Mon. Feb 24th, 2020

What Artists Could Learn From Pop Star Taylor Swift’s Battle With Her Former Record Label

3 min read

April 23, 2019 - New York City, New York, United States - MANHATTAN, NEW YORK New York City, NEW YORK, USA - APRIL 23: Singer Taylor Swift wearing a J. Mendel dress, Lorraine Schwartz jewelry, and Chloe Gosselin heels arrives at the 2019 Time 100 Gala held at the Frederick P. Rose Hall at Jazz At Lincoln Center on April 23, 2019 in Manhattan, New York City, New York, United States. (Photo by Image Press Agency) (Credit Image: © Image Press Agency/Avalon via ZUMA Press)

BAD BLOOD

On Monday, after polarizing pop supernova Taylor Swift took to Twitter to tell her fans she might be unable to perform a career-spanning set at the upcoming American Museum Awards due to a dispute with her former record label, the Hollywood Reporter relayed that Big Machine Label Group would grant all necessary licenses for the performance after all. But the broader rift between Swift and her former label—which has resulted in both death threats and comments from presidential candidates—could open up a radical option for contemporary artists who want to capitalize on their own resale markets.

For the uninitiated, this volcano erupted after Scooter Braun, the powerful music manager whose clients include Justin Bieber and Ariana Grande, acquired Big Machine Label Group earlier this year for a reported $300 million. The deal gave Braun’s Ithaca Holdings control of the group’s full slate of current contracts and past releases, including the master recordings (or just “masters,” in industry speak) of Swift’s first six multiplatinum albums, which she made with Big Machine Records through a contract she signed as a teenager. (Big Machine is the namesake, but not only, label in the group.)

Aside from Swift’s longstanding antipathy for Braun and, more recently, Big Machine Label Group president Scott Borchetta, it was the acquisition of Swift’s masters that ignited what the New York Times’s (essential) Popcast dubbed “the pop music civil war of 2019.” (Click through for more background; like eating a fresh mango with only your bare hands, it’s juicy, but complicated.) And it is Swift’s unorthodox attempt to regain control of her old work that chefs up food for thought for star-level painters, sculptors, and other artists working in traditional media.

I KNEW YOU WERE TROUBLE

Now, the business of music is arguably just as arcane and potentially exploitative as the business of fine art, if not more so. For efficiency’s sake, here are the absolute basics you need to know to understand Swift’s potential relevance to the art market.

A record makes money through royalties, which have to be paid anytime the record gets purchased (as a hard copy or MP3), played or performed in a public setting (including on the radio, in a sports arena, or at another artist’s concert), or used as a soundtrack for moving images (meaning in a movie, TV show, or commercial).

The key is that different royalties are worth different amounts, and they go to different parties based on who holds which form of copyright on a record. (Again, it’s complicated, but here’s a primer on music royalties for my fellow knowledge maniacs.)

The most valuable copyright, literally and figuratively, belongs to whoever owns the masters—the original, finalized recordings that all other copies are made from. (Obviously, the notion of “copies” gets a little squishy in the streaming era, but suffice it to say intellectual property attorneys have been paid obscene amounts of cash to figure out answers.)

When you own the masters of a record, you get the final say in how that record can be licensed out in the world, and you get the meatiest royalties from those licensing deals. And in a classic example of pro-management standard-setting, the masters normally belong to the person who financed the recording of the music, not the person who wrote or performed it—meaning, almost invariably, the record label.

Prince put this arrangement in the most bracing terms during a dispute with his then-label, Warner Bros., in the ‘90s: “If you don’t own your masters, your master owns you.” (He also memorably took to scrawling the word “slave” on his face before public appearances during this stretch.)

In essence, then, the recording industry has been designed to operate so that artists normally don’t receive the most lucrative part of the upside when their careers take off. Why? Because someone much richer owns the valuable physical manifestations of their talent, which can be resold to the highest bidder—sometimes for tens, even hundreds, of millions of dollars.

Is this starting to sound familiar? Would it help to think back to, I don’t know, the over $1.1 billion in New York auction sales at Christie’s, Sotheby’s, and Phillips earlier this month, all of which went to private sellers, dealers, and the houses thanks to America’s lack of an artist resale royalty right?

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