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Justin Bieber sells music rights to investment fund Hipgnosis

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Justin Bieber has sold the rights to his music to a Blackstone-backed investment fund — becoming the latest, and one of the youngest, artists to cash in on their catalogues amid a boom in music licensing deals.

Hipgnosis Song Management, the investment adviser for the London-listed music fund Hipgnosis, has acquired the rights to more than 290 of Bieber’s songs. This includes global hits released before Dec. 31, 2021, such as “Sorry,” “Despacito” and “Baby.”

The purchase was carried out on behalf of Hipgnosis Songs Capital, a partnership between Hipgnosis Song Management and the asset manager Blackstone, Hipgnosis Song Management said in a news release said.

Although Hipgnosis Song Management has not publicly confirmed the value of the deal, announced Tuesday, the Wall Street Journal reported that it was worth around $200 million.

“The impact of Justin Bieber on global culture over the last 14 years has truly been remarkable,” said Merck Mercuriadis, the chief executive of Hipgnosis Songs Fund, in a news release. “At only 28 years of age, he is one of a handful of defining artists of the streaming era that has revitalized the entire music industry, taking a loyal and worldwide audience with him on a journey from teen phenomenon to culturally important artist.”

“This acquisition ranks among the biggest deals ever made for an artist under the age of 70, such is the power of this incredible catalogue that has almost 82 million monthly listeners and over 30 billion streams on Spotify alone,” Mercuriadis added.

With this move, Bieber, 28, joins a growing list of artists who have sold the rights to their music. Others who have made that move include Stevie Nicks, Bob Dylan and Bruce Springsteen, who sold his entire catalogue to Sony Music Entertainment for an estimated $550 million in 2021.

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But the acquisition of Bieber’s music rights stands out among recent such deals because of Bieber’s age, says Richard Baskind, the head of the music department at the London-based law firm Simons Muirhead Burton. The biggest deals have typically involved older artists who are selling the rights to decades of their life’s work. It’s “less common” for a 28-year-old to do so, Baskind said.

With legacy artists such as Springsteen and Dylan, prospective investors can measure the popularity of the artists’ songs over decades and therefore can expect to have a reliable income stream if they buy the rights to those songs.

Older artists, who may be on the verge of retiring, also may choose to sell their catalogues to leave their families “a big pile of money” instead of a “complex set of music rights,” Larry Miller, the director of music business at NYU Steinhardt, previously told The Washington Post.

“For artists, the benefit is clear,” said Cassine Bering, an intellectual-property lawyer at Briffa in Britain. “They are being offered more in these deals than they would see in their lifetime if they retained and continued exercising these rights themselves. Accruing money generated from music can be a slow process and an administrative burden, with many royalty collection societies only paying out a few times a year.”

The major potential drawback of such deals for artists, she added, “is the loss of control” over their intellectual property. “We haven’t seen the terms of this deal [between Bieber and Hipgnosis], but often, assigning your music rights means losing your say over when and where that music is used,” she said.

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For most songs, there are two distinct copyrights: The publishing copyright, derived from song composition (the arrangement of the music and the lyrics), and the tangible sound recording of the music (known as the “master”). The owners of both copyrights need to sign off on any deal to license the song.

Under the terms of their agreement, Hipgnosis acquired Bieber’s publishing copyrights. The company also acquired Bieber’s share of the copyright of the “master” recordings — meaning that while Universal Music Group, Bieber’s music label, continues to own the master recordings in perpetuity, any revenue payments that would previously have gone to Bieber will now go to Hipgnosis, according to the company.

Hipgnosis also acquired related synchronization fees — when a song is used in conjunction with a visual image, such as in films or advertisements — and neighboring rights, which come into play when a song owned by a copyright owner is performed publicly.

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The acquisition of Bieber’s music is the latest major deal for the music licensing business, which has taken off in recent years. It was propelled by the pandemic, when many artists lost their source of income because they could no longer tour or perform, and investors flush with cash because of few investment opportunities in a low-interest-rate environment backed big deals to acquire popular music as a way to secure regular income derived from their copyrights. Funds such as Hipgnosis would acquire artists’ catalogues, bundle them together and pay dividends to shareholders off the royalties derived from their ownership of the song rights.

Founded in 2018 by Mercuriadis, who formerly managed Elton John and other artists, the fund has bought music rights from artists including Shakira and the Red Hot Chili Peppers.

In 2021, Blackstone invested $1 billion to set up Hipgnosis Songs Capital with Hipgnosis Song Management, the investment management firm for Hipgnosis Songs Fund. Blackstone also bought an ownership stake in Hipgnosis Song Management.

Hipgnosis has gone through tough economic times since then, partly because of market conditions and partly because of investors’ concerns about the underlying value of Hipgnosis’s portfolio.

Hipgnosis’s share price was up slightly Wednesday morning in Britain after the announcement that it acquired the rights to Bieber’s music, although it had fallen back to the previous day’s closing price by the afternoon.

Last year, the Canadian singer and songwriter canceled and postponed planned performances as part of his “Justice World Tour” because of poor health. He announced in June that he had been diagnosed with Ramsay Hunt syndrome and that part of his face was paralyzed as a result of the rare neurological disorder.

Travis M. Andrews contributed to this report.

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