A Game of Tones: Shifting Legal Strategy in the Music Industry
November 12, 2021 must have felt a lot like Groundhog Day for Jake Gyllenhaal. With All Too Well by Taylor Swift topping charts around the world, and social media seemingly united in rage against him, the similarities to 2012 were uncanny, when Red by Taylor Swift was first released. However, much to fans’ delight—and Gyllenhaal’s confusion—the world hadn’t suddenly traveled back nine years into the past. Instead, Taylor Swift had just released a re-recorded version of her fourth album, Red.
To people unfamiliar with the ongoing dispute, this may seem like a very strange situation. After all, why waste the time and money to re-record something you’ve already released? However, unbeknownst to some fans, Swift has displayed signs of a Mastermind—as she claimed in her most recent album, Midnights. In conjunction with her new production team, Swift has used a novel legal strategy to reclaim the rights to her old music.
Setting the Stage: Copyright and Production
To truly understand why Swift has been re-recording old music, one must understand the mechanics of what goes on behind the scenes when new music is released. Unlike other media, the music industry uses a multi-layered copyright system, leading to two distinct sets of rights, and streams of revenue. First, is the Musical Work Copyright, which is created through the act of song writing. This copyright is typically held by the song-writer—which may be distinct from the singer—and affords them performance royalties from streams such as live performances.
The second music copyright is the Sound Recording Copyright, also known as a master right. This is created when the music composition is eventually recorded, and produces revenues from CD and digital sales, and streaming on music platforms. For this reason, masters are typically the much more significant, and sought- after copyright produced by music. In addition to being highly lucrative revenue producers, masters also afford the holder significant control over the distribution of music. For another party to use any part of a song recording, they must obtain a Master Use License from the copyright holder; regardless of whether they want the whole recording or just a snippet. Because of this control, most record companies have historically required artists to sign away their master rights; and as a result, an artist’s relationship with their production company can strongly impact their career trajectory.
Many say music is a democratic artform, with the people ultimately deciding who shines, and who fades into obscurity. However, music production certainly does not reflect this in its recording environment. Music production has evolved into a clear-cut oligopoly, with only 3 companies controlling 68% of the industry. These three companies—Universal Music Group, Sony Music Entertainment, and Warner Music Group—have historically held iron grips over master rights in music. However, recent developments have forced production companies to rethink their strategies. Taylor Swift’s decision to re-record her music has been the catalyst for an industry that had grown all too comfortable with the status quo.
Bad Blood: Swift v. Braun
Taylor Swift’s copyright issues began before she realised it. At the young age of 15, Swift signed onto a contract with music production start-up Big Machine Records. As part of this contract, Big Machine stipulated that Swift would have to sign over the masters rights for her first six albums; after which, the contract could be renegotiated. Initially, this was a largely symbiotic relationship between Big Machine and Swift; Big Machine Records enjoyed strong revenues from holding the sound recording copyrights, while Swift was rewarded handsomely in royalties as per her contract.
However, following the release of her sixth studio album, Reputation, in 2017, the relationship with Big Machine took a turn for the worse. Having now worked in the industry for over a decade, Swift was much more well-versed in issues surrounding the ownership of her music—and she wanted to take back control. In renegotiating her contract with Big Machine, one of the main issues was returning ownership of the masters for Swift’s first six albums. Big Machine, however, had other plans. Having grown accustomed to their control over Swift’s discography, the record label offered a tit-for-tat deal. Ownership of the masters rights would be returned to Swift—but in return, Big Machine would acquire the master rights for the subsequent 6 albums. Unsurprisingly, Swift declined the offer, instead signing with publishing giant Universal Music Group in November of 2018. As part of this new deal, Swift stipulated that she would maintain ownership of both music copyrights.
While the drama could have ended here, with Swift simply having to pay a master use fee to perform her old music, her departure from Big Machine was only the beginning of her issues. In June of 2019, Big Machine Records was acquired by private equity firm Ithaca Holdings for an estimated $300 million USD—of which Taylor Swift received $0. While this involved transferring the copyrights of other artists, it is by no means a stretch to say that the acquisition largely centred around acquiring Swift’s catalogue, who accounted for over 80 per cent of Big Machine’s revenues. The main issue in this was the ownership of Ithaca Holdings, with whom Taylor Swift promptly denounced following the announcement of the deal.
Ithaca Holdings was owned by entertainment manager Scooter Braun, whose main clients have included Justin Bieber, and Kanye West. To say Braun and Swift have had a rocky professional relationship is putting it lightly. The poor relationship largely stems from Braun’s client, Kanye West—who also shares a rather negative relationship with Taylor Swift. In 2016, West released his song Famous, in which he claims to have been responsible for Swift’s rise to fame, and referring to her as “that b----." Adding fuel to the fire, the music video for Famous features a fully nude wag figure in the likeness of Taylor Swift—to which she accused West of creating “revenge porn.”
Begin Again (Taylor’s Version)
The acquisition by Braun was the last straw for Swift, who quickly announced her intention to re-record her original six albums. While she did not have control over the sound recording copyright, as a songwriter for all her past music, Swift did maintain control over the musical work copyright. In essence, this meant that while she did not own the actual song recordings, she did own the lyrics and composition, meaning that bar any contractual limitations, she was well within her right to cover her own music with re-recordings. This fact was paramount to her legal strategy. Had Swift not been the original songwriter, there would have been no legal path to re-recording. While her original contract with Big Machine Records did include a clause barring re-recordings, it expired in 2020, paving the way for Swift to set about her new legal strategy.
The question remains, however: Why bother re-recording her old music? And how would a simple re-recording solve her ownership issues? Essentially, by re-recording old music, Swift is able to create a brand-new Sound Recording Copyright—even though the re-recordings are designed to sound as similar as possible to the originals. By creating a new masters copyright, Swift is significantly impairing the value of the original song masters. Additionally, Swift could earn revenues from her re-recordings. While still not earning anything from the original recordings, Swift would be entitled to streaming revenues from the new versions—differentiated by her now signature “(Taylor’s Version)” subtitle.
As Swift began work on her strategy to regain ownership of her music, Braun also took to the offensive. Since she no longer had any relationship with Big Machine Records, Taylor Swift was obligated to formally request a master use licence whenever she performed her old recordings and pay the associated fees. Aware of this, Braun began denying Swift’s requests to perform her old music, first at the 2019 American Music Awards, and later for her Netflix Documentary Miss Americana. However, seeing that Taylor Swift was serious in her intention to re-record, Braun saw that the future value of Swift’s old catalogue was likely to be significantly impaired. As such, he promptly sold the masters to Swift’s catalogue to another private equity firm for an estimated $450 million USD—with Swift again receiving nothing from the sale of her music.
The Aftermath
As of 2022, Taylor Swift has followed through with her plans to re-record old music, having released two of six albums. As she continues to work on her re-recordings, it is also important to note how her actions have shifted the industry as a whole. As noted by a report conducted by the United States House of Representatives, the music industry has historically featured vast differences in bargaining power between artist and producers. Swift’s success in re-recording past music has shown other artists that a path exists to regain control over their music masters. In light of her first re-recording successes, several other artists who have also experienced difficult relationships with their producers have announced their intentions to record past music. A diverse array of artists has announced intentions to re-record old songs, from the Jonas Brothers to Snoop Dogg. Additionally, Taylor Swift’s successes in the masters controversy have inspired new artists such as Olivia Rodrigo to negotiate maintaining control over their masters. It is undeniable that Swift’s successes have rewritten the rules of the music industry, helping to level the playing field between musician and producer.
Not everyone has taken kindly to this shift in power dynamics. The three major music production companies (remember them?) have recently altered their standard contracts following the Swift controversy, doubling the time new artists are not permitted to re-record old music. While Universal Music Group was assuring fans that it supported Taylor Swift’s—and other artists’—right to fully own their music, it has been quietly working in tandem with other industry giants to ensure other artists cannot pull off a similar feat. While this may seem frustrating to music fans, it can be excused as basic self-interest that any company should exhibit. After all, most companies are primarily focused on returning a profit to their shareholders; protecting existing masters rights is essential for production companies. However, what is much less excusable, is the weaponization of master rights by predatory productions companies. As Braun demonstrated at the height of his feud with Swift, producers who maintain control over masters can easily use them to keep rebellious artists in check and prevent singers from using their own music.
The impact on the music industry did not stop there, however, as fighting about Swift’s copyright battle spilled over into the legislative world. In the United States, many on the political left took issue with the private equity firms that sparked the conflict in the first place. In a statement echoed by many of her peers, Senator Elizabeth Warren condemned the purchase of Big Machine Records, and urged action to regulate similar leveraged buyouts by private equity firms. Politicians had been raising the alarm about the power of private equity firms for years; however, it wasn’t until it affected a beloved figure such as Swift that most people began to listen.
Long Story Short
As an industry, music and entertainment have been rather set in their ways for decades. For years, the balance of power rested squarely in the hands of music producers. However, the actions of Taylor Swift in reclaiming her masters rights have highlighted the importance in strategic innovation. The music industry is like a game of chess; each move can make or break an artist’s career. However, as Swift has shown, an unexpected strategic shift can sometimes impact more than just other players—it can change the rules of the game.