LONDON >> Merck Mercuriadis was sitting in a small office at Abbey Road Studios, pecking away at a vegan breakfast bowl and calmly laying out his plan to dismantle the part of the music business he loves most.

A longtime record executive and artist manager who counts Guns N’ Roses and Elton John among his former clients, Mercuriadis has become the industry’s most polarizing figure by storming the ramparts of the music publishing world — the lucrative side of the business that handles the licensing and royalties of songwriting catalogs.

“The traditional music publishing model,” Mercuriadis said, in the steady tone of a general planning out his big offensive, “is something that I want to destroy.”

Whole swaths of the music business, like touring, shut down in 2020, but music publishing has had a stunning bull market. The action has all been in catalogs: bundles of songwriting copyrights that, if popular and long-lasting enough, can collect steady, predictable streams of income. Thanks to plentiful investment coffers, rosy projections about online streaming and, less happily, the need of many artists to raise cash during the pandemic, there has been a flurry of deals this year, often at staggering prices. Stevie Nicks sold a majority share in her catalog for $80 million. Bob Dylan signed away his entire corpus of more than 600 copyrights for a sum estimated at $300 million to $400 million.

The company that has driven the most transactions and done so the fastest is Hipgnosis Songs Fund, which Mercuriadis introduced into the London Stock Exchange in July 2018. In just 2 1/2 years, Hipgnosis has spent about $1.7 billion scooping up the rights to more than 57,000 songs from an enviable list of writers. Hipgnosis owns, in full or in part, 108 songs by hip-hop producer Timbaland; 188 by Jack Antonoff, a collaborator of Taylor Swift; 197 by Debbie Harry and Chris Stein of Blondie; 814 by RZA of the Wu-Tang Clan; 315 by Mark Ronson; and 1,068 by Dave Stewart of Eurythmics.

But to hear Mercuriadis tell it, the business structure that has sustained the publishing market — and the livelihoods of songwriters — for more than a century is fundamentally broken and needs to be rebuilt.

“People look at songs as being inanimate objects; I don’t,” he said. “I think that they’re the great energy that makes the world go ‘round, and I think that they deserve to be managed with the same level of responsibility that human beings do.”

In a series of interviews with The New York Times this year, Mercuriadis shared his plan for Hipgnosis, which is inseparable from his critique of the music publishing establishment. The big publishers — which are all divisions of the major record conglomerates — own far too much material to exploit it all properly, he said. Sony/ATV, for example, has nearly 5 million songs in its portfolio. (Among them are two of the industry’s ultimate trophies: the Beatles and Motown songbooks.) The term publisher, Mercuriadis has said, is “a euphemism for someone that collects your money but doesn’t really add value to the song.”

In its place, he posits a bold but somewhat vague plan called “song management,” in which leaner companies look after smaller collections of high-value hits, and each track is held to a profit-and-loss analysis to ensure its value is maximized. Hipgnosis, he said, will eventually have no more than around 150,000 titles.

Mercuriadis’ pitch and the big bucks Hipgnosis has paid have gotten the industry’s attention. And in headline numbers, Hipgnosis is off to a successful start. Its latest financial results, published this month, reported that the “fair value” of its catalog, as determined by an independent reviewer, rose 10% from April to September.

Hipgnosis’ growing collection means that its songs are everywhere. It recently acquired a slice of “All I Want for Christmas Is You,” Mariah Carey’s inescapable holiday standard; and the new season of Netflix’s hit show “The Crown” uses four songs from the Hipgnosis portfolio.

But Mercuriadis has drawn a backlash from the establishment he has provoked. They question whether Hipgnosis can ever earn back the sums it is paying and whether “song management” is any different from what other music publishers do every day.

“One thing that Merck is doing really well is persuading people with deep pockets that music publishing is a simple business which others are doing badly,” said Jane Dyball, the former chief executive of the Music Publishers Association, a trade group in Britain. “In reality it’s not a simple business.”

Even his critics, however, acknowledge that Mercuriadis has raised the temperature of the business and that by paying top dollar to buy out songwriters’ work, Hipgnosis may be driving a fundamental change in the industry. (In the publishing world, though, the other guy’s deals are never as golden as one’s own.)

“He’s stirred the bottom of the barrel,” said Larry Mestel, founder of Primary Wave Music, whose portfolio includes Nicks, Bob Marley, Burt Bacharach and Smokey Robinson. “Merck has been getting a lot of splash because he’s closing a lot of high-multiple deals, but he’s not closing the quality we’re closing.”

In person, Mercuriadis, 57, comes across as less a corporate raider than a colossally ambitious music nerd, with a clean-shaven head and an ever-present black Prada jacket. He grew up in a small town in Nova Scotia and tells of record-buying pilgrimages to Halifax. Hipgnosis Songs Fund is named after Hipgnosis, the British design firm whose high-concept album cover art for Pink Floyd, Led Zeppelin and others redefined rock marketing.

Hipgnosis, like other publishers, fills its portfolio with both old and new songs. It has 73 songs by Starrah, for example, who has written for Rihanna and Camila Cabello, along with 917 recorded tracks by Barry Manilow.

Mercuriadis, who is the founder of Hipgnosis as well as the chief executive of its affiliated investment adviser, makes a persuasive case for songwriting copyrights being undervalued assets.

Streaming, which helped turn around the moribund fortunes of the 21st-century music industry, has also cemented a pop production model in which few stars write their own material. Instead, they are furnished with songs by a network of writers and producers — yet industry formulas generally split streaming royalties in a way that pays performing artists around five times more than songwriters.

“We are now in a paradigm where 90% of artists that are being signed are reliant on songwriters to help deliver hits,” Mercuriadis said. “And yet the songwriter is now the low man or woman on the totem pole when it comes to getting paid.”

By building a portfolio of top songs and gaining the endorsement of major writers — who may have given up their rights but were paid handsomely for them — Mercuriadis believes he can gain leverage to “change where the songwriter sits in the economic equation.”

Mercuriadis’ pitch to investors is that the royalty streams of proven hits are a more stable investment than gold or oil, given the inelastic demand for music — a premise that has largely held up during the pandemic.

“Music has been able to prove itself out this year as being uncorrelated to the overall marketplace,” said Nari Matsuura, a partner at Massarsky Consulting, which estimates the value of music catalogs on behalf of investors and publishers, including Hipgnosis. “Investors are increasingly attracted to music since other industries are under turmoil.”

A confluence of factors, including low interest rates and high stock prices, has made music royalties appealing to institutional investors like pension funds and university endowments, which tend to favor safe and steady growth. Hipgnosis, which pays an annual dividend of about 7 cents per share, counts the Church of England among its major investors.

When publishing catalogs are sold, the price is usually set as a multiple of their annual earnings. Lately, those multiples have been skyrocketing. According to Massarsky data, a decade ago most catalogs were trading at multiples of nine or 10. By 2018, collections of “standards” — popular songs from before 2000 — were going for an average of 13.5 times earnings. In 2019, the multiple grew to 16. This year, it is 17.5.

Hipgnosis has disclosed that its average multiple is 14.76, although Mercuriadis said that for some “important” catalogs, it had paid multiples as high as 22. Hipgnosis’ competitors accuse it of driving up prices; Mercuriadis said his deals are guided by thorough price analyses and portrays other players’ complaints as sour grapes. “The only ones that say I overpay,” he said, “are the ones whose access I have killed.”

Successful singer-songwriters tend to view their catalogs as their most valuable asset. Hipgnosis has pushed the envelope in seeking to buy out those assets entirely.

The publishing business splits the income and ownership of songs between a writer and a publisher.

A writer is typically paid half of a song’s earnings; the rest of it — and the ownership of its copyright — may be divided between writer and publisher, or either party might own it outright. In most cases, a publisher retains control and administers the use of the song.

For most of its deals, Hipgnosis buys 100% of a songwriter’s control, including the copyrights. Those deals were once rare, but lately they have become more common. Dylan’s recent sale, for example, gave Universal total ownership of his work.

For many writers, the sums now being offered have changed the calculus of whether to sell.

“It’s almost like a stock-trading business; you can say hold onto a stock, but sometimes the price is really at its peak,” said Dion Wilson, the producer and writer known as No I.D., who has worked with Kanye West, Jay-Z and many others and in August signed a deal giving Hipgnosis control over his share of 273 songs.

Still, many artists complain that they have no choice but to consider selling their most prized asset because of the loss of touring income in the pandemic and anemic royalty rates from streaming services.

“We’ve been forcibly retired,” said David Crosby, who added that he is in active negotiations to sell his publishing rights. “I don’t have savings, and I don’t have any retirement program. But I did have my publishing. It’s the only option that’s open to me to take care of myself and my family.”

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