Little Man: Why Merck Mercuriadis’ Blackstone Partnership Spells Doom for Human Creativity

LONDON, ENGLAND – Intellectual property (IP), as a legal concept, has its origins in the pharmaceutical industry and in the creative arts industry. Led by Pfizer and other powerful corporations like IBM, Hollywood studios and the top record labels joined in a U.S.-led campaign to introduce IP into international trade talks, which until the early 1970s centered only on physical goods. 

The idea that information, itself, could be attached to notions of private ownership was not new, per se. In fact, monopolizing information has been at the center of many an empire. The Catholic Church is one notable example, but hardly the most recent in Western history. For that we need look no further than Anglo-American colonialism, which went hand-in-hand with the perpetuation of ignorance within its domains as literacy and cultural development did not exactly mesh well with a slave-based economy.

IP is only the latest iteration of an old paradigm and forms the basis of the digital enclosure, writ large. The ethical questions raised by a company claiming to own the “rights” to the DNA of a given strain of corn or other naturally-occurring life forms, as Monsanto and many other concerns since the codification of IP have done, are readily apparent to many. But, such questions are less obvious when it comes to IP for creative endeavors like music.

After all, who would argue that the author of a particular song, book or painting should not be entitled to reap the benefits and rewards of his or her own work? The argument seems straightforward and it has been made to much success by the heads of movie studios and music distributors as they crafted the legal bounds of their highly profitable protection rackets, which invariably left the actual creators with crumbs and generated billions for the likes of David Geffen, BMI and Paramount Studios.

The advent of digital publishing shook up all facets of the entertainment industry and although early digital content download sites like Napster and LimeWire cut into some of the industries’ revenue, reports of its demise has been, as they say, greatly exaggerated. In reality, we were simply witnessing the establishment of a new marketplace, where all those hard-won IP protocols established decades before (against the protestations of smaller countries) could be fully exploited.

For the past few years, companies like Spotify, Apple Music, Netflix and Amazon have dominated the freshly-honed streaming business, generating obscene fortunes for their CEOs and other executives on the backs of tens or hundreds of thousands of artists, who still fail to find a place at the table. Now, the banner is being hoisted once again on behalf of the creators by a relatively new player in the music business, in particular, who is trying to leverage the old argument of author rights to build the next phase of the IP empire. This one led by the world’s largest hedge funds and private equity firms.

Head of the Table

Merck Mercuriadis talks the talk. Manager to the likes of Elton John, Guns N’ Roses, Morrissey, Iron Maiden and Beyoncé, he has built a solid reputation as a song-writers’ advocate and ever since founding Hipgnosis Song Fund with Disco legend Nile Rodgers in 2018, has been leading the charge for what he insists is a revolution of the music industry and realizing his dream of taking “the songwriter from the bottom of the economic equation, where they currently sit, to the very top of it”.

“The motive,” behind Hipgnosis is, “to establish songs as an asset class and get shareholders a great return on their investment”, Mercuriadis shared in an ‘open letter‘ published by Variety last month. Launched as a public company on the London Stock exchange, Hipgnosis aims to make it possible for musicians to make a “decent living” off of their streaming content on platforms like Apple, Spotify, TikTok, Peloton or Fortnite. 

Mercuriadis’ crusade for an equitable share of profits for musicians and songwriters seems laudable. But, once we start peeling back the onion and understand the context in which these profits are supposed to be generated, author rights and the proverbial fight for the underdog is once again revealed to be little more than lip service. 

Two weeks ago, Hipgnosis announced a $1 billion partnership with The Blackstone Group, in what was only one of several billion-dollar investments by private equity firms in the music business occurring only days apart. In addition to Blackstone’s massive capital infusion, KKR – a global investment firm run by Trump acolyte Henry Kravis – ponied upanother billion for a music rights fund with music publishing giant Bertelsmann Music Group (BMG), which is half-owned by Sony. 

Days before, Apollo Management, whose founder and CEO recently stepped down after revelations of his close business ties to deceased sex-trafficker Jeffrey Epstein, partnered with Morgan Stanley’s former head of entertainment and media to launch a new music-rights management company called HarbourView.

“The idea is very, very simple”, Mercuriadis explains regarding the attraction to buying up music catalogs. “The income streams are predictable and reliable,” he continues, “because you’re investing money in proven music as opposed to music that is unproven and a total risk as a result”. 

No Risk Art

From a hedge fund manager’s perspective, Mercuriadis’ logic is unassailable. But, from an artist’s vantage point, nothing could be more foreign. When the celebrated manager asserts that he is “focused on reforming the decades-old paradigms in our industry that are holding back the songwriter”, he is appealing to artists’ clichéd material instability. But, as he keeps talking, it becomes clear that his audience sits in boardrooms and not in their parent’s garage trying to come up with an original sound.

Mercuriadis throws terms around like “proven songs” and “predictable and reliable” earning patterns to describe the business model he is trying to infuse into what he calls a “proper songwriters’ guild”, comparing the plight of the trovador to the chimneysweep. His language is intended to lure the bankers and is betting on his reputation to be able to herd the artistic community in.

The music executive’s cognitive dissonance is embarrassingly exposed when he confessed that he and his business partner, Rodgers “have always believed that hit songs and music, art in general, has real value to it” (emphasis added). Given that he was speaking for both of them at that point in the interview, it would be interesting to know if Rodgers felt any kind of way at that moment, when his associate – a man responsible for managing such iconic figures like Lou Reed – considered the value of art to be real only if it was “investable”.

“We are in the song management business,” he continued, boasting that all of the songs on Hipgnosis’ catalog had “a P&L”, in other words, a profit and loss statement. “You can pick any song in our catalogue and say ‘what did that song earn last year?'”, Mercuriadis pitched, adding how such data could inform strategies to increase the ‘asset’s’ value in the future.

A Feast of Mediocrity 

The phrase “priceless work of art” speaks to the exalted nature of higher human endeavor. It refers to particularly successful achievements within a realm of activity undertaken for no other purpose than to move the human spirit. The more accomplished the work, the less material reality can account for its worth.

In the world of Blackstone, KKR and other investment firms, material reality is all that counts. The cult of Mammon has never been so widespread and as we continue to give these entities more and more power, it only stands to reason that they would eventually try to subsume art into its paradigm. 

Musicians who decide to join Mercuriadis’ ‘guild’ or any number of hedge-fund-sponsored, blockchain-running tokenized ecosystems, that are in the process of emerging will have to come up with a new name for themselves, as they can no longer be called true artists. Meeting the criteria of “investable” and “proven” musical offerings, that Mercuriadis has in mind has no place in the artistic process and is only a recipe for entropy – a race towards homogeneity, where the winner will always be the first to crack the secret of most common denominator.

“Talent, and particularly an extreme amount of talent,” Mercuriadis believes, “is normally God’s way of overcompensating for something else in your life that he really messed up.” To this twisted (and tacitly egomaniacal) logic, I can only counter with the lyrics of one of my own favorite songs by one of my favorite bands: 

Cover image: London, UK. 11th July 2018. Nile Rodgers and business manager Merck Mercuriadis attended the London Stock Exchange today to float their music-licensing company Hipgnosis Songs, and their first signing songwriter The-Dream. Rodgers is an Advisory Board Member and Mercuriadis is the CEO and Founder. Credit: Anna Watson