In “Taylor’s version” of the music industry, the artists own a bigger piece of the pie
Lesson summary
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Coming up today… Taylor Swift takes control of her back catalog with new recordings of old songs. It’s a good move for the pop superstar but might adversely affect new artists who have not yet signed with record companies. Today’s English expression is “to take something lying down.” And we have a quote of the week from Taylor Swift herself. Let’s get going.
Taylor Swift and catalog ownership
If you’re a Taylor Swift fan—or even if you’re just a pop music fan—you may have noticed in your streaming app that there are new versions of the artist’s old songs. They sound almost identical. But they have new cover art, and the album title contains the words “Taylor’s Version.”
When I wrote this paragraph, I was listening to the album “Fearless (Taylor’s version),” and the song that was playing was “Hey Stephen (Taylor’s version).” I’m not enough of a Taylor Swift fan to notice any differences between the new version (released this year) and the original (released in 2008, thirteen years earlier). But some fans have noticed minor differences, including a few tweaks to the melody and a new richness to the singer’s voice.
The big difference between the two songs is not in the music but in the money. Taylor Swift is re-recording and re-releasing her back catalog of songs so that she, not the owner of her master recordings, can make money off the song rights. And this new move is affecting the way music contracts are being written.
Taylor Swift is today one of the most popular musicians in the world. She’s won music awards, is in the Guinness Book of World Records, ranks on multiple Billboard magazine lists, and has sold over 200 million records. She’s as big a star as the music industry has. But for a long time, she hasn’t been happy with the economics of her industry.
Taylor Swift first signed a contract with Big Machine Records back in her early country music days. The rights to her recordings were sold multiple times, including to a company that Taylor Swift didn’t like at all. Today, the master recordings of her first five albums are owned by an investment fund.
What does that mean? In the music industry, there are two kinds of rights to each song. Every time you hear a song on the radio or Spotify and every time you hear a song in a commercial or a movie, two parties get paid. First, the record label gets paid because they own the master recording, the sound you hear in your ears. Second, the artist gets paid because they own the intellectual property of the song: that’s the melody and the lyrics. Those are called synchronization rights. In most cases, the owner of the recordings gets about 80 percent of the royalties, while the artist only gets about 20 percent.
Over the years, different people bought the rights to the Taylor Swift recordings. That didn’t make Taylor Swift happy, so she decided she wouldn’t let her music be played in commercials or movies. Remember that artists own the synchronization rights. That means that they and the recording owners both have to agree if the song is to be used in a movie. And Taylor Swift withheld her consent.
It’s not because she doesn’t want her music to appear in movies and commercials; she does want that. Instead , she withheld consent because she didn’t want the investors in her songs to make so much money.
Now, let me tell you one more thing about typical record contracts. There’s an exclusivity window. Artists can’t re-record their work and release it until five years after their last recording in a given contract. So, the record labels invest in new artists; they want that exclusivity period in exchange for that investment.
Guess what? For Taylor Swift’s first five albums, that period just ended. That means she’s now free to re-record all the songs that Big Machine Records once owned and which are now owned by that investment company. And now, with new recordings in her own name, Taylor Swift gets to keep all the money from her streams and all the money from the royalties. So instead of just getting 20 percent of the money from royalties, she gets 100 percent – the whole thing.
That’s good for her. But record labels aren’t taking this lying down. One of the most prominent labels, Universal Music, is Taylor Swift’s current label. They are bending to her will and giving substantial concessions because she’s such a star. But Universal is changing the terms of the contracts they write with new artists to prevent this from happening in the future.
New artists that sign with Universal today will have to wait longer to re-record songs after their contract ends. New artists—the people who are fifteen, twenty years old today—don’t have the kind of negotiating leverage with Universal that a superstar like Taylor Swift does. Most are just happy to be noticed by a label; they’ll sign anything.
Music industry observers say that smaller labels often adopt the same contract terms as Universal. So, it’s possible that Taylor Swift made this historic move to own her back catalog, but in the process made it more difficult for other artists to do so in the future.
Checkmate?
So, is Taylor Swift winning the battle against her old label? Yes and no. Her new recordings are extremely popular; some are achieving even more streams than when they were first released. But it’s not a zero-sum game. Streams of the original recordings are also strong, suggesting that the new strategy, in total, is attracting more fans to Taylor’s world.
When I was researching this lesson, I learned about how much money it costs to license a song for different purposes. Want to hear some?
In a TV show, if a song is playing in a bar in the background but nobody is really paying attention to the song, that can either be free—the artist likes the exposure—or can cost up to $3,000 for a five-year license. Not bad. In movies, that same right could be $10,000 to $25,000.
Theme songs for movies cost in the $50,000 to $75,000 range. But commercials are where the big money is. If you want to license a song for a commercial, that can cost $75,000 to $200,000 for a year of use on TV and radio in the United States. That’s big money! You can see why Taylor Swift wants a bigger piece of the pie.
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