the billion-dollar artist

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Hey. We lost a legend this week. I never met Clarence Avant but I was inspired by his impact in music and entertainment. He continued to make moves into his 80s and 90s, and I hope I can do the same when I’m that age. If you haven’t watched The Black Godfather, go check it out. It’s well worth the watch.

Today's memo is about Taylor Swift. She’s captured headlines with her billion-dollar tour, re-recorded albums, and masters ownership drama, but I wanted to dig deeper. This week’s Trapital episode (with our new logo!) is with MBW’s Tim Ingham, who has done a series of investigative stories on how the money flows in Taylor’s businesses, what those NDAs really said, and who the real winners and losers are.

We talked about all that and more. Let’s dive in.

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ECON 513: Unpacking Swiftonomics

Taylor Swift is having one of the biggest runs ever for a pop musician. We’re talking late-1950s Elvis Presley, mid-1960s Beatles, and post-Thriller Michael Jackson. But those artists all peaked in the early years of their careers. Taylor is in year 17. “Teardrops on My Guitar” is so old, Taylor performed it on MTV’s TRL.

Here are a few factors that led to this moment:

The post-pandemic superstar surge. Touring is back and bigger than ever—thanks to the most popular artists in the world. Demand is up for all the megastars, not just Taylor.

In 2016, I saw Drake in Oakland at the Oracle Arena for his Summer Sixteen Tour. I bought tickets on the night of the show at the box office for $57, and I’m pretty sure I got upgraded once I got to my seats. This year, the cheapest seats at Drake’s sold-out Bay Area shows at the Chase Center concert are over $500.

Taylor’s ticket demand may get the most headlines, but all the big names have benefitted. Taylor, Drake, Beyonce, and Adele all blew up in that sweet spot in the 2000s. They rose to power when monocultural events were more common. By the time streaming took off, they were already superstars. And they have continued to win due to the lack of new (American) monocultural moments and the industry’s struggle to break new artists.

The more options people get, the more they want the hits.

Albums on albums on albums. This is Taylor’s first tour since 2018’s Reputation Stadium Tour. Since then, she’s dropped seven albums including four new projects and three re-records.

There’s a lot of new material for fans to hear. Each time an album drops on a digital service provider (DSP), it’s a unit of attention that boosts demand for the artist’s entire catalog. That works to Taylor’s advantage.

Drama with major companies. It wasn’t that long ago that Taylor thought, “people may need a break from me.” She was a tabloid fixture with her celebrity relationship breakups, the “he said, she said” with Kanye West and Kim Kardashian over Ye’s song “Famous,” the mixed response to Reputation, and the public pressure to speak on social issues.

But in 2018, her record label, Big Machine Label Group, sold its assets to Scooter Braun’s Ithaca Holdings.

Everything changed. The narrative on Taylor Swift flipped. She was in the center of a masters ownership saga. Nothing has rallied an artist’s fanbase quicker than a record label dispute. It led to a series of events that Music Business Worldwide’s Tim Ingham and others have broken down to get to the meat of the issue.

The drama and support for Taylor intensified after the Ticketmaster onsale issues. The Swifties have been in public defense mode for the past five years and have not taken their foot on the gas.

Why every stakeholder involved has won

The longstanding advice in the music industry is that if you get the chance to work with a good superstar, hold on and ride the opportunity for as long as possible.

I hear it from agents and artist managers all the time, but it’s true for the major companies too. It’s especially true for everyone that has done business with Taylor Swift or any of the recordings she made.

In 2019, Ithaca Holdings flipped Taylor Swift’s original re-recordings from $140 million to $305 million in less than two years. That’s the type of move private equity firms get jealous of. Scooter’s been honest about the mental toll this process has taken, but the financial return was strong. The Big Machine deal likely made him a billionaire.

Taylor Swift herself has made more money from the sale of these re-recordings than she ever would have if she had bought her masters outright in 2019 when her management team was given the opportunity.

Her record label partners are in the money too. Taylor Swift’s signed an artist-friendly deal with Republic Records and Universal Music Group for her future albums. Some critics believe it’s too artist-friendly, like former Warner Music Group head Steve Cooper. But this is the biggest star in the world. Midnights generated $230 million in less than four months. That’s more than some blockbuster films make at the box office (but with a much, much smaller budget). There’s exceptions to every rule.

Shamrock Capital, the investment firm that currently owns Taylor’s six original recordings, is often seen as getting the short end of the stick. The catalog has taken a dip since the re-recorded albums. It may soon see another dip when 1989—Taylor’s most popular album— is re-released. But those original songs are still tied to legacy playlists, still show up under Taylor’s name on all DSPs, and some fans may prefer the original versions. If Shamrock buys and holds, it should be fine.

It’s not a coincidence that everyone won financially despite the drama. It’s music’s version of The Social Network. Sure, Mark Zuckerberg had legal issues with The Winklevoss Twins, Eduardo Saverin, and others, but they all benefitted financially from the same rocketship.

The best CEO in music?

Taylor Swift has been called the best CEO in music and similar accolades on several occasions. It’s a lofty title that’s worth digging into.

She’s a once-in-a-generation superstar with unparalleled power over her business partners and distributors. Taylor’s the LeBron James of music. She influenced Spotify and UMG’s business the way that LeBron influenced every team he’s been a part of, and NBA player empowerment overall. But their legendary talents paved the way for their wise business decisions to succeed, not the other way around.

The best CEOs in business can often do more with less, can outmatch more talented competition, and attain feats that speak to their judgment and decision-making. We rarely see the top artists in that position unless they run their own company where they manage other artists besides themselves.

But I’ve talked to enough people close to Taylor. She pays attention to detail, has maniacal focus, and stays connected to the deepest corners of the internet keep her fresh. It’s all admirable, and fall in line with traits demonstrated by the top leaders in the game.

If you liked this breakdown, check out the full conversation with Tim and I. We also discuss:

• why Taylor’s masters valuation increased over 2x in value from 2018 to 2019
• what was really in those signed NDAs
• commonalities between her disputes with Ithaca Holdings and Ticketmaster

And if you already listen to the episode, share it with a friend! You can post it on Twitter, LinkedIn, Facebook, or share the link below:

​https://link.chtbl.com/tswift​

money moves

• ​hip-hop’s 50 greatest moguls​
• ​the economics of hip-hop (my interview on HubSpot’s Marketing Against the Grain)
• Disney’s Taylor Swift Era​
• ​the future of music (my interview on The Future of Music with Jim O’Shaughnessy)
• how Connor Price makes $200k/mo independently on Spotify​

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coming soon from Trapital

Podcast: MTV. Another deep dive episode on one of the most influential companies ever in music. Stay tuned!

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