Swift’s spat shows industry change
After years of decline, the music world is experiencing a resurgence
Taylor Swift has become embroiled in a spat with music manager Scooter Braun after he bought the singer’s former label, Big Machine, for US$300 million ($447m). The purchase gives him control of six of her albums. Big Machine said last week that it had been acquired by Braun’s Ithaca Holdings, which is backed by the US private equity giant Carlyle Group, prompting Swift to complain that she had not been offered the chance to buy the rights to her catalogue before it was sold to Braun (whom she accuses of “incessant, manipulative bullying”).
The 29-year-old wrote: “Essentially, my musical legacy is about to lie in the hands of someone who tried to dismantle it.”
Then Justin Bieber, who is also managed by Braun, accused Swift of attempting to “get sympathy”.
In most cases, when an artist signs with a label they give up the rights to their recordings in exchange for a cash advance that can be recouped against royalties. As one of the world’s biggest performers, having sold more than 31 million albums, Swift’s catalogue is a gold mine.
The feud demonstrates that the music industry, despite being
battered by years of plunging sales and illegal downloads, is still of interest to investors. Goldman Sachs said in a recent report that after nearly two decades of disruption, the industry is undergoing a “massive revival”. Artists, labels and publishers are cashing in on the popularity of streaming platforms such as Spotify — and consumers are signing up for paid subscriptions.
Spotify subscriber numbers hit 100 million in April, up almost a third, and Apple Music has 60 million — outgunning its Swedish rival in the United States.
Goldman Sachs estimates music revenues will more than double to about US$131 billion by 2030, growth that will be driven by streaming. But it is record companies, rather than artists or writers, who take the lion’s share — up to 60 per cent. Despite Swift’s protestations about Big Machine and the sale of her catalogue, it is “very commonplace in the industry”, explains Andy Booth, a music and media lawyer at SAS Daniels. “It is not unusual for a label and its catalogue to be sold. Ithaca Holdings will have acquired the whole Big Machine catalogue, not just Swift’s. She wouldn’t have been given the option of buying back copyright because in any corporate sale, once you break up the assets, their value goes down.” Scott Borchetta, who founded Big Machine, has claimed Swift was given “every chance in the world to own not just her master recordings, but every video, photo — everything associated to her career. She chose to leave.”
Swift said the only offer was to “‘earn’ one album back at a time”. She added: “I walked away because I knew once I signed that contract, Scott Borchetta would sell the label, thereby selling me and my future.”
Craig Hamilton, a research fellow at Birmingham City University’s school of media, says Braun bought Swift’s catalogue because “he would have been confident that over the long term he would see a return”. He adds: “Physical records have a relatively short lifespan. A record label would invest in it, the artist would make it, then sell it and tour it, and that cycle would last around six to 18 months. Now, with digital streaming, there is a longer trajectory. The majority of listeners go back to what they know and will continue to listen to old songs so the revenue is continuous.”
Spotify pays US$0.00437 per play on its platform, one of the stingiest services, according to
News, but that still means big bucks for the biggest artists. Swift’s latest single, You Need to Calm Down, has been streamed almost 70 million times since release on June 14, bringing in more than $375,000 from Spotify alone.
Even though Swift does not own her recordings, she gets a share of the royalties. As she writes her own songs, she controls publishing rights and makes money when they are played on radio or TV, used in films or advertising.
Amid the growth in streaming, institutional investors, such as private equity firms and hedge funds, are taking notice and realising the potential value of their assets.