Blackstone Gets Into the Music Industry

Digital Music Rights Market Draws Asset Managers’ Interest

Blackstone (BX) is aiming to capitalize on the growth in music streaming, teaming up with the advisory arm of Hipgnosis Songs Fund (HPGSF) to invest in music rights and catalogs. The asset management firm is investing $1 billion in the effort. Hipgnosis is a music investment company which buys artists’ songs catalogs and makes money when songs are streamed online or used in commercials, TV shows, and movies.

Under the deal, the Hipgnosis fund will be able to co-invest with Blackstone on any music catalog deals. Blackstone will take a majority stake in Hipgnosis Song Management and will invest in the firm to improve the data and tech it uses to manage music rights.

Hipgnosis Bets on Streaming

Hipgnosis was founded in 2018 by Merck Mercuriadis, a former manager for big names including Elton John and Beyoncé, and by Nile Rodgers, the co-founder of Chic. Hipgnosis buys songs through the Hipgnosis Songs Fund. The company has inked music deals with Rihanna, Shakira, and Neil Young. Since going public in 2018, Hipgnosis owns the rights to over 64,000 songs, 14,000 of which are top-10 hits. The company has gross assets of around $2.2 billion.

Asset managers including Blackstone see obtaining music rights as a big growth play. After all, old songs can generate a lot of money via streaming platforms and on social media.

Asset Managers Circle

Blackstone is not the only large asset management firm to make big investments in the music industry. Apollo Global Management (APO) is backing HarbourView Equity Partners, a firm gearing up to purchase music rights via a $1 billion investment. Meanwhile, KKR & Co. (KKR) purchased a majority stake in producer Ryan Tedder’s pop music catalog. The PE firm also inked a deal with the record label BMG.

With social media and streaming platforms taking off, big asset management firms see an opportunity to make money off of music. It will be interesting to see what these investors do next.

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