Merck Mercuriadis

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 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 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 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, 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,

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 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, 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 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 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, 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 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 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 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 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 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, 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 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, 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

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 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 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 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.

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 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 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 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 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 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 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 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, 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, 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 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 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

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 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 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 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 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, 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 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 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 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

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 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 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 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, 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 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, 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, 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

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

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 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 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, 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, 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 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 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 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 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. 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 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

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 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 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 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 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 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. 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 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, 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 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 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, 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 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 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

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 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 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. 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 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 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. 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 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 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 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 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 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. 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 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 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 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, 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

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 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 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. 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 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 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 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

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 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 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, 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, 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 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, 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 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. 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

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 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 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, 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 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 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 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 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 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 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 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 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 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.

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 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, 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 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 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,

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, 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 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 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 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 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

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.

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 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, 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 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 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 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, 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 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 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 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 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 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 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 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 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

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 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 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

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 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.

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

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 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 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, 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 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 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 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, 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 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 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

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 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 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

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 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 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. 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 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 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, 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 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 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 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 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

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 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 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, 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 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 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 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 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.

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, 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

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, 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 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 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 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 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 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 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 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 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, 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 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, 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 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 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 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

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 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 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, 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

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

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, 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

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,

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 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 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, 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 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, 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 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 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

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 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 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 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 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, 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 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

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 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 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 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 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. 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 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. 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 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 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 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. 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? 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 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 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 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 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.

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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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, 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 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 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. 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 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

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 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 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 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, 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 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 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 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 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 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 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. 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 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. 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 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 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.

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 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 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 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

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 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 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, 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 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. 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. 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 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 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 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 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 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 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 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 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 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,

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 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 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 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 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, I think you're the best there is. Well, thank you

so much. Until next time, this is Bob left sex