Taylor Swift vs. Scooter Braun: A Dramatic Music Deal

We break down the nine-figure transaction that shook the internet.

Taylor Swift vs. Scooter Braun: Inside the Year’s Most Dramatic Music Deal

Scooter Braun’s recent purchase of Big Machine Records rocked the music world. Or, more precisely, the entertainment mogul’s acquisition rocked the Nashville-based label’s former linchpin, superstar music maker and occasional snake Taylor Swift.

And Swift’s reaction to the nine-figure biz deal destroyed the internet.

Swift’s Tumblr post that day of the news broke called the sale her “worst case scenario.” The singer, who says she “pleaded for a chance to own” the master recordings, believed her creations were now in the hands of someone who had been an “incessant, manipulative” bully to her “for years.” Team Braun and the head of Big Machine, Scott Borchetta, pushed back against Swift’s narrative. Lines were drawn and sides were chosen. Instagram likes were given and taken away. Flowcharts awkwardly flowed.

We’re here for the drama. But we’re here more for the details behind the drama.

It’s time to break down the deal and its background, and its work and money implications, via the key underpinning numbers. Let’s start with the players.

29 — Taylor Swift’s Age

Taylor Swift is one of the best-selling recording artists of all time; her songwriting underpins her success.

Swift began in country music then moved into the pop realm in recent years, and, no matter the genre, she surfaces details of her personal life — sometimes explicitly, sometimes with a hint of mystery — in her songs. She weaves a narrative involving her romantic life, her feuds and her wildest desires, among other things. Sometimes she shares her feelings about spelling.

She knows what she likes, and she likes to control her own narrative.

38 — Scooter Braun’s Age

Scooter Braun’s a bona fide name-brand mogul. He launched his entertainment career as a party organizer while a student at Emory University in the early 2000s, and now he owns of Scooter Braun Projects, a media company that includes talent management, marketing and film production. SB Projects is owned by Ithaca Holdings, Braun’s media holding company.

Braun discovered Justin Bieber, Carly Rae Jepsen and Psy of “Gangnam Style” fame. He currently manages Bieber, Jepsen, Demi Lovato, Ariana Grande, Tori Kelly and the Zac Brown Band, among others. Past artists include Usher, Black Eyed Peas and Kanye West — you can see a list of past and present clients on the SB Projects website.

He never represented Swift.

15 — Swift’s Age When She Signed a Deal With Big Machine

Swift joined Big Machine in 2005; she was its first artist. When she signed with the fledgling company, Swift also signed away ownership rights of her first six albums to the label. That means whenever anyone bought Swift’s eponymous first album or streams “Shake it Off,” the money goes to Big Machine first, with Swift earning royalties. It’s a completely commonplace arrangement in the music industry.

Owners of master recordings also control the rights to put the artist’s music on a streaming service like Spotify or to chop up albums into greatest hits packages or to place songs on a movie soundtrack. Owners of master recordings have incredible control.

Swift makes clear in her Tumblr post that the age she started her musical career is significant.

“This is what happens when you sign a deal at fifteen to someone for whom the term ‘loyalty’ is clearly just a contractual concept. And when that man says ‘Music has value’, he means its value is beholden to men who had no part in creating it.”

Swift has been vocal about controlling her career and about artists getting ripped off. In 2015, she chastised Apple for its initial decision to not pay artists anything during a free three-month trial period for anyone who signed up. Apple actually listened, and the company decided to pay its artists, albeit at a reduced rate.

3 Percent — The Size of Swift’s Father’s Stake in Big Machine

According to Rolling Stone, Swift’s dad, Scott Swift, “was a minor investor in the label, which was more of an idea than a company when they signed.”

Forbes reports that country star Toby Keith bought a 10 percent stake in Big Machine for $400,000. The elder Swift’s initial investment is believed to be around $120,000.

6 — The Number of Full-Length Records Swift Made While With Big Machine

Those would be:

“Taylor Swift” (2006)
“Fearless” (2008)
“Speak Now” (2010)
“Red” (2012)
“1989” (2014)
“Reputation” (2017)

The master recordings to of those six albums lie at the heart of the Swift/Braun drama.

$1 Million — The Cost of Launching a New Musical Artist

That’s according to the Economist, which writes that “labels own recordings in exchange for the investment they have made not just in that artist — it can cost up to $1m to take an act from signing to their first release, with no guarantee of a hit — but also to fund new artists, of whom between one in four and one in ten will become successful.”

It’s unknown just how much Big Machine spent to help launch Swift’s career.

32 Million — Sales of Taylor Swift Albums in the U.S.

It’s no joke how many albums Swift has sold. It’s a huge achievement, as many of her sales have come amid the notoriously soft sales of the streaming era. Her biggest-selling album to date, according to Billboard: “Fearless,” which has sold 7.2 million units.

34.1 Percent — Swift’s Portion of Big Machine’s U.S. Sales and Streaming Activity in 2018

Billboard made that partial estimate in November 2018. The figures for the previous years:

2017: 41.2 percent
2016: 21.2 percent
2015: 56.6 percent

So Swift’s importance to Big Machine’s bottom line has fluctuated, but she has usually accounted for a significant amount of the label’s sales and streaming activity.

$100 Million — Annual Revenue of Big Machine

That’s according to the Wall Street Journal’s reporting on the sale. The estimated annual EBITDA (earnings before interest, taxes, depreciation and amortization) of Big Machine: $40 million.

Again, Swift has a huge impact on Big Machine’s bottom line. This is the hand she was playing when, with her deal with Big Machine expiring in November 2018, she tried to negotiate a follow-up deal — a deal that would involve her gaining control of the master recordings of her six albums with the company, and to gain ownership of masters for new music moving forward.

7 — Number of Years Swift Wanted to Re-Sign for With Big Machine

During the pushback after Swift’s Tumblr post, Big Machine’s Borchetta countered with his own post on the company’s website, outlining the terms of the potential follow-up deal the company was negotiating with Swift. According to the documentation Borchetta posted, Swift wanted to sign a seven-year deal. It also addressed Swift’s desire to regain ownership of her masters.

“As you will read,” Borchetta writes of the proposed but never consummated agreement with Swift, “100% of all Taylor Swift assets were to be transferred to her immediately upon signing the new agreement. We were working together on a new type of deal for our new streaming world that was not necessarily tied to ‘albums’ but more of a length of time.”

10 — Number of Years Big Machine Wanted Swift to Stay With the Label

Somewhere between 7 years and 10 years, and whatever other negotiations were going on, the deal fell apart.

Borchetta’s post includes an alleged text from Swift, signaling that she was moving on:

“Owning my masters was very important to me, but I’ve since realized that there are things that mean even more to me in the bigger picture. I had a choice whether to bet on my past or to bet on the future and I think knowing me, you can guess which one I chose. I also saw a rare opportunity to effect positive change for a lot of other artists with the leverage I have right now.”

Swift framed her departure from Big Machine this way in her Tumblr post:

“For years I asked, pleaded for a chance to own my work. Instead I was given an opportunity to sign back up to Big Machine Records and ‘earn’ one album back at a time, one for every new one I turned in. I walked away because I knew once I signed that contract, Scott Borchetta would sell the label, thereby selling me and my future. I had to make the excruciating choice to leave behind my past.”

$300 Million — The Reported Sale Price of Big Machine

Braun’s Ithaca Holdings made the purchase. Borchetta writes that he promised to Swift, “I want you to know that I will continue to be the proud custodian of your previous works and will continue to keep you and your team abreast of all future plans for releases of you[r] work.”

$200 Million — The Asking Price for Big Machine...in 2014

The Nashville Business Journal reported Borchetta was looking to sell the company in 2014, before Swift’s contract expired. Big Machine wasn’t well-positioned for the music industry’s streaming-driven future, and Borchetta told the WSJ he wanted to help the label “plug into a pop landscape that will turbocharge opportunities for these artists.”

Swift’s future at the company seemingly complicated the sale.

As Refinery 29 wrote in the wake of Big Machine’s sale, “The indie label's value has been tied up in Swift's music for some time...Had Borchetta sold Swift's masters back to her, he might not have gotten $300 million for Big Machine.”

$185 Million — Taylor Swift’s Projected 2019 Earnings

Forbes ranks Swift as the world’s highest-paid celebrity. While she makes piles of money from streaming and sales of her music, she earns most of her money touring and performing. She also earns money from merchandise sales and other media, like her tour documentary for Netflix, “Taylor Swift Reputation Stadium Tour.”

It’s the second time Swift’s topped the list.

$800 Million — Ithaca Holdings’ Valuation Post-Acquisition

At least one private-equity firm believes in the power of T-Swift’s masters and Ithaca’s future. The WSJ reports the Carlyle Group agreed to make another investment in Ithaca, which helped boost Ithaca’s valuation.

??? — The Size of Swift’s New Record Deal

Swift decided not to return to Big Machine Records and instead signed a deal with Universal in November 2018. Terms of the deal haven’t been publicly disclosed. Speculation about its value has varied.

According to Variety, “One source friendly to those involved in the new deal says that if the masters were really that important to her, she could have made a move to buy the company outright, but ‘instead she chose to go with a $20 million album deal’ with Universal.”

Another Variety report says Swift’s new deal could be “worth into the nine figures for her over time.”

207,864 — The Number of People Petitioning Swift to Re-record Her Old Albums

Many people, including fellow pop superstar Kelly Clarkson, have suggested Swift re-record her albums on her new label to undermine Big Machine and regain control of her songs. It’s true, Swift could re-record her songs to compete with her own original recordings. Prince famously re-recorded some of his old songs when he wasn’t able to get back his own master recordings, as have other artists.

Clarkson tweeted, in part: “I’d buy all of the new versions just to prove a point.” Presumably, the more than 200,000 who’ve signed the Change.org petition for her to re-record and re-release her original six albums agree.

8/23/19 — The Release Date for Swift’s Next Album

Swift’s set to shove her first bet on her own future into the middle of the table. The album’s called “Lover,” and it’s her first work that she’ll own outright from the start. The first two songs have already been released, “ME!” and “You Need to Calm Down.” The song and the video for the latter feature Swift continuing to use her voice to stand up for her beliefs; she advocates for LBGTQ rights.

Swift’s Tumblr post addressed her feelings about the next phase of her career. She writes:

“Thankfully, I am now signed to a label that believes I should own anything I create. Thankfully, I left my past in Scott’s hands and not my future. And hopefully, young artists or kids with musical dreams will read this and learn about how to better protect themselves in a negotiation. You deserve to own the art you make.”