Taylor Swift Sets New Norms for Artists

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Taylor Swift just signed a new record deal that will likely influence the ways in which other artists negotiate with labels. On November 19, the 28-year-old megastar, said goodbye to her longtime label Big Machine Records, and partnered with Universal Music Group’s (“UMG”) Republic Records. Big Machine, based in Nashville, Tennessee, has released all of Swift’s albums since she was 16-years-old.

Artists sign new record deals all the time, so what is all the hype surrounding Swift’s move to UMG? As part of her new agreement, Swift will maintain ownership of all future master-recording rights. This means she will own the copyright on the records of any music she makes from now on – a major victory in an ownership-driven industry. By owning the copyright, Swift will also hold control over where her music is used.

Swift not only negotiated for her own benefit– she bargained (successfully) on behalf of all artists. As part of her contract, Swift made it a condition that if Universal sells its Spotify shares, it must distribute some of the money from that sale to all artists it represents – and this will be non-recoupable (i.e., the payout will not go against the artists’ royalties or advances). UMG owns an estimated 3.5 percent stake in Spotify, which is estimated to be worth $850 million. It has yet to sell any of it shares.

While the deal is a huge win for Swift, she is not stopping there. Billboard reported that what Swift wants most is to regain ownership of her first six albums. Those six albums all belong to Big Machine, and nothing in Swift’s new contract changes those ownership rights. However, there are ways Swift can reclaim ownership. One is if UMG buys Big Machine, which is on the market for $300-$350 million. Swift could also partner with investors to buy the label herself. According to Billboard’s calculations, Swift’s share of Big Machine’s U.S. sales and streaming activity ranges from the 21.2 percent of the label’s total in 2016 to the 56.6 percent she had in 2015. In 2017, she comprised 41.2 percent and so far this year, her sales and streaming account for 34.1 percent.

Speaking about the contract, Swift stated on Tumblr that “[UMG has] generously agreed to this, at what they believe will be much better terms than paid out previously by other major labels. I see this as a sign that we are headed toward positive change for creators — a goal I’m never going to stop trying to help achieve, in whatever ways I can.”

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