Growing up in a small town in Canada in the 1970s, Merck Mercuriadis can pinpoint the exact moment that changed his life forever.
At the age of 12, the future music industry power player made the 100-mile journey to see rock titans Kiss, supported by a then little known Cheap Trick. It was a night that left an unshakeable impression on the young devotee.
“I’m literally right up at the front,” says the now 55-year-old, with a glint in his eye. “Kiss came on and just fucking destroyed the place. I’d only ever seen a five-minute gig before [an aborted Joe Cocker show] and suddenly not only was I seeing a band, but one that had pyro, theatrics and lights.
“People think that Kiss are about the spectacle, which of course they are, but deep down they also have great songs and it just fucking made me go, ‘If they can do it, I can do it’.”
Even then, the future Guns N’ Roses and Elton John manager had the self-awareness to appreciate that his dreams could only be realised away from the stage.
“I knew from a really early age that my job was to figure out what role I could play to help the performers,” he explains. “I never had a guitar lesson, I never attempted to play. I can’t fucking sing, that’s for sure.”
Mercuriadis, who has also represented icons such as Morrissey (“tremendous”) and Beyoncé (“no one works harder”), laughs when reminiscing about a painful lesson from his formative years.
“In the third grade I had this Scottish music teacher,” he remembers. “She had this great reel-to-reel player and would try to teach you rhythm and melody.
“One day, she said to me, ‘Could you stay after class?’ And trust me, I loved this class. But she just said, ‘Listen... I think it would be better if you never came back’.
“Years later, Elton John and I are on the cover of Billboard together. I only sent that copy of Billboard to one person, and that was to her. I have no idea whether it got to her or not, but it was the only copy of that magazine I gave away – that was my way of just going, ‘OK, fuck you!’”
Mercuriadis has come a long way since clapping along to the strains of Abbey Road and Jesus Christ Superstar as a music-obsessed schoolboy. His industry journey began in the early 1980s, at Virgin Records in his native Canada.
“I thought that Virgin was the greatest record label in the world,” he says. “I used to write letters to [co-founder] Simon Draper. Everyone gives Richard Branson the credit, but the creative vision for Virgin was actually his cousin, Simon Draper. He was probably the greatest A&R man who ever lived.”
Relocating to the UK, as luck would have it, Mercuriadis’ arrival coincided with a time of immense prosperity for the label, which counted the likes of Peter Gabriel, Simple Minds, Culture Club, The Human League, XTC, OMD and UB40 among its ranks.
“Suddenly, Virgin went from being not only the coolest label with the coolest bands, it also became incredibly commercially successful,” marvels Mercuriadis. “I was just a functional marketing guy but, more than anything, I was a massive champion of this music and making sure that people got to hear it.
“They rewarded me by letting me be part of the process of signing an artist called Mary Margaret O’Hara. When her album, Miss America, eventually came out [in 1988], it was unbelievably acclaimed, but its gestation was among the most painful things anyone has ever been through.
“I’d become sophisticated enough to realise that by working for Virgin Records, I’m not actually working for the act. As soon as I realised that, I knew I had to stop and change my core profession from working for a record company to becoming a manager.”
Hooking up with Iron Maiden managers Rod Smallwood and Andy Taylor at Sanctuary Group, Mercuriadis served more than two decades with the pioneering firm, rising to CEO.
“I was looking to soak up as much responsibility as possible,” recalls Mercuriadis. “That was really the start of Sanctuary and over the next 21 years together we built the biggest independent record company in the world.”
Departing Sanctuary in 2006, Mercuriadis launched management and publishing firm Hipgnosis Songs and music IP investment vehicle, Hipgnosis Songs Fund, which floated on the London Stock Exchange in 2018. The company has been on an acquisition spree since purchasing its first music catalogue from Terius Youngdell Nash, aka The Dream, and has raised a further £141.5 million from investors, bringing its total to almost £350m since its IPO.
The grounds of Abbey Road Studios provide a suitably storied backdrop for Music Week’s meet and greet with Mercuriadis. The venue has become familiar territory since his latest client, disco legend Nile Rodgers, became its chief creative advisor in 2018.
Here, Mercuriadis talks Guns N’ Roses, social media and his ambitions to kickstart the “song management revolution”...
How did you come to represent Nile Rodgers?
“Nile and I have been friends for over 20 years. Three years ago we started working together and our discussions began with his career, but also with what we wanted to do with songs. We had this common understanding that the business had changed from the one we had both come into, where 90% of the artists we would sign wrote and sang their own songs. Today, 90% of the artists being signed are talented kids who just want to be famous and are happy to sing the best song available to them – it doesn’t have to be theirs. So if you’re Zara Larsson and you have access to hit songs, you are at the top of the charts. If you’re Iggy Azalea and you had the biggest song in the world five years ago with Fancy but, for whatever reason, you no longer have access to hit songs, you’re nowhere. It’s all about the song today and we could see this coming. We felt that the songwriter being the low man on the totem pole had to change and we both wanted to do something about that. I also had this vision that Nile was in many ways unsung. As far as I was concerned, he had written the most important pop records of the last 40 years. They weren’t just big hits, they changed culture.”
You managed Guns N’ Roses during Slash’s exile from the band. Were you surprised to see them reunite?
“The reunion was always a possibility because Axl [Rose] was open-minded to it. All he ever wanted was for Slash to apologise for certain things and while Slash was in a position where he maybe didn’t understand that was what was necessary, then the band were never going to come together. But at some point it was inevitable that they would have that conversation and Slash would be able to have his say, because there were things that he wasn’t happy about. Let me put it to you this way, Axl might call me up and say, ‘I’m unhappy with Slash’. If I had jumped in and went, ‘You’re right, he’s a fucker!’ Axl would be the first person to turn and around and go, ‘No, no, you can’t say that. I maybe can say that, but you can’t’. So Axl was always protective of Slash and the other guys in Guns N’ Roses, there were just certain things that he wanted to be put right. They obviously figured out how to put them right and it’s been incredibly successful.”
How would you describe your management style?
“I listen to my artists. I don’t work with anyone that doesn’t float my boat musically – my job is to make people believe, but I can only do that if I genuinely believe. Once I believe, I’m a crusader and I’m out there making everyone else believe. The conclusion that I came to a long time ago, being a kid from a small town of 2,000 people in Canada – who went from kissing a girl at age 11 or 12 for the first time to an Elton John song, to then managing Elton John – is that success isn’t difficult. What is difficult is the success that you want to have, because that requires discipline; that requires knowing when to say yes and when to say no, and being true to what it is that you want. Once you get in this mix, you will get all kinds of things thrown at you and before you know it you’ve ruined your chance because you’ve said yes to becoming one thing when you really wanted to become another. My job is to help keep them focused on what they want. Sometimes that’s unpopular, because people live in fear – they’re scared that the opportunity might disappear and they start to compromise. I’m the manager that won’t let you compromise.”
You’re fairly active on Twitter, how important has social media become for artists?
“You cannot have a successful artist today without social media, but social media is an evolution. It’s like when I was a kid obsessed with The Clash, I was lucky enough to have a Tony Parsons giving me the truth because he believed in the music as much as I did. But equally, there were a bunch of other tossers writing about music and giving you their version of the truth, not the band’s version. There is a London band at the moment that I love called Black Midi. What can Black Midi get out of social media? They have an opportunity to communicate directly with the 15 to 17-year-old kid that might be interested in them, with nobody getting in the way. Social media is still in its infancy and what we’re going to find is that the next version of Johnny Rotten, Joe Strummer, Frank Zappa, David Bowie or Nile Rodgers is going to be like the Pied Piper – marching their audience down the street before most of us even know what the fuck is going on – because they’ve got the ability to talk to the audience. That is really exciting.”
We hear there’s a good story behind the Hipgnosis name...
“Hipgnosis was the premier artwork design company of the 1960s and the 1970s. It was two guys – Storm Thorgerson and Aubrey Powell – and by 1980/81, all of a sudden, the aesthetics of everything were completely different. Hipgnosis was so closely associated with the ’60s and ’70s that they decided to stop using the name. Storm and I worked together for many years on projects and he eventually became one of my clients. One day he said to me, ‘What do you want to call the new company?’ He caught me completely off guard, so I said, ‘Well, I’d like to call it Hipgnosis but that name’s already been taken’. A few days later I received a package from him saying, ‘I’d like you to use the name’, and he had designed all the logos for it.”
What persuaded you to get into publishing?
“I wanted to change where the songwriter sits in the economic equation. The songwriter should be rewarded to a greater extent than they are and I believe that the only way to get to that place is to build a £1 billion to £3bn company that has the critical mass to help to bring that change into place. On the other hand, I also am a massive fan of streaming. What streaming has done for us more than anything – and the numbers are exploding because of this – is that it has given the passive consumer a reason to spend money on music. Prior to streaming, the benchmark for extraordinary success in our business was the platinum record. In the US that’s a million copies in a country of more than 350m people; in the UK that’s 300,000 copies in a country of almost 70m people. So whichever of those two ratios you look at it tells you one thing – the average person was never putting their hand in their pocket and paying for music.”
Indeed, even the biggest-selling album of all-time in the UK, Queen’s Greatest Hits, is owned by just 1/10 of the population...
“Exactly. Our target consumer [in the US] was that one in 350. Now, our target consumer is all 350 because the $10 or £10 price point, combined with the convenience of having all of the music when you want, is a price point that the consumer has decided is worth paying. Suddenly, for the first time in our history as an industry, the passive consumer is joining the active consumer in paying for music. That’s why we’ve gone from 50m paying subscribers to music streaming services two years ago to 200m today. JP Morgan is predicting that we will have two billion paid subscribers by 2030 – that’s only 11 years from now – so we’re talking about a business that is going to grow by 10 times.”
So where does Hipgnosis fit into that?
“I went to the financial community in London and explained that proven songs were as predictable and reliable – and therefore investible – as gold, oil or diamonds. I like to make money just like anyone else does, but it also then gives me the critical mass to be able to change where the songwriter sits in the economic equation. Pretend for a minute that you are the head of Paramount Pictures and I work for the Screenwriters’ Guild. I come in to see you once every three years and I’m saying to you, ‘I know you’ve got Reese Witherspoon and Bradley Cooper for this film, but unless you’ve got my script there’s no movie to be made and you don’t get my script unless you pay the writers properly’. In Hollywood that happens every three years, but at the end of the day they figure out a way to pay the writers more money and everyone lives happily ever after. That’s never happened in music because no one has had the critical mass to be able to do it and no one has worked on a strategy of how to get to that place. Controversially, the reason that hasn’t happened is because Universal, Sony and Warner, as the three big recorded music companies, also own the three big song companies. On the recorded music side of the business you’re making an 80% gross margin and a 40% net margin on success. And on the song side of the business you’re making maybe a 25% gross margin, on average, and an 8-12% net margin. So any time the model improves they use the leverage to push that improvement towards recorded music where they have the biggest margin, unfortunately, at the expense of the songwriter. Someone needs to come along and disrupt that system.”
And that someone can be you?
“I want it to be the last paragraph of my Wikipedia page, that I pushed them over that precipice, because everyone wants it. Sir Lucian Grainge [Universal] knows that we’re nowhere without songwriters, Rob Stringer [Sony] knows we’re nowhere without songwriters, Max Lousada [Warner] certainly knows that. We all want the songwriters to be paid more money, but we’re dealing with a paradigm that has existed for decades and it’s going to take time and, most importantly, disruption to make that change. The only way that you can really do it is if you’ve got the critical mass, so I’m buying these assets because I think they’re an incredible way for people to realise value and get a great return on their money. But I have this ulterior motive to then use the leverage that comes from amassing a couple of billion pounds worth of assets and put that to work for the songwriters to change where they sit in the economic equation. That’s totally aligned with the best interest of my investors because, if songwriters are being paid more money for their new songs, that also means we’re being paid more money for our catalogue.”
To wrap up, how big can Hipgnosis become?
“I think that in 18 months we’ll be over £1bn. We have over £600m worth of pipeline available to us right now and every day it grows. An important part of what we do is to then actively manage these songs and build additional value in them. Part of the problem in songs being managed as well as they should be is that the big companies have as many as 20,000 songs for every creative person they have working for them. They’re managing literally millions of songs. We manage songs in the same way that we manage artists – with responsibility. Every song has a P&L [profit and loss statement]: The Dream has a song called XO, a Beyoncé song. Last year it made seven grand, this year it’s made 125 grand already because we put effort into it and that effort ended up resulting in sync. I want to eradicate the word ‘publishing’ from our vernaculars because what should be happening is that every songwriter, artist or producer should have a song manager. ‘Publisher’, to me, is a euphemism for someone that collects your money but doesn’t really add value to the song. I want our company to be a song management company. I want it to be the beginning of the song management revolution.”
