Photo Credit: Barry Manilow by Matt Becker / CC by 3.0
Barry Manilow sues Hipgnosis for $1.5 million over bonus payments due from their music catalog acquisition agreement.
Barry Manilow and Stiletto Entertainment are suing Hipgnosis Songs Fund for $1.5 million in unpaid bonus funds from his catalog sale to the company back in 2020, part of an ugly fallout between the parties. The lawsuit, filed in the US District Court of California and viewed by Digital Music News, asserts that bonuses were due as part of the acquisition of Manilow’s catalog, alleging breach of contract, fraud, and negligent misrepresentation.
Hipgnosis also alleged breach of contract, filing suit against Manilow just last month. A spokesperson for the company told Financial Times that “in discussion with Mr. Manilow’s representatives it became clear that there was a difference in understanding of certain clauses in the sale agreement regarding bonus payments.”
The purchase price, upon which both parties had agreed, included an upfront payment of $7.5 million, with two additional payments of $750,000 each, contingent on Hipgnosis’ income from the purchased royalties reaching certain benchmarks. The lawsuit claims Manilow’s songs “satisfied the necessary conditions to receive the two additional $750,000 purchase price payments based on the income received” by Hipgnosis during those years, which it says range from $404,388 to $550,383 during each of the relevant years.
Manilow and Stiletto’s complaint alleges that Hipgnosis and the company’s founder, Merck Mercuriadis — who notably stepped down earlier this year after the company’s stock tanked and music IP valuations slumped — misrepresented its experience and expertise to induce Manilow and Stiletto into the agreement.
Further, the filing asserts that Hipgnosis failed to actively promote and optimize the value of the purchased royalties as promised. “None of the promised marketing or promotion ever materialized. It has never consulted with Manilow or even attempted to so consult. It became clear that Hipgnosis made profoundly false promises.”
“It pledged to do so by leveraging its purported expertise, experience, and bench strength through its large staff,” the filing continues. “Hipgnosis promised to provide a full-time, dedicated team of qualified industry professionals to devote themselves to optimizing the value of the royalties they purchased.”
Hipgnosis, which was only launched in 2018, led the now-infamous “gold rush” on song catalogs by paying over $2 billion for music assets from artists including the Red Hot Chili Peppers and Neil Young. But the company’s pledges far exceeded its ability to make good on them, leading to plunging stock, shareholder unrest, and the company changing hands.
