Merck Mercuriadis

Episode Transcript
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Speaker 1 (00:08):
Welcome, Welcome, Welcome to Canadian Music Week. In the Bob
Left Sets the podcast. My guest today is Murk Peculiadest,
who runs the hottest company in music today, the Hypnosis
Songs Fun Mark. How's it going, Bob, It's a pleasure
to be with you, mate for a long time. Okay,
So you're constantly signing new acts, new catalogs. Do you

(00:33):
reach out to people or do they approach you? Um,
it's a combination of both. I would say that of
the deals that we make are you know, people that
who's music that I'm listening to, and when I'm listening
to that music, it makes me reach out and turn
around and tell people that, you know, I admire the
work that they're doing and that I would like them

(00:54):
to be a part of Hypnosis. But it's it's generally
a long courtship. I I generally build the relationship with someone.
In my case there you know, many of these relationships
are relationships that have been built over ten, twenty thirty
forty years at the time that I've been in this business.
So you know, it's it's it's there's a bit of

(01:15):
a love affair that's been going on for a long
period of time generally before I approach anybody. But then,
of course, on the back of success, you have a
lot of people that pick up the telephone and want
to be a part of what you're doing as well. Okay,
let's talk about a couple of specific cases. You recently
signed the Red Hot Chili Peppers. How did that come
together so that when I can't talk about Bob and

(01:36):
I apologize for that, But that's a deal that uh
under n d A and that is is a deal
that is is not something that we can talk about publicly,
and I apologize. I should have said that at the
very beginning. Okay, is there a deal that would be
representative that you can talk about relatively recent? Sure, we
can talk about Neil Young, we can talk about Lindsay Buckingham,

(01:59):
we can talk about and let's talk about Shakira. Okay,
let's start with Neil Young. How did you what was
the entreaty with Neil Young? Did you reach out to
him or do you reach out to you? Well, you know,
I've had a relationship with Neil for about twenty five years,
maybe longer. Um I was very close with his manager,

(02:22):
Elliott Roberts, sadly who's no longer with us anymore. And
Elliott was a bit of a mentor to me. We were,
you know, we had a very similar approach to the
way we did things, always integrity, lead um and Frank Geronda,
who was Elliott's lieutenant for many many years and is
now Neil's manager, was also part of of of that

(02:44):
circle of of of friends around Neil, and it was
there therefore very easy. I mean. The funny thing about
the Neil deal was that when I first started to
see investors, uh four or five years ago to educate
them on the idea of songs as an asset class um,

(03:06):
and I would explain to them, you know, the way
that certain artists cared about music, and that it would
be you know, the kind of equivalent of uh, you know,
the songs being metaphorical children, uh, if you like. And
therefore these were very emotional transactions that uh the artists

(03:26):
would find uh, you know, difficult, and that they would
want to make sure that they were putting those songs
into the hands of the right people. I always used
Neil as the example. I had over a hundred and
seventy seven meetings with investors in the first twelve or
thirteen months of of of hypnosis as an idea, and
in every one of those meetings, Neil was always the

(03:48):
example of the sort of artists that would do business
with me as opposed to doing business with other people,
because they would know that I cared about the music.
They would know that I amderstood that these were emotional transactions,
and that they looked upon these songs as metaphorical children
that they've given birth to in the form of songs,

(04:09):
and that they would want to know that those songs
were going into the right hands. And you know, I've
made my reputation and my success with artists and songwriters
and producers as opposed to at the expense of artists
and songwriters and producers, and therefore I have a pretty
good name in the artistic community. They know that I care,
they know that I'm prepared to fight on behalf of

(04:31):
the songwriters and the artists and the producers. And they
also know that, you know, perhaps most importantly, that while
I'll always want to, you know, enhance the earnings and
enhance their reputation, at the same time, I would never
do that at the cost of protecting their legacy. The
legacy is always the most important thing. And protecting the

(04:52):
value of the songs and protecting how the songs are
used as paramount. That's that's inherent. You know, when you
look at someone like you young, you know, on the
one hand, the songs are as valuable as they are
because Neil is an incredible artist and a wonderful songwriter.
But equally well inherent in that is the way that
he's conducted himself over the past sixty years. The reason

(05:15):
why people like you and I look up to Neil
is because of that conduct. And I've read you write
about Neil. Uh, you know, read what you've written about
Neil many many times over the decades, and you have
a similar passion to mind most of the time. And
that's partly based on the fact that Neil is a
guy that we can believe in. Okay, but walk us

(05:35):
through the process of making a deal with Neil. Did
you hear that he wanted to sell or did you
approach Frank and tell him, Hey, I think this is
an opportunity for you here. It's a it's a courtship
that that has existed from the time that hypnosis started.
Um And of course you know sometimes the artist will

(05:57):
get to a place where they be it's the right
time for them to make a deal like this, and
other times it will never be the right time to
to to to make a deal. In Neil's case, UM
probably last October he decided that this was the right
time for him to make a deal and to uh,

(06:19):
you know, put the songs and let me just stop
you for a second. That was totally independent of you
talking to him. He basically woke up in bed one
day and said today's the day, okay, correct continually and
and and instructed his team that it was it was
time to find uh, you know, the right people to
do to make a deal with UM. So from that

(06:41):
point it became very easy. You know, the lawyer and
Frank reached out to me. I told them what I
was prepared to do, literally within a matter of seconds.
And ultimately, and you know, when you you have a
career like Nils and and and you know you've got
sixty years almost worth of incredible songs You've got obviously, uh,

(07:01):
you know understand what the how the marketplace feels about
your your catalog and your songs. But I was very
confident that what I proposed to them right from the
get go would prevail. And indeed it did, and the
deal was done within about thirty days. Okay, so you're
saying that within a matter of seconds you had a

(07:22):
number that you could give them. What it wasn't wasn't
even minutes, it was seconds. So how did you come
up with that number? Because you know, as you may know,
you know, the sort of general discussion around catalog sales
is based on a multiple um. So for me to

(07:45):
be able to express the multiple that I was prepared
to pay for Neil just took a matter of seconds.
You know. By that point, I was already you know,
the better part of two billion dollars invested. I knew
what these catalogs were trading ends for. And you know,
the one thing that I'm never gonna do. And it
doesn't matter whether you're as famous as Neil Young or

(08:06):
you know, whether you're you're you're someone that you know,
maybe as a decade into your your career, your life,
I'm never gonna mess a great creator around. You know,
my my modus opper endi is too. And this has
been this way throughout my career. You know, if I
believe that I should pay a dollar I'm not going
to offer ninety cents and then let you talk me

(08:28):
up to a dollar. I'm going to offer a dollar,
and then if you want more, I'm gonna justify why
I believe it's a dollar. So it's it's you know.
My My approach is always to be as real as
I possibly can be, and then if there's effort and
time that's required to then explain and to justify why
that's the number, and then I'm prepared to do it.

(08:51):
But I don't. I don't try to nickel and dine people.
I think that, you know, one of the things that
I set out to do when I started hypnosis, there
were three three goals. The first goal was to establish
songs as an asset class that could rival golden oil um.
The second was to use the leverage of hypnosis to

(09:11):
then help to change where the songwriter sits in the
economic equation, because despite the fact that they're delivering the
most important component to an artist having success, they are
the low man or woman on the in the economic equation.
And then the third goal was to destroy the concept
of traditional publishing, where someone gives you a check but

(09:34):
doesn't really add much value beyond that and to replace
it with song management. As as an artist manager, you know,
I manage people with responsibility because I understand that. You know,
first of all, I can't play the guitar, I can't
sing a song, I can't write a song. The only
thing that gives me a seat at the table with
these great people is that I take my responsibility seriously

(09:56):
and I think that that same responsibility should be extended
to these great songs that make the world go round.
But that's not what traditional publishing is. Let's get let's
get downe in the nuts and bolts. So if you
could make a deal or come up with a number
that quickly. Did they tell you how much they were
making from their catalog every year or is this something

(10:19):
where you investigate all the available acts yourself and see
how much they're making. So basically everything that we buy
is bought on verified data. So the artist will supply
the last three years of their publishing statements, the last
three years of their p r O statements, the last

(10:41):
three years of their you know, neighboring rights, sound exchange masters,
depending on what it is, that's that's that's on the
table um. But in the case of Neil, what I
gave immediately was the multiple that I was prepared to
pay for it. They then supplied me with that verified
aid to within a couple of days, they had the

(11:03):
formal offer back with that number, that yearly number times
the multiple that I was willing to pay, and we
were there very very quickly after that. What is the
multiple that I can't talk about I'm under n d A.
But but what I can, But in general, what I
can tell you is this is that I've now invested

(11:25):
over two billion dollars, about two point two billion dollars
at an average weighted multiple of fifteen. So I've I've
bought some catalogs for a lot more than a fifteen
times multiple, and I've bought some catalogs for a lot
less than a fifteen times multiple. But the average weighted
multiple across the two billion invested is fifteen times. Okay,

(11:47):
let's assume you pay fifteen times for your purposes. How
long a period of time do you calculate it will
take for you to recoup your investment. Well, it's probably
something that's closer to ten years time rather than fifteen
years time, because, of course, the context for all of
this is the explosive growth of streaming where when we started,

(12:11):
you know, just over three years ago, we had thirty
million paid subscribers to music streaming services. Today we have
four dred and fifty million paid subscribers. Then in addition
to that growth, you know, you've got uh things like
legislation that's taken place all over the world, such as
the Copyright Board ruling in the United States that has

(12:34):
given the songwriter a forty four greater share of the
pie incrementally between two thousand and nineteen and the end
of two thousand and twenty two. Now that's been appealed
by Spotify and by Amazon, but not by Apple, and
we believe that that increase will prevail. So by the

(12:54):
time you get to the end of a dollar's worth
of income that you bought will be worth a dollar
forty four if it was predictable, reliable income. And then
we go to work actively managing the songs better than
they've been actively managed for a long time, because you know,
the big publishing houses that administer many of these songs
when we buy them, they have as many as twenty

(13:17):
thousand songs per person. So as good as they are
what they do, they don't have the ability to be
able to affect the success of twenty thousand songs per person.
They just don't have the bandwidth to do it. We
operate on a basis of five hundred plus songs per
person UM, never more than a thousand songs per person.
We're adding all the time, so that ratio of between

(13:40):
five hundred and a thousand songs changes depending on where
we are between what we've acquired recently. So today we
have acquired a hundred songs from Andrew Watt um Grammy,
a winning Producer of the Year UM. But we're adding
more people to manage those songs and manage the songs
that are in the catalog on a glue basis, So

(14:01):
it fluctuates between having five hundred and a thousand songs
per person depending on where we are in that cycle. Ideally,
as we get to the point where there's a steady state,
it's five hundred songs per person as opposed to twenty
songs per person, and those people are very focused on
putting the songs in movies, TV commercials, video games, getting

(14:23):
new artists to cover those songs, getting new songwriters to
interpolate them, making sure that they're on TikTok, making sure
that they're on Peloton, that they're on the right playlists, etcetera.
So by the time you add all of those ratchets,
you know, what is a fifteen times multiple probably becomes
something less than a ten times multiple if you're doing

(14:43):
your job properly. Okay, let's just use Neil Young as
an example. So a lot of these older artists, Neil, Paul, Simon,
Dylan have sold in. The conventional wisdom is they're doing
it for tax reasons. In this particular case, you make
it deal with all of these very highly well known,

(15:04):
respected artists, is part of the negotiation where and how
they get paid for tax reasons. Well, certainly they will
have all had very very good independent tax planning. So
you know, you you you are probably aware that under
the Trump administration previously that at the mid terms last

(15:27):
time around, Trump tried to get rid of, uh the
the capital gains tax treatment for songwriters. Bart Harbison at
the n s a I and Nashville stepped in with
a very very heavy lobby and they were able to
turn that around and keep the capital gains tax in place.
We've now got what I think we all believe is

(15:50):
a far, far better president and Joe Biden. But Joe
Biden is also intent on, uh, you know, putting a
tax program in place that will likely get rid of
capital gains tax for songwriters. Whether that happens this year,
whether it happens next year, it's certainly something on the agenda.
I've been part of many, many discussions with the n

(16:12):
s a I and various congress people around the country
explaining to them number one that songwriters deserve capital gains
treatment and number two that even if we just look
at hypnosis, hypnosis has probably paid about five dred to
six hundred million dollars into the treasury based on songwriters

(16:32):
getting capital gains treatment. If that capital gains treatment were
to go away, many many songwriters would have to think
twice about whether or not they sold their songs. Okay,
but specifically that would be the general leandscape. Do you
just make a deal and say I'll pay you X
for this, let's just use a hundred million dollars is

(16:53):
around number? Or do they say we want you know, like,
is it like a baseball player where they say, well,
I want to be paid in Canada or I want
to be paid. Here are those factors that Hypnosis is
involved in at all, Where the money is generated, from
where it goes. We're not involved in the factors because

(17:14):
of course we're not advisors to the artist or the
songwriter or the producer. But if the songwriter or the
artist or the producer has a legitimate tax plan with
their advisors, as long as it's a legitimate tax plan,
we will do our very very best to cooperate and
make the transaction and the sale of the catalog is

(17:37):
smooth and seamless as as as the songwriter needs it
to be. Um, and that's something that you know, the
music business that you and I came into wasn't such
a sophisticated place. I'm happy to say it's becoming more
sophisticated on behalf of artists and songwriters and producers every day.
So you know, there are many many good business managers
and lawyers out there that have looked after clients well,

(18:00):
certainly in the hundred and fifty odd transactions that we've
made today. Okay, an iconic artist doesn't have that much
runway left. Paul Simon talks about not touring anymore. He's
either eighty or going to be eighty this year. Now
you say, whatever the multiple is, let's just assume it's
less than twenty, and you predict that you'll make the

(18:22):
money back in ten. What is the pitch to someone
who's in their thirties like Andrew Watt. So that's really
about de risking that person's future. You know that if
you look at Andrew Watt specifically, Andrew Watt is not
only an incredible songwriter and perhaps the most important young
songwriter in the world today. As I mentioned before, you know,

(18:45):
the Grammy Award winning Producer of the Year, you know,
killing it with du Olyppa, with Miley Cyrus, with Post Malone,
with Ozzy Osborne. Because he's a guy that that that
you know, works on music that he loves. He just
doesn't just work on on on whatever is the flavor
of the moment today. Um. And you know, in Andrew's case,

(19:05):
he was a guy that was very very bright, that
made an admin deal, didn't take any money for it,
and just went to work and relied on himself to
uh succeed in order to put money in his pocket
and to pay the rent and you know, put food
on his table and and and everything else that goes
with it. So for someone like Andrew now at the

(19:27):
age of thirty, his future is entirely de risked. What
he works on tomorrow is his own choice because he's
got enough money now to live for the rest of
his life. And that's an important, you know, point of
freedom for any young creator. Um so you know, it's
it's it's you know you is you I think are

(19:47):
getting to it. You know, people have different motivations for
for for selling, and in his case, it's de risking
his future and creating a relationship with a company like Hypnosis,
because when we make these transactions, that's the beginning of
the relationship. That's not the sum total of the relationship.
Every one of the hundred and fifty deals that we've made,
these people are now part of the Hypnosis family. They

(20:10):
work with the eighty three people that I have around
the world, and we're doing great things together. So for
someone like Andrew, the prime motivation is that he's now
de risked his future. But the second part of his
motivation is that he now has a partner to help
execute many of the things along with Scooter Braun as
his manager, to execute many of the things that that

(20:32):
are important to him in his growth as as both
an artist and a producer and a songwriter. Okay, you
say they're partners. What is the potential upside of an
act that makes a deal with you? So every artist,
without whether they ask for it or whether they don't,

(20:52):
are going to get a minimum of two bonuses in
our deals. And the reason why I have those two
bonuses at the end of year three and at the
end of year four is because I don't ever want
anyone to have negative emotion for making a deal with me.
So I'm very clear with people from the get go
that I'm doing this. On the one part, you know,

(21:14):
the motive, the motive of the fund is obviously to
make money for our shareholders and for ourselves. The ulterior
motive is to change where the songwriter sits in the
economic equation. But as we work towards the ulterior motive,
you know, the motive is something that is coming together
very very quickly. And if I'm right, and streaming grows

(21:36):
from four under the fifty million people inside of the
next decade to two billion people around the world. If
I'm right, in the copyright Board ruling stays in place,
and there's a forty four percent increase if I'm right,
and we can actively manage our catalogs better than where
they came from before, and there's that growth both from
a capital perspective and from a revenue perspective. I want

(21:58):
the songwriter to participate paid in that, so I build
in bonuses at the end of year three and at
the end of year four that are as much as
of what the purchase price was in the first place. Okay,
what happens after year four? After year four, then it
depends on what you know. That's a standard practice that

(22:20):
I have for every deal that I make. If someone
has negotiated something better than that after year four, then
that's a different story. Okay, So some people this is
a negotiable point. It's a negotiable point because, as I say,
I want people to be able to participate in the
in the upside um. And uh, I'd never wanted to

(22:44):
be any negative emotion in someone, you know, I never
want someone to knock on the door and say, dude,
you were smarter than I was, Which is why I'm
very clear with people from the get go what my
thoughts are on where this business is going. Okay, now
you're the big Juna, the Primary Wave is buying catalogs,
Roundhill is buying catalogs. Now we saw Universal and Sony.

(23:09):
Does everyone ultimately pay the same price or is it
a bidding war? How does an act ultimately decide? Well,
seventy of the of the transactions that we make are
off market transactions that never involve you know, Primary Wave
or round Hill or or you know any of these

(23:30):
other companies that are are are out there. Obviously, Universal
and Warner and Sony have made some deals of their own,
but they're not particularly active. You can understand why if
a Bob Dylan were available on the market, why Universal
would do that, whereas for the most part they're not buyers.
You can understand why Sony would make a deal like

(23:53):
Paul Simon, where for the most part they're not buyers. Uh.
You know, Lend Blevotnik has Tempo as a fund within Warners,
But in general they seem to be buying only catalogs
where they have a first or matching right on having
signed an artist early enough to be able to have
that built into the contract. But I I don't fear

(24:18):
the competition in the same way that many of my
competitors feel the competition because I rely on the relationship
that I have with artists in the community and songwriters
in the community and producers in the community that I
believe in and that in turn believe in me, and
that puts me in a situation where I don't have
to compete, as I say, of the time and the

(24:40):
thirty percent of the time where I am competing, if
something special comes along. You know, we have people like
Richie Samborra from Bon Jovi or the Risive from the
Wood Tang Clan that are you know, on public record
as having sold to us for less than what they
were offered by competitors, because the material difference is not

(25:01):
the size of the check, but the quality of the
people that you're you know, putting your metaphorical children into
the hands of you know, where I'm a I'm a
good surrogate parent when it comes to music, because I care.
It's not just about the money for me, It's about
doing what's right for the music. And what I've certainly
discovered in the almost forty years that I've been doing

(25:23):
this is doing the right thing. Money comes to you.
If you do something based on money, sometimes you'll find
it very, very hard to to have that money coming
to you. So you know I'm I'm someone that is
always making decisions based on what's in the best interest
of the music. Um. And then I have the trust

(25:44):
in the surrender to the good man above that the
money will find us. Okay, in the case of Paul
Simon and Bob Dylan, did you make a bid on
those catalogs on Paul Simon? No? UM On Bob Dylan,
I'm under n d A. So I have to be
careful about what I say, but I will say that. UM.

(26:07):
You know, Jeff Rosen, who looks after Bob Dylan's publishing,
is arguably the most underrated person in our business. He's
done an unbelievable job for Bob over the years. Bob
obviously has a level of faith and trust in him
to allow him to execute that job. Was sometimes many
artists find that difficult to do. So I I pursued

(26:30):
Jeff and threw him Bob for the better part of
eighteen months or two years to make a deal. And
and uh I believe that the only discussions that he
ultimately had were with Hypnosis and Universal and uh I
think that the deal that he was able to make
was a deal that only a company that's worth you know,

(26:50):
thirty three and a half billion euros to fifty billion
dollars could have made. Okay, do you think you helped
incentivize Bob to sell or was Bob the kicking the
tires on selling when you get in the picture eighteen
months ago? Now, you know, I worked very hard to
get uh. You know, when I talk about establishing songs

(27:14):
as an asset class, inherent in that is that I
believe that music has a value on behalf of artists
and songwriters and producers, that everyone is known all along,
but that the major companies and other people like Primary
Waves who've been buying and selling catalogs for a long
time didn't want to fully acknowledge. And I was very

(27:36):
happy to fully acknowledge what the true value of of
of of of these incredible songs are because it's in
the context of explosive streaming growth and all of those
other levers that I talked about. So, you know, it's
very very important on the part of Hypnosis to truly
recognize the value of these songs. To make sure, you know,

(27:59):
nine point nine percent of our deals out of the
hundred and fifty deals that we made A hundred and
forty eight of them are directly with the songwriter, the artist,
or the producer. There are only two deals that that
were you know, a collection of songs that were owned
by Cobalt, for example, that we've made separate and apart
from that, all of our deals are made directly with

(28:20):
the artist and the songwriter and producer because I want
them to be acknowledged and I want them to be
put in a position where they are their their futures
de risked. Whether you're a thirty year old Andrew Watt
or whether you're a seventy five year old Neil Young,
I want you to be the beneficiary of of of

(28:41):
of of the deal, not some corporation. And in doing that,
I've truly do you ever talk to somebody and say
you ever talk to somebody say I don't think you
should sell. I tell people that almost in every instance,
that I don't think that they should sell, and I
tell them in exactly why I don't think that they

(29:01):
should sell. But at the same time, I also tell
them why, if they're at that place in their life
where they want to sell, why I'm the right person
to sell to. So you know, because you know, as
you know, you can take a piece of real estate,
whether it's you know, anywhere in the world London, Los Angeles,
you know, and you know New York, Miami where I

(29:23):
am at the moment, and you know, you could say
to someone, look, you know, you've got to hold on
to that property because twenty years from now that's going
to be you know, it's something really really special, even
relative to where it is right now. And of course,
if if you don't have twenty years, what's the point,
right It's it's so if someone's at a point in
their life where they're ready to sell, then I'm the

(29:46):
right person to sell to. If if if your music
is something that I care about, then I'm the right
person to sell to. If your if your music is
not something that I care about, then there's a lot
of other people out there. Okay, you only a hundred
percent of the catalogs you buy. Now, there are there
are instances where we've bought off interest of the overall catalogs.

(30:10):
So you know, we would never go in and pick,
you know, fifty songs out of a hundred. It would
be buying a half interest in all one hundred songs.
As an example. Um, so there are instances, you know,
I would say probably out of the hundred and fifty
catalogs that we own, a hundred and forty five of
them are owned, and there are probably five of them

(30:34):
where we own somewhere between fifty and seventy and in
those five, and this is a minor part of your portfolio,
do you have an option to buy the rest of
it or is it left totally open? Correct? No, we
have an option to buy the rest of it. And
most of the deals that we make, even when we're
buying a hundred percent of a songwriter's catalog, if there's

(30:56):
someone that that is young and has a future, like
Andrew Rott as an example, then we'll have a first
and matching right on their next catalog as well. Okay,
so let's soon I make a deal. You've established your
bona fides. But theoretically, and I certainly hope this doesn't happen,
you could die tonight, Okay, and as so could I.

(31:21):
Are there chemian clauses or the ability to buy back
or can the catalogs be transferred freely after Hypnosis purchases them? No,
there are, there are There are no key man clauses
and there are no abilities to buy back. But I
have probably relative to other you know what, I don't

(31:43):
allow us to be called a publishing company, where a
song management company, but relative to say, companies that are
called publishing companies, we probably have a higher level of
people in position marketing these songs and protecting these songs
than any other company in the world, including Universal Warner

(32:06):
and Sony because the sort of executives that we have,
whether it's Amy Thompson who's the chief catalog officer, or
Ted Cockle who's the president, you know, these are people
that are generally reserved for recorded music roles where the
record company is getting the lion's share of the money,
where the economics allow them to spend this kind of
money on on on executives. In most publishing companies, the

(32:30):
money is being spent on A and R executives rather
than marketing people. So I've put in an incredible network
of eight three plus people now that as I say,
include people like Amy Thompson, Ted Cockle, Kenny McPherson, Richard
Rowe that are real artist people that understand and love
the music as much as I do, and that are

(32:53):
there to to ensure that the artists and the songwriter
are protected. Um, in the case that I do get
hit by that proverbial bus and I'm no longer there tomorrow.
And my children, who have grown up with this music
and who have grown up with these artists all of
their lives, are also a part of the company, and
they know what my standards are, UM, and adhere to

(33:16):
those as well. So it's it's there's probably if you know,
if you'd asked me this question two years ago, UM,
that was a real issue, right because obviously I hadn't
made the company exciting enough yet at that point to
be able to track people like Ted or Amy or
Kenny or whoever it might be. Now at this point,
you know, we're about to start our fourth year. UM.

(33:39):
You know, as you very nicely said, this is the
most exciting company and music perhaps today, and therefore there's
no shortage of quality people that are prepared to follow
in my footsteps and protect the artist if necessary. Okay,
now one for you dressed earlier. I want to expand

(34:02):
most of the money is in streaming. There's a dollar
in streaming dollar of income comes in. Although Spotify is
being beaten up, we all know, that's not really what's
going on. They have to stay in business. They're taking
approximately thirty Most people in the artist community feel of
the remaining seventy cents, let's call it that the songwriter

(34:26):
got a raw deal. Now we also know that these
major at this point only three companies also have a
huge footprint in songwriting and therefore, on some level they
don't care where the money comes from. Is there any
chance that the percentage will grow? You know, you talk

(34:47):
about the legal with one for four, but as we
go down, what's an appropriate amount of a streaming dollar
that should go to the songwriter and how do we
get there? Yeah, there's no question that the songwriters share
of the income is going to grow. And you know,
the business that you and I came into, both as
fans and then as professionals was one that you know,

(35:09):
I I affectionately referred to as the post Beatles paradigm,
right where ninety percent of the artists that we would
sign and work on were people that, you know, we're
self contained. They you know, had a good idea of
who they were, who they might become. They wrote their
own songs, they knew what their album covers should look

(35:29):
like what their stage show should look like. And the
job of someone like you or I was to a
believe in them and be to put a plan in
place to bring their ideas to fruition and to bring
them success make other people believe in them. Today the
business is much more like the nineties and the nineteen fifties,
where nine of the artists that are being signed are

(35:51):
very talented people, but that are absolutely reliant on outside
songwriters to deliver their heads. So, you know, I don't
know if you know a statistic, but you know, we
were talking about Bob Dylan a few minutes ago. It's
the second of the last Bob Dylan album in two
thousand and fourteen, which I think was tempest Um. That

(36:12):
is the last album that became a Billboard Top one
album of the year that didn't have an outside songwriter
on it um. So the song it has never yea
So the songwriter has never been more important in our
lifetimes but perhaps ever in history than they are today.

(36:33):
And you know, if you're Monty Lippmann or if you're
John Janet or Rob Stringer, you know you need to
have a relationship with you know, whether it's Andrew Watt
or Taylor Parks or Benny Blanco or the monsters and strangers.
Those relationships are more important to you today than your
than your artist relationships are, because that's where the hits

(36:53):
are coming from, is from the songwriter. But I want
to to um, take up a point that you made
a minute ago, which is, you know, you said they
didn't care where the money was coming from. But the
truth is is that they absolutely care where the money
is coming from. And the reason why the songwriter is

(37:14):
the low man or woman on the totem pole in
the economic equation today is because the three biggest song
companies in the world, being Universal, Warner and Sony don't
advocate for songwriters, Um, you know. And it's not because
they don't want to, it's because they can't because they're
you know, those three biggest publishing companies in the world

(37:35):
are owned by the three biggest recorded music companies in
the world. And on the recorded music side of the business,
they're getting four fifths of the revenue, they're getting an
eight gross margin of forty net margin, and in general
they own those master recordings in perpetuity, right is you
and I know there are very few artists that actually

(37:55):
own their own masters. Right. Conversely, on the song side
of the busines this on the publishing side of the business,
you've got a fifth of the revenue, you've got a
fifth of the margin, and quite rightly, whether it's through
good management and lawyering in the first place or reversions
or renegotiations, the songs end up back in the hands

(38:15):
of the people that co created them. So recorded music
controlling publishing and stopping publishing for advocating for songwriters is
why you have this unbelievable disparity. In the way that
you described the dollar being split, You're right, thirty cents
goes to Spotify or Apple. Now you can make an

(38:37):
argument that that thirty cents will eventually become cents twenty
four cents, and I'm quite certain it will, but that's
not the material point. The material points what happens to
the other seventy cents, And currently the other seventy cents
is fifty eight and a half cents going to the
record company. Because of their power that they wield mercilessly,

(39:00):
they are paying most artists on a sale rather than
on a license, when it actually should be a license.
If it was a license, they'd be having to split
that fifty eight and a half cents with them, but
by paying them on a sale, they pay them about
nine cents out of every dollar, So they're clearing almost
fifty cents out of every dollar in recorded music. And conversely,

(39:22):
on the song side of the business, you've got eleven
and a half cents that remain. Sometimes you've got four
or five six songwriters on a song. They have to
split that eleven and a half cents with their publishers
in some way, shape or form. So you know, these
great songwriters that are delivering the songs that make the
world go around are getting fractions of a penny on

(39:43):
every dollar. And that you know, as I said at
the very beginning, this has been changing. This system has
been the ulterior mode of of hypnosis. The reason why
I created hypnosis is that in managing people like Diane
Warren and the Dream at Justin Tranter, people that we're
songwriters at at the very very highest heights of success,

(40:04):
and yet they weren't getting what they should be getting
because of this system where and people will turn around
to me and say, listen, you know why you blame
blaming Universal Warner and Sony aren't. Isn't the way that
songwriters are paid, you know, dictated by legislation, And the
answer to that is absolutely, it's dictated by legislation. But

(40:24):
how is legislation affected. It's affected by lobbying, It's affected
by advocacy. So if you don't have the three biggest
companies in the world advocating for songwriters and fighting for
them to get paid more money, how do you expect
that to be reflected in the legislation. So we're a
catalyst to bring that change. I'm very, very vocal about it.

(40:45):
As I say, it's the ulterior motive, and every one
of my four ninety odd institutional investors has known from
day one that this ulterior motive is the real reason
why the fund was created, because I knew that if
I talked to Bob Left, it's and I talked this
way that you know, Universal Warner and Sony could squash

(41:05):
me like a fly if they wanted to. But now
they can't because I've a multi billion dollar company behind me,
some of the finest song assets in the world, and
I have a platform to speak on behalf of the
songwriter and the creator um and to try and bring
change and of course, the serendipity of it all is
that if I can bring that change and I can

(41:26):
get the songwriter paid more money, it's also in the
best interest of my shareholders because they'll get more money
for the songs that we own. And therefore they're prepared
to fight and they're prepared to put their money in
and you know when you've got uh, you know, investors
that range from the Church of England to invest Deck,
to invest Go to refer to you know, Acca and

(41:50):
Newton and on and on and on. These are all
people that that that have a lot of power in
their own right. Um, so that was really the motive. Okay,
let's just say, let's just say you get more for songwriters.
Are you agitate for that or advocate for that? It's
got to come out of the recording company's end. I mean,
they're gonna really hard, you know what they've what they've done, Bob,

(42:13):
which I think is unbelievable. You know, if you and
I were having this conversation five years ago, we'd never
be able to look each other in the eye and
say that the best years of the music industry in
front of it, right. We can say, hey, remember back
in ninety nine, remember back in the year two thousand,
whereas right now, you know, I can look my nineteen
year old son in the eye and say you should

(42:34):
absolutely devote yourself to music because the best years of
the music industry in front of it. So, you know,
Universal Warner and Sony And despite the fact that our
our business has been saved by Daniel Eck and Spotify,
and the way that Apple have followed and Spotify is
wake um, you know, creating this very powerful one to

(42:55):
punch and obviously lots of great regionals around the world
as well. Um, you know we're making them out to
be the villain, right we were? You know, we've we've
just given evidence for the last four or five months
in the UK in the Department of Culture, Music and
Sciences hearings in Parliament, right and the if you look

(43:17):
at our written evidence UH and also our our personal
evidence are in person evidence. The hearings were originally called
UH an investigation into the Business Practices of Music Streaming Services,
and the first couple of sentences of our written evidence
basically say, you know, look, we appreciate that you're doing

(43:38):
these hearings into the quote unquote business practices of music
streaming services. But we think what you're gonna find very
very quickly, and we want to prepare you for this,
is that what you're really going to be investigating is
the unhealthy relationship that exists between the three major companies
recorded music companies in the world, controlling three major publishing

(44:01):
companies in the world and stopping them from advocating for songwriters.
That's what stopping the songwriter from being paid properly. And
the funny thing, and the most ironic thing about all
of this is that if you're Big John and you're
running Sony, if you're a guy Moot or Carry and
you're running Warna Chapel, if you're um, excuse me, Jody

(44:22):
and you're running Universal, you're delivering the most exciting people
in your entire company's business, and yet you're not being
rewarded properly for it. Right. It's it's not I'm not
when I am critical of the majors. I'm not critical
of the publishing companies. I think the publishing companies are
doing great work. I'm not critical of the people that

(44:45):
that work in the recorded music companies. What I'm critical
of is the paradigm. There are people that work in
those companies that are as passionate about music, that care
as much as I do and and you do, and
that do great work, but they're off parading under a
seventy five year old paradigm that doesn't properly recognize the
role of the songwriter. And that's why I'm intent on

(45:07):
changing it. Let's go to the other side of the equation.
You own these songs. There's administration. This is something that's
been evolving in the Internet era. Cobalt was the first mover.
Universal seems to have updated their systems. Let's leave Sync

(45:28):
aside at this point in time. Who administers typnosis? So
we have deals with everybody, so we we you know, Cobalts,
I would say, are our preferred administrator. We believe that
they collect more. We believe that they collected faster, and
we believe that they pay it through faster, and we
believe that they do it in a completely transparent way.

(45:52):
But you're absolutely correct that Universal and Sony and now
Warner two are all king hard to try to get
to a better place, right But the difference is this
is that you know, most of these big companies also
operate on a two year money go around right where

(46:14):
they collect some money in Spain and it sits there
for six months, and then you know, it operates that
they send the money to the UK and it sits
there for another six months, and then they send it
to the US and it sits there for another six months.
And because most of them still only have two non
transparent reporting periods a year, you know, January one to
June thirty and they pay you out at September thirty,

(46:36):
July one to December thirty one, and they pay you
out at March thirty one. You know, they're basically holding
onto your money for the better part of two years.
And there's a great book um uh that's out this
week um by will the Formumer team Spotify. Will page
that you know, will tell you that, you know, if

(46:57):
you were to take the cap it all that is
being used by Universal, Warner and Sony on a daily basis,
from moneys that haven't gone through, to songwriters that haven't
gone through to artists, it's a massive part of of
you know, it's the capital that they used to keep
their businesses going and making new investments. Um And this
is artists money and and songwriters money. You know, Willard

(47:21):
ardreents at cobalt Um, I think came to the business
twenty years ago with a very noble and important idea,
which was to have transparency for the songwriter and the
artist and to put them in a position where their
money was being collected quickly, it was being paid through quickly,

(47:42):
and that they understood every step of the way. The
fact that that has now forced the major companies to
try and and and at least uh go some level
of of emulation, or to some degree of emulation, I
think is the the artistic community and the songwriting community,

(48:03):
Oh Willard a debt that could never ever be repaid.
And certainly the spirit of Hypnosis follows very much that
of Cobalt. That you know, we're forcing people to make
change that they don't want to change, that that they
that they don't want to make, whether they don't feel
that they can make because of course people fear change
right on a on a on a personal level, I

(48:24):
like things to be the same way every day in
my personal life, but in my professional life. You know,
people call me a disruptor. I've never used that word myself,
but I'm absolutely wanting to destroy these paradigms that have existed,
and that I've put the artists at the bottom of
the pile, and I want to put them take them
to the top of the pile. Because without the songwriter

(48:45):
in the artist, what do we have right if you
go and see an artist. Because yeah, we made that
point many times. Let's go back to administrator. You can't,
but you can't. But you can't make it enough, Bob,
you know the remember three rises in the past eighties,
six years, Right, There's there's so much and I'll use

(49:08):
this word and you can beep it out if you like,
but there's so much fuccory in this business that you
have to keep repeating the same things over and over
and over again. So thank you for indulging. Those are
all good points, but I want to be able to
address a little bit more. So. You say that a
hypnosis uses multiple administration companies, and would hypnosis ever go

(49:29):
into the administration business? Um? You know, So we use
multiple administration companies that say Cobalt is our preferred administrator.
But we do great work with Sony on a daily
basis on our artists and songwriters. The same thing with Universal,
the same thing with Warner including Concorde as well, and

(49:51):
and and and several others. Because of course, when we
buy our catalogs, often there is no administration deal in place,
so we can take over on day one. But at
other times there's a year left on the administration, there's
two years left on the administration. We've even bought some
catalogs where the administration is is perpetual with a particular company.

(50:12):
And I think that you know, you you talked about
universal um, you know, kind of stepping up to the
plate as far as emulating Cobalt or or or doing
something that's forward thinking. But I think that you can
give Sony a lot of credit on that front as well. UM.
And I think that that that now with Guy Mood
at Warner Chapel, I think he's gonna want to do
the same thing. So you know, I have high hopes

(50:35):
that that all of them will want to do the
same thing. I'm I'm in the asset business, so you know,
from that point of view, I believe that my investors
money should go into buying great songs, um. And that
you know, you can rent these services from people. But
as we approach you know what is now, you know,

(50:57):
two point five billion dollars in did and I expect
that by the end of the next two years will
be about six billion dollars invested. It might be in
the best interest of our shareholders to have an administration
company UM and that's something that that will continue to
to keep an eye on. But you know that, to

(51:18):
me is not the priority. The priority is to to
stay very focused on buying these great songs while they're
there to buy. Okay, let's talk about you specifically, Mark.
Where did you grow up, What did your parents do
for a living, how many kids in the family, what
was your adolescents like? Um So I was born in

(51:39):
a mining town in Quebec that doesn't exist anymore. When
the when the mind dried up, the people dried up.
To um So, I ended up being raised in Nova Scotia.
My parents were Greek immigrants to to Toronto in the
nineteen fifties. Before I was born, my father had been
a soccer player in Greece for a team called Pouk

(52:00):
and he was brought to Canada to play soccer for
a team called the Toronto Star, which is the sort
of forefather of the Toronto MLS team today. Um and
his brother was a topographer for the iron Ore company.
Of Canada. So when he retired from soccer, he went
to work with his brother. In those days, you know,

(52:21):
the brother was was responsible for designing the infrastructure that
the miners would would need to live and do their job.
And there were opportunities, whether it was building restaurants or
schools or or whatever the case might be. When all
that dried up, we moved to Nova Scotia, and I
had this very idyllic childhood in Nova Scotia. But I

(52:44):
was very very lucky. I've got I've got a sister
who's still in Toronto today, and and uh, she's lovely
and everything. But you know, when we were kids, we
didn't see eye to eye on on on just about anything.
Right if was black, you know, she loved the Boston Bruins.
I loved the Montreal Canadians. She loved which one of

(53:05):
you is older. She's one year older than I am.
So I had this very serendipitous thing happened to me though,
which is that my eldest cousin, my father's brother's eldest son,
who was about ten years older than I was. Um,
he got in trouble in Greece because Greece was under
a military junta. And if you were you know, fourteen

(53:28):
or fifteen years old and you were smoking dope and
and and you know, listening to music um and wearing
peace signs that the Greeks believed were like a broken crucifix,
you were you were a target for for the military.
So my uncle sent my older cousin, Mike to live
with us. And this guy arrived with long hair. He

(53:50):
arrived with argust by wishbone Ash. He arrived with the
first two Fleetwood Mac records that the Peter Green Ones.
He arrived with Paranoid by Black Sabbath, super fled by
Curtis Mayfield, t for the Tillerman Uh, just about you know,
fourteen or fifteen albums that are still amongst the fourteen

(54:10):
or fifteen albums that are the most important in my life.
And he knew everything about drugs, and he knew everything
about girls, and he was someone to aspire to be
because he also knew an awful lot about music. And
that really kind of put me on the path that
you know, I'm still on today, and I'm still influenced by,
as I say, those those fourteen or fifteen records that

(54:32):
he had, and we would sit in in the room
that my parents had constructed for him, and we had
one of those you know, dropped down turntables where you'd
stack the records up and they dropped one at a
time and play through, and then you turn them all
over and play them through. And I fell in love
with this idea of twenty minutes of music and then

(54:54):
instead of wanting to hear the next twenty minutes of music,
you'd want to play that same side over and over
and over again because it was so magical. Um. And
you know, he arrived, he gave me a present for
the first birthday that that I had with him there,
which was a copy of Sergeant Pepper's And then that
got me into a place of spending every penny that

(55:17):
I had on on records. So very soon after I
bought my own tea for the Tillerman. Very soon after that,
I bought Harvest, uh. And these records, you know, a
small town of of of two thousand people, these records
really start to teach you that there's something else that's
going on in the world, uh, that's not going on

(55:37):
in your world. And then concurrently with that, my parents
one of the restaurants that they had was a diner,
and the diner had a jukebox in it, and that
jukebox had everything from Elvis Presley singing mac Davis's song
in the Ghetto to you know, looking out by My
back Door by CCR. And again, these records had a

(55:58):
massive effect on these So you know, I can very
distinctly remember In the Ghetto as being the first record
that I ever heard that made me sad, and that
made me realize that in fact, everyone's world wasn't perfect
in the way that my world seemed to be perfect. So,
if you like, it was my first kind of real

(56:19):
experience of empathy brought up by mac Davis's great words
and Elvis is great delivery. And you know, I suddenly
realized that I was going to the school of Neil Young,
and going to the school of Lou Reid and led
Zeppelin and Patti Smith and eventually the Clash, and you know,
these these are are the people that kind of educated

(56:39):
me and prepared me for a world. I can remember
playing needle in the damage done by Neil Young and
having nightmares that I was taking heroin and waking up
in in the morning and kind of looking at my
risks to see whether or not they were really track
marks there. Um. So the music had an unbelievably profound
effect on me. And you know, you you, I think

(57:02):
when you write your best is when you write about Elton,
and uh, when you write at your best is when
you're writing it Elton about Elton. And and those Alton
records had the same effect on me, particularly a little
bit later than than the ones that you rave about,
but particularly Captain Fantastic and someone saved my life tonight.

(57:22):
Those those are you unbelievably important records for me. So
they gave me the ability to manifest how the funk
to get out of this town with two thousand people
in it and go on to manage Elton John was
all based on on that obsession with this music and
recognizing that that, uh uh, there was something for me

(57:46):
to do because you know I talked about Elliott Roberts earlier. Um,
I was very clear from the time I was seven
or eight years old that I had no musical talent
and that I was never gonna be you know, Neil
Young or Jimmy Page or Robert Plant. So I started
to read about these people in everything from Rolling Stone
to Cream to whatever the library had, and I started

(58:09):
to learn about people like Elliott, and I started to
learn about people like Peter Grant, and suddenly there were
you know, kind of role models there for me that
you know, I believed that I could emulate. I I
got the real message that, uh, you know, people that
were making music wanted to make music, and that other
people had to come along and protect them and make

(58:30):
sure that that, you know, the commerce was maximized with
the art not being compromised. Okay, so you graduate from
high school, what's your next step? How do you get
out of Nova Scotia? Um? I literally ran away, Uh
you know, I ended up in in in Uh you know,

(58:51):
I've been writing letters to Simon Draper at Virgin Records
in the UK. And and for for those that don't know,
Simon was Richard's Richard Branson's cousin, and he was the
guy that that uh you know, really was the musical
brains behind the company. So you know, he had signed

(59:12):
Tangerine Dream, he had signed My Goldfield, he had signed
Robert Wyatt. But then of course subsequently everyone from the
Sex Pistols to XTC two Simple Minds to You Be
forty two. Uh you know the Human League, Peter Gabriel,
you know, Orchestral Maneuvers in the dock you beforety On
and on and on. So this amazing thing happened where

(59:34):
I find myself working for Virgin Records, still in my teens,
a little bit, a little bit slower. How do you
write these letters? How do you literally get a job
at Virgin Records? How old are you? And we're and
what is the job? So I'm making I go to
Toronto and I get a job for six months thanks

(59:58):
to a girlfriend that I had, were king for the
Canadian UH distributor of Motown. And before I got that job,
I knew that Virgin was opening and they were going
to open as a standalone label, and I went and
met with the guy that was going to run it,
and he offered me the job to be the marketing person,

(01:00:21):
the one and only marketing person at Verga Records at
that point. And but the company was gonna open for
six months. So for that six month period, I got
this job working for the Canadian distributor of Motown and
which was a company called Quality Records and run by
this magical guy called George Street and UH, a guy

(01:00:44):
called UH Larry McCrae and Cameron Carpenter, who I know
you you know quite well, and of course in Canada,
and that that kind of became my little gang for
this six month period. And the funny thing about this
that within days of me starting the company took on

(01:01:04):
a distribution deal with Clive Calder's then brand new Jive Records.
And Uh, the guy that UH was the Jive person,
the young Jive person in the same way that I
was the young Quality Records person, was Barry Weiss. So
the first phone call that we ever had, the first

(01:01:25):
phone call I ever made, was to Barry Weiss. The
first phone called Barry Weiss ever made, you know, in
terms of being in the music business, was to me
to talk about a band called the Compsat Angels that
we both loved, that had been on poly Door and
had a rough time and had now signed to Jive
and were affectionately known as the cs Angels because the

(01:01:46):
Compsat Satellite Company was taking action against them not to
use the name. Um. So I was there for six
months and then I went immediately to Virgin Records and
started to work for Virgin Records, and I developed my
relationship with Simple Minds, and I developed my relationship with
Orchestral Maneuvers in the Dark and with the Human League,
and you know, with all these wonderful artists. Because Virgin

(01:02:08):
had this serendipitous situation where even though they were making
left of center you know, what was known as alternative music,
it was succeeding commercially in wild ways, you know, culture Club.
We're becoming the biggest band in the world. Simple Minds
were soon to follow suit. Um, and that was my
big passion project and remains one of my great passions

(01:02:31):
to today. Um. Same thing with O. M. D. And
same thing with you Be forty, who had massive success
with Red Red Wine. And I was young and unsophisticated,
and I didn't realize that, uh, I wasn't working for
the artist, right I because Virgin was the most artist

(01:02:52):
friendly record company. I honestly thought that I was working
for the artist, not for the for someone else. And um,
what happened was that they rewarded my success at the
label by allowing me to be a part of signing
one of the most wonderful Canadian artists of all time,
someone that I would still rank even though she's never

(01:03:14):
had the career that she deserved, alongside Neil Young and
Joni Mitchell and Robbie Robertson and Leonard cone Is you
know in the Weekend and Drake is Canada's greatest products. Um.
It was a girl called Mary Margaret O'Hara, and she
was Catherine O'Hara's little sister, and she was unbelievably special.

(01:03:36):
And uh, you know, we got Andy Partridge from XTC
to agree to make her record. And even though Andy
was a wonderful artist in the form of XTC, he
wasn't a wonderful producer, and he wasn't someone that was
prepared to recognize that in the producer's role, that his

(01:03:58):
job was to be there to serve Mary Margaret and
to help her make the best record that she wanted
to make possible. So there were all kinds of problems
from the get go in the making of that record.
And even though the record eventually came out three or
four years later as a record called Miss America and
won a lot of awards and was the album of

(01:04:19):
the Year, the actual making of the record was a
very very painful experience. And I recognized at that point
that for the first time, suddenly the light bulb went off,
and I found myself in a position where I wanted
to be on Mary's side rather than on the record
company's side. And at that point I became a manager,

(01:04:41):
and uh, they were probably gonna fire me anyways, because
it was very clear that I was on on on
on Mary's side and the company had new leadership, and
and uh, you know, probably wasn't gonna work out. But
I basically went to two guys in and that I
had a relationship with a guy called Rod Smallwood who

(01:05:03):
you know, and a guy called Andy Taylor, who you know.
And I said, listen, I've had this epiphany. I'm not
supposed to work for a record company. I'm supposed to
work for the artist. I'm supposed to be a manager.
And Rod and Andy said, you're right, and you know,
you should come in with us. They were both fifteen
years older than I was, and they were looking. Yeah,
I worked at Sanctuary of course in the eighties, very

(01:05:26):
different the one you worked for. But how did you
know Rodd Andy Andy to throw in with them? Because
I was a fan of Iron Maidens, and I was
particularly a fan of the way that Rod acted on
behalf of Iron Maiden and protected the band. And I
knew that, you know that that he was one a

(01:05:50):
role model that uh, you know, you could certainly do
a lot worse than too. And you know the great
thing about these two guys, you know, I'm you already
know this, but I'll tell it for everyone else that
doesn't is that you know, they were best friends. But
they couldn't be more different from each other. Right, one

(01:06:11):
of them was completely business the other was completely creative.
One of them hated sports, the other one loved sports.
The only thing that they had in common was that
they loved drinking, right, and they loved Iron Maiden, and uh,
I became the bastard offspring of the two of them. I.
I took what Andy knew about business and I absorbed

(01:06:31):
it all. I took what Rod knew about integrity and
about creativity and you know, protecting people in fairness, and
I absorbed all of that as well. And I became,
as I said, I'm very proud to be the bastard
offspring of of of the two of them. And I've
certainly built a career on the back of lessons that

(01:06:56):
they taught me. And there was another guy that was very,
very important in this even before Rod Nandy, and that
was a guy called Bruce Finley from Edinburgh in Scotland
who managed Simple Minds. And this guy very very similarly
to Rod Smallwood. He understood that your job was to
go out and create as much enthusiasm for your artists

(01:07:19):
music as possible and get the troops on your side
and get them working, and get them in love with
the band your band as much as you're in love
with your band. And he taught me a tremendous amount
as well. And those those three guys, along with Elliott Roberts,
are are you know, the people that I consider to
be my mentors. Okay, a couple of questions here, Hey,

(01:07:43):
what year did you start working for Sanctuary be the
company ultimately goes public, can you tell us the insight
and how that happened and see how did you essentially
end up running it? Sure? So, so the the uh,
this is probably eighty six and probably the better part

(01:08:04):
of of UM five or six years later, you know,
were iron Maidens Management Company right when the when the
company ends in two thousand and six or so, we're
still iron Maidens Management Company, but we go from being
iron Maidens Management Company to eventually being out John's management

(01:08:26):
company and Guns and Roses management company, Beyonce's management company,
with me driving all of those artists. UM. And the
way that it happened was that we recognized in the
early nineties, UM, when Uh Polli Graham became a company
called p l G. That was the first real consolidation

(01:08:51):
of a major record company where they went from effectively
having four companies to basically having four A and R
sent ters with a common marketing department and a common
promotion department. That this was going to disenfranchise many artists
because you know, if you were one of the artists
that was selling ten million records around the world, you

(01:09:14):
were going to get a lot of attention because of that.
But if you were an artist that was going to
sell a million records around the world, that was no
longer interesting, believe it or not, you know, knowing what
we know about what happened between two thousand and one
and two thousand and sixteen, there's a point in the
nineties where being able to sell a million copies around
the world is not interesting to the major record companies.

(01:09:37):
And we knew that this was going to disenfranchise a
lot of artists, and it would particularly disenfranchise a lot
of artists in the hard rock world. That that that
we had a lot of expertise in, whether that was
a Mega Death or a Slayer or whoever it might be.
And we wanted to be prepared to be able to
service those artists better than the big companies. So, you know,

(01:09:58):
we created an independ the record company that became the
biggest independent record company in the world and that worked
with everyone from you know Morrissey to Megadeth to you
know Ossy and and and Osborne and Kelly Osborne and
many many others um and became very much best in

(01:10:18):
class for its period. We had the biggest booking agency
outside of North America that was Helter Skelter that booked
everyone from from Metallica through to a C d C
as well as Iron Maiden. And the idea was we
built a real three sixty company, Bravado Merchandizing that you know,

(01:10:39):
merchandised everyone from the Spice Girls to the Red Hot
Chili Peppers to Iron Maiden. Um. You know, we built
a company that could provide services to all of these
wonderful artists on a three hundred and sixty degree basis.
But my vision of three sixty was very, very different

(01:10:59):
from the modern record companies version of three sixty. My
version of three sixty was, look, we're going to make
a capital investment in this artist. In order to get
that capital investment back, we need to have as many
income streams as possible. But within each of those income streams,
we're going to give the artist the best deal possible

(01:11:20):
and will be based on what the market is being
is prepared to pay for that artist. And the company,
as you know, was wildly successful for a long period
of time. It went public and then you know what
happened was that as you get from two thousand and
five into two thousand and six, the company was the

(01:11:40):
first major company to feel the effect of the bottom
falling out of the record business because people were now
able to download their music for free illegally rather than
to pay for it. And we were too big, um,
you know, we were in that period of time where

(01:12:01):
we weren't small enough to be able to make changes quickly,
and the effect on the company was disastrous. And also
the company didn't have the level of sophistication that it
should have with the stock market and its dealings. With
the stock market, and effectively what happened was that, you know,
after seven years of year on year growth, instead of

(01:12:25):
the company going to the stock market and saying, look,
that type of growth isn't possible right now, illegal downloading
is killing the music business. But we've got these amazing
artists like Elton John and Beyonce and Guns and Roses
and Morrissey and many many others, UM, and what you
need to do is you need to let us batten
down the hatches and get to a point where we

(01:12:45):
ride this out and then we'll be back for you.
And instead, more growth was promised and the company wasn't
able to sustain itself, so it was sold to Universal.
That becomes a very very important UH lesson learned in
the UH way that then Hypnosis gets launched. Because when

(01:13:07):
I launched Hypnosis, I ensured that I had a level
of sophistication and a level of advice at the very
very highest level UM from the financial community. UM that
would ensure that I would never ever be in a
position where shareholders were let down again. So it's something

(01:13:28):
that I had to be very very honest about in
the sense that that UM I was never gonna try
and hide the fact that Sanctuary didn't succeed, even though
the idea was wonderful. UM. But I also had to
make sure that I had the right people around me, um,
in order to gain the trust of the financial community. Okay,

(01:13:49):
so what do you do from two thousand six to hypnosis? UM?
I pretend that everything is perfect, but really I'm terribly depressed.
And while I continue to manage lots of wonderful artists
like Morrissey and John Stone and Diane Warren and Justin
Tranter and The Dream and and and you know, lots

(01:14:09):
of incredible people, Macy Gray, I'm probably you know, clinically depressed,
and I'm trying to keep my chin up and trying to, uh,
you know, find myself again, because you know, Sanctuary was
a twenty one one year experience that uh was really about,

(01:14:30):
you know, I think doing something important, um, and then
it didn't work. And when that happens, of course, UM,
you know, not only do you feel like a failure,
but probably wrongly, you also assume that the rest of
the world sees you as a failure as well. And
I found myself talking to people all the time, and

(01:14:50):
people would would you know, say nice things and do
nice things. But it didn't feel that way to me.
To me, it felt like it was a massive failure. UM.
So it took me a long time to come out
of that. And even though I think that you know,
my friends and my family and my contemporaries didn't ever
really see it, my artists never really saw it. I

(01:15:12):
knew it. I knew that I was fighting, um, you know,
this this feeling inside of me on a daily basis.
And it just took me, you know, the minute that
that I hatched the plan for hypnosis and I knew
exactly what it was. Um, I came out of that
because then I had clarity on what I could do

(01:15:35):
to take this previous failure and turn it into not
a victory for myself, but a victory for the songwriting community.
Because that's the you know, the idea of hypnosis was
born out of managing Diane Warren, managing Justin Tranter, managing
the Dream and realizing that these people were delivering massive

(01:15:55):
hit songs for artists and not getting paid properly. And
what I saw was that UM streaming was and you know,
Daniel Eck and Martin Lawrence and at Spotify can attest
to this. It was very clear to me the first
time I ever saw Spotify that not only was it

(01:16:16):
going to be wildly successful, but the effect that it
was going to have was to take music from being
a discretionary or luxury purchase and turn it into a utility.
Because that ten dollar price point, that ability to have
access to at that point almost everything to today pretty
much everything, um, you know, was going to be appealing

(01:16:38):
enough to the passive consumer to make them want to
pay for music. So, you know, if you look at
where we are today, you know, the benchmark for extraordinary
success in our business used to be the platinum record,
you know, million copies in a country like the United
States that has three sixty million people in it. Today,

(01:17:01):
you know that one in three sixty you know, tells
you that the average person might love music, but they
didn't love music enough to put their hand in their
pocket and pull out money to pay for it. Today,
we have a hundred million homes in the United States
that are paying for a paid music streaming subscription. Right
so we've gone from one in three hundred and sixty
people paying for music to one in three point six

(01:17:24):
people paying for music. That's why you're seeing the sort
of money flooding into this business that you're seeing is
because music has gone from being this luxury purchase to
now very much being a utility purchase. That was very
clear to me. Alongside that, I knew that these great
songs that these songwriters wrote that when they hit they

(01:17:47):
became a part of the fabric of society. And when
they become a part of the fabric of society, they
start to have predictable, reliable income, and that that would
make them investible because those are the same reasons why
we look at gold and oil is that predictability and reliability. Okay,

(01:18:09):
so you said that you had a hundred and seventy
seven meetings. What transpired to build hypnosis? So out of
those hundred and seventy seven meetings, which were really about
educating the investment community, as I say, about this predictability
and reliability of these income streams, and also the fact

(01:18:29):
that the income streams were uncorrelated. Right if you know,
I compare them to golden oil, and you know, if
if the if political upheaval, if there's some sort of
political upheaval tomorrow, the price of golden oil will be affected,
but the price of songs and the revenues associated with
songs aren't affected because if people are living their best lives,

(01:18:50):
they're doing it to a soundtrack of music. Equally well,
if they're experiencing the sort of challenges that we've experienced
over the last fourteen or fifteen months, you're taking comfort
and escaping with music. So this uncorrelated aspect of the
revenues is something that investors have a real appetite for
because they understand that in a world of Donald Trump's

(01:19:12):
and you know, all the craziness that that's happening all
over the world, that having uncorrelated assets, at least in
part of their portfolio is very important. So it took
about a year and a half to do these hundred
and seventy seven meetings, and eight of them said to me, Um,
don't ever darken our doorstep again. It doesn't matter how

(01:19:33):
successful you make this idea. Our investors will never be
you know, the people that give us money will never
be comfortable with this. Um. Thirty eight of them said,
you know, we're in. We want to do this, and
they backed me with two hundred million pounds and the
other remaining hundred and thirty odd all said listen, you know,

(01:19:55):
we think what you're doing is fascinating and uh, we
love it, but we can't be your guinea pigs. So
you go away and make this successful and then you
come back and see us. Which is how we've gone
from being a two hundred million pound company to being,
as you say, at two point to two point three
billion dollar company. Um, because we went back to every

(01:20:15):
one of those hundred thirty one investors that said we
don't want to be your guinea pig, and we've also
now gone to know another three d or so on
top of that. So are about four hundred nine or
odd investors that make up the two point two billion
dollars that's in hypnosis, and that's allowed us to buy
sixty three thousand of the most wonderful songs in the world. Okay,

(01:20:38):
why is the company based in Guernsey. It's based in
Guernsey for tax reasons, um. And that's not you know,
Guernsey is a British Channel island, so it's not tax avoidance.
But you know, for example, we get the vast majority
of our money, our earnings comes from the United States.
Right if we were based on the mainland in UK

(01:21:01):
that those US earnings would be subject to withholding tax.
By being based in Guernsey, they are not subject to
withholding tax. Does that mean there are people actually in Guernsey.
Our administrators and our administrator and administrator in this instance

(01:21:22):
is very different to our publishing administrator. Our administrator and
this instances are the people that deal with the money
on Hypnosis is part. So I I never touch Hypnosis money.
Hypnosis money is only ever touched by our administrators. They
make all the payments on our behalf, They collect all
the moneys on our behalf. You know, everything gets paid

(01:21:43):
through into two our Guernsey bank accounts. So yeah, we
have a small team of people in Guernsey, but the
majority of our people are in London and we have
eighty three people between London and Los Angeles. Okay, you
have a unique structure and I'll let you explain it
because I don't want to make a mistake. Where there

(01:22:05):
is the company Hypnosis that owns the asset, yet you
work for a different company that provide management services, Why
and how does that work? So this so, this is
what's known as an investment trust and it's a classic
construct on the London stock market. Right. So so there

(01:22:28):
are many many investment trusts. The vast majority of the
companies in in in the foot see to fifty our
investment trusts. And this construct of having a vehicle that
owns the assets and that has no liabilities beyond the
ownership of those assets is a very very allows for

(01:22:49):
a very very clean company. And then you have an
investment advisor that then manages those assets. So I'm the
founder of both companies. I'm founder of the parent company
if you like, or the main company, which is the
asset holder, Hypnosis Songs Fundlimited. I'm also the founder of

(01:23:10):
the Family Music which is the company that manages those
assets and that buys those assets on the behalf of
of of of the fund. And as I say, this
is a classic English stock market construct. Um. And we've gone,
you know, the three years plus that we've been doing this,

(01:23:30):
we've gone from being a normal listing on the London
stock market to a year later, on the back of success,
being a premier listing, and then fourteen months ago, fifteen
months ago we became a foot see two fifty company.
We're one of the biggest companies on the London stock
market and we're the number twenty three biggest yielder on
the London stock Market, meaning that they're only twenty two

(01:23:53):
companies that are paying a bigger dividend to their investors
than we are. Okay, there was some scuttle but about
this recently. Can you explain how the management company, the
family operation gets paid and how you get paid as
opposed to the investor, because there were some analysts and

(01:24:13):
investors were kicking around raising questions about this. Yeah, there's
there were there were some newspaper reports that, um, you know,
we're basically making the point that the more I invest
and the more money I raise, the more the family
music gets paid. Right. But of course, and and that's

(01:24:36):
a fair statement to make. It's a it's an accurate
statement to make. We get paid on the back of
the money that we raise and the money that we invest.
So we you know, on the first five sorry, first
two fifty million pounds that we raised we got, we
get paid one percent of that as a management fee.
On the next two d fifty million pounds we get

(01:24:58):
paid point nine percent. This is all a matter of
public records, so I don't mind mind disclosing this. And
then on on everything beyond that first five million pounds
we then get paid point eight percent. So the more
money we raise and the more money we invest, the
more we get paid. So there are are we're a
couple of newspaper reports that we're making that point and

(01:25:20):
that we're making that point as as perhaps being the
motive of why we raise so much money and why
we invest so much money. And what they were missing,
of course, was that every one of our investors has
backed us with that money for the last three years,
as to say, growing it from the initial two million

(01:25:42):
pounds to now what is you know, one point seven
one point eight billion pounds two point to two point
three billion dollars um. And the reason why they've backed
us is because part of the thesis from the get
go was that there was a limited opportunity here to
buy these assets. It's these great songs at attractive prices.

(01:26:03):
I think that two years from now, three years from now,
it won't be you know, you'll be buying these songs
for um income, but you won't have the same exponential
net asset value growth that you'll have based on what
we've bought over the last two years and what will
buy over the next two years um and there and

(01:26:23):
all of our shareholders have understood that from the get go.
It's been a part of those discussions from the get go,
and it's why they continue to back us with with
with each fundraise and allow us to continue to um
uh invest in these great songs. Okay, So let's just
understand there is him, there is hypnosis. It owns the songs.

(01:26:45):
Who owns family? And how does family get paid? Yes,
and let's just use round numbers. You raise a hundred million,
you get one percent. That's a million dollars that goes
to family. Is that distributed it? How do we who
owns family? How you know? House family run? So I

(01:27:07):
owned the family. I have some minor shareholders in it
as well. And the family employs, as I say, the
better part of eighty three people around the world with
those fees. Right, So the fund has no expenses other
than its legal fees and other than its brokers and
professional advisors, one of which is the family. But the

(01:27:28):
people those eighty three people that manage the fund around
the manage the assets on behalf of the fund are
paid for by the family. Okay, So now you raise
on a million, you get a percentage that goes into
the family. How much does the family make? What's the
return to the family on regular income. Well, that's not

(01:27:52):
a that isn't a matter of of of of of
public income. But as as I say, you can do
the sums. You know, we the family makes aximately ten
million pounds a year, and out of that ten million
pounds a year, it pays for offices, It pays for
eighty three employees, It pays for the expenses of operating
and managing these songs to the best of its ability.

(01:28:14):
I guess what I'm asking. Let's assume I'm an investor. Okay,
I know I'm paying you approximately one per cent on
every hundred million. But since family is doing the work,
so to speak, isn't there a raw percentage that I
know that I will have to pay family every year?

(01:28:35):
How does that work? Because an investor is gonna want
to know. But all of that is spelled out, and
we have a you know, one of the things about
being a public company is that you have to have
a prospectus. And the prospectus is a document that is
a couple of hundred pages long, that is a legal
document that literally spells out everything that there is to

(01:28:56):
know from costs to you know, what the upside is,
what the potential downside is, what the investment policy of
the company is, what the borrowing policy of the company is.
Literally every aspect of how we do business is spelled
out in that two perspectives. And the perspectus is something

(01:29:17):
that's updated on a yearly basis, and whatever changes are are,
you know, to any of those policies goes into that document.
So all of our shareholders are very very clear and
very aware on a daily basis of exactly how we operate. Okay,
so let me ask a different question. What is the

(01:29:38):
present percentage? And who negotiates the change in the percentage?
This is a better public record. Yeah, So the present
percentages point eight percent of every penny raised, right, so
you know, uh point zero eight percent, no point eight

(01:29:58):
point eight of a per end of right, Um, so
that is that's the current rate. Then we also have
a performance fee. When that performance fee is ten percent
over a ten percent hurdle, So that's something that you'd
have to get your calculator out and and try and
figure out what I think I think we underten it.

(01:30:20):
But what you're saying is the performance fee is what
family gets paid, the management fee, and potentially a manage
the management fee is guaranteed, right, which is that how
much is the percent? And that's the point eight percent.
So you get paid not only when you not only
when you raise it. You're getting paid point eight percent

(01:30:42):
of the total fund every year. Correct. Okay, so you
get the point eight then ten beyond ten percent of
net also goes to family, correct. And that's so and
and and on that. There's no guarantee because that's based

(01:31:04):
on where the share prices for the entire month of March,
which is the last month of of of our fiscal year.
So depending on what the average weighted share prices during
that entire month, we might make a performance fee. We
might not. If we've raised money, we won't make a
performance fee because when you raise money, the share price

(01:31:24):
goes down because there are shares that are being offered
at at at at a discount for people to come
in and and and and invest more money. So, because
of the fact that we've been so acquisitive um and
because that's been the focus, the performance fee is is
something that's been a very minor part of our world
so far. Okay, So let's just go back for those

(01:31:48):
you know and make it very basic. Let's assume, for
the sake of round numbers, hypnosis generates a hundred million
dollars in a year. That is not how family gets paid.
Family gets paid the point eight family gets paid the
point eight percent, and if you're doing well, the stock

(01:32:10):
price will go up and then you'll get the ten
percent beyond the ten percent. Correct. That is roughly accurate
and simple terms. Okay, So if the stock price does
not go up, family does not get paid beyond the
point eight percent of total funds raised. Correct in order

(01:32:35):
for us, in order for us to get paid a
performance fee, we need to have the stock price out. Okay.
So let's assume I you want to raise money. Are
you raising you know, there's different ways. Is it all
part of the same company. Is it a separate fund?
How does that go when you raise additional funds? It's

(01:32:57):
all part of the same company. There is no there
is no fund one, fund two, fund three. It's all
a public company. It's all all trades under the ticker
of song S O n G, and it's all one company. Now,
there are instances where you may without getting complicated, where
you may raise money as a C share rather than

(01:33:19):
an ordinary share, and then that C share, once it's
fully invested, would then be merged into the ordinary shares.
So that can happen at different times depending on on
what the circumstances of the fundraise are. But in general,
the way to the correct way to look at it
is it's all one company. So let's assume, for the

(01:33:41):
sake of discussion, you want to raise a hundred million.
He who makes that decision, and b do the shareholders
have to approve it? I make that decision, and then
that in in a conjunction with my advisers, which are
in general my brokers. And my brokers are JP Oregon,
the Royal Bank of Canada, and an English company called

(01:34:04):
N plus one Singer, which is the company that brought
us to the stock market. And then I go out
and I speak to all of our investors and they
have a choice of how much they want to put in.
So the the investors can't stop us from raising money.
But if they but they certainly can choose not to
put money in in that latest fundraise. Okay, but theoretically

(01:34:29):
they could be they could see it as being somewhat
diluted relative to the stock market. If you raise more
money when you go out and you do that raise,
you're you're right that people come in at a strike rate, right,
and that strike rate is based on what the NAV
is of the company net asset value is of the

(01:34:51):
company at that moment in time. So the current um
uh NAV of the company is teen pence and change.
The current share price of the company is about a
hundred and twenty three pence, so we're trading at a
premium of about four or five percent. And if we

(01:35:13):
were to issue new shares tomorrow and we issued some
new shares a small amount of new shares last week
as an example, then those shares were issued at one
pound eighteen and people came in. And because of the
fact that we're taking this money and investing it in
more assets, no one is diluted because the capt market

(01:35:34):
cap of the company grows at the same time with
the investment. So it's not like you're taking a hundred
million dollars or a hundred million pounds and you're spending
it on overheads that don't increase the value of the company.
You're spending it on assets that do increase the value
of the company, so there is no dilution. So, as

(01:35:55):
you mentioned earlier, one of the good things about publishing,
especially with some of these like Onic Acts of the
seventies thereafter, they actually own the publishing. So you've got
great acts, you've got a hundred and fifty acts, but
there's a huge number of people out there who still
own their publishing. How does Hypnosis Hypnosis by what's available

(01:36:20):
or does at some point does Hypnosis close its fund
and say close its organization and we're only managing X number. Well,
there's certainly a ceiling to our growth, but that ceiling
is driven by what I referred to as the third
key factor in what I wanted to achieve with Hypnosis,

(01:36:41):
which is that I wanted to take that traditional publishing
and replace it with song management. Right now, in order
to be an effective song management er, there's obviously a
ceiling on on what you can do. So we currently
own sixty thousand songs. Over five thousand of those songs
are number one songs, Over fifteen thousand of them are

(01:37:04):
Top ten songs, over forty thousand them are top forty songs,
and the rest are the ones that that that that
came with them in in word two point two, as
I say billion or so dollars invested in the next
two years, I expect to be somewhere around the five
or six billion dollar mark invested, and I expect to

(01:37:25):
grow the fund from the hundred sixty three thousand songs
that it is today to about a hundred and twenty
five thousand to a hundred and fifty thousand songs. At
that point, I will also have grown the active management
team to about two hundred people, so that we stay
on that less than a thousand songs per person um.

(01:37:46):
And at that point you know whether it's two two
hundred and fifty people, whether it's a hundred hundred and
fifty thousand songs. I think that that is the real
ceiling on being a song management company, because I don't
think you can manage more than two fifty people. I
don't think that you can manage more than fifty thousand
songs with the sort of responsibility that I want to

(01:38:09):
manage songs equally well. Coinciding with that same two and
a half two to two and a half year period,
I think that the true value of streaming will be
reflected in the song that the data that you buy
these songs on and I think at that point, you know,
there'll be a lot of people that want access into

(01:38:32):
this space. I don't think that there'll be a lot
of access left. I think that there's a lot of
pipeline out there today, whether it's for me, whether it's
for Primary Wave, whether it's for Around Hill, whether it's
for all of you know, KK are these other companies
BMG that are are are looking to buy as well.
I think there's more than enough pipeline to go around

(01:38:52):
for everybody. Everyone has their own relationships. But I think
that at a certain point there will be a lot
of other people wanting to enter space. There won't be
a lot of of of action left in the space,
and the multiples will really explode because people will want
to pay very very high prices to get their hands
on these assets. And I'm just to be clear, I'm

(01:39:14):
never a seller. You know, people like Larry Mistell, they buy,
they sell, that's the business that that that they're in.
We don't sell. We're and and we've been very very
clear with our investors from the get go, and it's
the reason why I did this as a public vehicle,
because I never want to turn around. I don't know
how Larry rationalizes it when he talks to someone like

(01:39:36):
Stevie Nicks that you know, he might be selling her
catalog in two years time. But I never want to
be in a position where I'm looking someone like Neil
Young in the I and say that, you know, guess what,
We've just sold your catalog. So the reason to do
this is a public company is because effectively the capital
is permanent, whereas private equity money has five year terms,

(01:39:56):
ten year terms, you know, and and at that point
you have to to to sell and and you know,
I never want to be in that position. And I've
even gone to the extent in terms of protecting my
integrity with the songwriter where if for any reason, our
shareholders should ever want to sell, or if our shareholders

(01:40:17):
should ever want to get rid of me, they have
to sell the catalog to me, because my relationship is
with the artists and the songwriters and the producers that
have allowed me to become the custodian of of of
of these great works. Um, and that's an important part
of what we do. Okay, So you know you really
went to my next question. So getting to some stock

(01:40:39):
market issues, I would assume A the company has no debt.
B it's traded on the stock exchange. See could they
get rid of you in family D. Could someone come
in and buy all the stock and essentially own the
company and run it their way. So in terms of

(01:41:00):
of A yes, we're a public company on the stock
market as are saying, we're a foot see two fifty company,
one of the highest yielders on the index. And of
course with that success having given our shareholders of total
return over the last three years, return over the last year. UM,
you know, we're looked upon very very kindly, particularly in

(01:41:24):
a pandemic environment. UM. We do have debt because our
prospectives allows us to lever our assets bytent um. And
that's because our investors want to get paid their dividends UH,
and they want to to basically by using leverage, get
even higher dividends and even higher total returns. So the

(01:41:47):
leverage is something that is agreed at thirty percent and
we have a great UH consortium of of of lenders
led by JP Morgan and City National Bank that do
that BOB for us UM. And then in terms of
of of the family I have a ten year agreement
as the founder of of of both sides. I have

(01:42:09):
a ten year agreement with the fund. That agreement rolls
over UM and I can only you know, we can
never only ever be removed for cause UM. As I
mentioned before, we have an administrator that handles all the
money for the fund that is an independent administrator. We
never touch or see any of the fund's money. UM.

(01:42:31):
We just manage the the assets and the buying of
of of the assets. I have a board of directors
that is five people strong, that is led by a
guy called Andrew Such that a corporate governance specialist, but
that includes people like Paul Berger who's the former head
of Sony UK and Sony Europe, was also the head

(01:42:55):
at one time of Sony Canada, Sylvia Coleman who was
his deputy at Sony UK and Sony Europe. Andrew Wilkinson
who was the business manager along with Prince Rupert Lowenstein
of the Rolling Stones and Pink Floyd Um and then
another guy who's a private equity government specialist called Simon Holden.

(01:43:17):
And those people obviously are there to hold my feet
to the fire and make sure that all of the
boxes are ticked properly and that both corporate governance and
compliance is adhered to at all times. I'm also surrounded
by my brokers at JP Morgan and plus one singer
in the Royal Bank of Canada that are also there

(01:43:38):
to protect shareholders as well as to guide me in
my dealings with shareholders. Um so it's a very very
robust situation. And then as I say, you know what
what you know? One of the things that the the
financial community understands is that whatever the asset is, whether
it's in the case of hypno us as songs and

(01:44:01):
music that's created by artists and songwriters and producers, or
whether it's something else, the key component is do you
or don't you have access right and they understand that
that access is quite often based on integrity and the
relationships that someone has built over a long period of time.

(01:44:22):
So it was very easy for me to be able
to prevail upon those investors and uh, you know, create
a deal whereby should our you know, investors ever want
to get out of the fund? You know, it's very
easy for them in a in an investment trust because
they can get out the shares are very liquid and

(01:44:44):
someone else will replace them the next day. But if
for whatever reason. If we decide that the company should
not be a public company anymore, then the only person
that these assets can be sold to Army UM unless again,
unless I'm fired for for cause, and I'm never going
to put myself in a position having built all this

(01:45:05):
just just I understand you talk about the tenure rollover.
Are you talking about you, Merk or Family? And just
the other question being theoretically, I'm not saying it's going
to happen. Could someone come along and buy up all
the assets so effectively they have control or is there

(01:45:25):
some kind of voting structure or something that makes it
that that can't happen. So when I talk about the
Family and Mark were effectively one and the same, because
the company is my company with the exception of a
few minor shareholders, and therefore the contract that I have
with the fund is through the Family Music Limited as

(01:45:46):
my operating company. UM. In terms of of you know,
any company that's on the stock market could be the
subject of a hostile takeover this, you know that, and
that's something that of course shareholders would have to vote on,
and uh, you know, there's there's always the chance when
you're on the on the public market that even though

(01:46:07):
something like that is remote, there's always a possibility that
it could happen. Okay, Now, just telling about the landscape
in general. What are the new opportunities in sync and
what are the new opportunities relative to collection in general,
and where is the focus of your managers? So the

(01:46:29):
focus is very much on getting more out of these
great songs, and getting more out of them in many,
many different ways. So you know, we own the great
Al Jackson's catalog, and when we bought Al Jackson's catalog,
it was making predictable, reliable income of four grand a year.
But you know, of that income was concentrated on one song,

(01:46:55):
Al Green's Let's Stay Together and as there probably no
Al jack and as the drummer and Booker T and
the MG's had an incredible career between nineteen sixty two
and when he died in nineteen seventy five, where he
wrote you know thirteen or fourteen of the most important
soul pop classics, not only Let's Stay Together, but still

(01:47:16):
in Love with You and call Me for Al Green
plus seven or eight of his other biggest songs he wrote, uh,
you know Booker Team, the MGS, Green Onions plus most
of their big records, plus getting royalties on big records
by Bill Withers and Otis Redding and many many others.

(01:47:37):
So of the concentration of this four grand is on
one song, Let's Stay Together, which just tells you what
I was, you know, a great example of what I
was saying before about these uh you know, big companies
that have twenty thousand songs per person, they don't have
the ability to actively manage. They're just taking incoming requests.

(01:48:00):
So in the year and a half that we've owned
the catalog, we've gone from four hundred grand a year
to six hundred grand a year, so we've grown the
earnings by a third. But crucially in doing that, we've
taken the earnings of Let's Stay Together from of the
overall number to less than fifty percent of the overall number.
And the remaining is now having put green onions in

(01:48:23):
about ten different movies, it's putting Call Me in a
TV commercial, it's putting Still in Love with You in
a movie, a TV commercial, and also having John Legend
interpolated in a new song on his last album that
was top ten all over the world that we owned
of the new song because of the interpolation, so everyone

(01:48:46):
is focused on on on you know, how to you know,
we basically operate every song on its own p anal
as if it was its own business, not to institutionalize it,
but basically to give a starting point to a conversation
about whether or not we think the song is performing optimally,
and in most cases really to guilt people into going

(01:49:10):
hold on a set. That song is way better than that.
We should be doing way better than that with that song,
and it gives that kind of impetus for people to
go out and do something with it. So, you know,
when we look at the Blondie catalog that we acquired
a little more than a year ago, you know when
Blondie started, and you've written two really important pieces over

(01:49:31):
the last ten days or so on TikTok that everyone
in the music business should read. Because these new opportunities,
whether it's TikTok, whether it's Peloton, whether it's Thriller, you know,
these are are are big opportunities. One because there's massive
consumption taking place, and too because it's new income. These

(01:49:53):
are not income streams that are in the data on
which you're buying these catalogs. So it's real value add
from the get go. So when when when we uh
signed Blondie, they didn't have a TikTok page. Amy Thompson,
who's the chief catalog officer, got very very excited obviously
about Debbie Harry being the icon that she is and

(01:50:15):
Christine and Debbie being the incredible songwriters that they are.
They started a campaign to create Blondie's TikTok page. They
put Heart of Glass up there, and you know, very
soon after that, Miley Cyrus covered Heart of Glass. That
gave us an opportunity to bring Debbie and Miley together

(01:50:37):
and create some you know photos that looked like Debbie
and Miley, you know, Miley of and Debbie of nine
together having a good time in a club that you know,
quote unquote went viral. And you know, from last October
until the very moment, Heart of Glass hasn't been out

(01:51:00):
of Spotify's viral charts, right and and and you know,
I think some at last count, you know, Blonde you've
had over a million participants on their TikTok channel. Um,
the same thing is happening with Nile Rodgers. We went
out and took everybody dance the Great chic song, UM,
and we made a new version of it with uh

(01:51:21):
DJ Cedric Gervais and the Sound of Franklin with Nile featured,
uh you know, playing his guitar part, and that's becoming
a hit all over again. And you know, literally came
out in last I think October, and every week the
streams are bigger on it, and the TikTok numbers are
bigger on it. So it's just really about, you know,

(01:51:44):
what makes us different. I don't know if you know
the statistic, but the Royal Bank of Canada, who as
I mentioned, is one of our brokers, UM, they put
out a comparison chart last year in July when we
released our fiscal numbers for Mark thirty, the same day
that Warner I p oed, and they did a comparison

(01:52:06):
between the two companies. And at that point, Warner Chapel
had done six hundred forty million dollars in their fiscal year.
We had done ninety million dollars in our fiscal year,
so we did approximately twelve percent of Warner's numbers. They
did it on one point four million songs. We did
it at the time on thirteen thousand songs, so we

(01:52:28):
did twelve percent of the revenue on less than one
percent of the songs. Their songs were putting out. Our
songs were putting out six thousand, two hundred and eighty
dollars per song. Their songs were putting out a hundred
and seventy five dollars per song. And that's not because
we're better than they are or we're smarter than they are,
quite the opposite. As I said before, there's great people

(01:52:48):
working in those companies. It's purely because we're structured to
be able to have the bandwidth, to be able to
actively manage these songs, to do song management rather than
just collect passive requests. Mark, you're a force of nature
and I'm very impressed. You certainly know your business and
the business at larger You can pull these names statistics

(01:53:10):
right out of your butt very easily. So I want
to thank you so much for taking this time to
illuminate about your history and hypnosis. I think people have
a much better understanding of what's going on. Thanks again,
it's my pleasure, Bob. Thank you, and please keep writing
about the music that you love, because when you do,

(01:53:30):
I think you're the best there is. Well, thank you
so much. Until next time, this is Bob left sex

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