{"id":153562,"date":"2023-06-14T22:01:11","date_gmt":"2023-06-14T21:01:11","guid":{"rendered":"https:\/\/www.musicbusinessworldwide.com\/?p=153562"},"modified":"2023-06-15T00:33:32","modified_gmt":"2023-06-14T23:33:32","slug":"taylor-swift-catalog-sale-following-the-money","status":"publish","type":"post","link":"https:\/\/www.musicbusinessworldwide.com\/taylor-swift-catalog-sale-following-the-money\/","title":{"rendered":"Reliving the Taylor Swift catalog sale saga (and following the money…)"},"content":{"rendered":"

Four years ago this month, a major music business story was bubbling away in Nashville.<\/p>\n

Scott Borchetta,<\/strong> founder of country indie powerhouse Big Machine Label Group (BMLG)<\/strong>, had put his company up for sale.<\/p>\n

Borchetta<\/strong> and BMLG\u2019s<\/strong> reps had convened with several potential suitors, amongst them the three major record companies \u2013 Universal Music Group, Sony Music Entertainment<\/strong>, and Warner Music Group<\/strong>.<\/p>\n

The jewel in the crown of BMLG’s<\/strong> catalog back then is now a matter of music biz infamy: The master rights to the first six albums by global pop megastar, Taylor Swift<\/strong>.<\/p>\n

Universal, said reports at the time<\/a>, got close to acquiring Big Machine\u2019s<\/strong> label.<\/p>\n

Yet according to Music Business Worldwide<\/em> sources close to the finalized deal, only one party \u2013 Scooter Braun’s Ithaca Holdings<\/strong> \u2013 was willing to significantly improve on the $300 million<\/b> pricetag Borchetta<\/strong> sought for his company.<\/p>\n

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In summer 2019, it became official<\/a>: Ithaca<\/strong> was to buy BMLG<\/strong> and its sister publishing company for a combined price that MBW has now confirmed was $330 million<\/b> on the nose.<\/p>\n

What happened afterward fuelled headlines, fan indignation, and music biz whisper-thons for months, and years, to come.<\/p>\n

With the dust now relatively settled on the cacophonous fallout from the Braun\/Ithaca\/BMLG\/Swift<\/strong> deal, Music Business Worldwide<\/i> has in the past few weeks \u2013 via multiple sources close to the key transactions involved \u2013 done our darndest to follow the money in this narrative.<\/p>\n

By doing so, we’ve been able to shed new light on who got paid what, when, and by who.<\/p>\n

Below, we walk through some of the standout moments in this tale, piecing together what MBW<\/strong> knew in the past \u2013 and what we’ve learned now.<\/p>\n

In doing so, we paint a clearer picture, through a financial lens, of what’s surely music’s most talked-about deal of the past decade…<\/p>\n

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Chapter 1: The initial sale (June 2019)<\/span><\/b><\/span><\/h5>\n

WHAT WE KNEW THEN…<\/b><\/span><\/p>\n

On June 30, 2019<\/strong>, Ithaca Holdings<\/strong> and Big Machine Label Group<\/strong> formally announced that Scooter Braun\u2019s<\/strong> company had acquired Scott Borchetta\u2019s<\/strong>. The deal included the master rights to Taylor Swift’s<\/strong> first six albums.<\/p>\n

In making the announcement<\/a>, Braun<\/strong> said of Borchetta<\/strong>: “He\u2019s built a brilliant company full of iconic songs and artists. Who wouldn\u2019t want to be a part of that?”<\/p>\n

Reports at the time suggested that Ithaca Holdings<\/strong> had acquired Big Machine<\/strong> for around $300 million<\/b>.<\/p>\n

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Scott Borchetta (left) called BMLG’s sale to Scooter Braun ‘a very special day and the beginning of what is sure to be a fantastic partnership and historic run’<\/figcaption><\/figure>\n
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WHAT WE KNOW NOW…<\/b><\/span><\/p>\n

According to MBW’s watertight sources \u2013 who were directly involved in negotiating the deal \u2013 the June 2019 agreement between Ithaca Holdings<\/strong> and BMLG<\/strong> was for a price tag of $330 million<\/b>.<\/p>\n

That price comprised $300 million<\/b> for Borchetta’s label group, plus a further $30 million<\/b> for Big Machine’s publishing operation (including its Luke Combs catalog).<\/p>\n

Taylor Swift’s<\/strong> six-album master catalog at BMLG<\/strong>, say our sources, was individually valued by Braun’s team as being worth $140 million<\/b>.<\/p>\n

Another fact worth clarifying, which increases in importance later on in this timeline: It was never known at the time what percentage Carlyle Group, <\/b>then Scooter Braun’s<\/strong> primary investor, owned in Ithaca Holdings<\/strong>.<\/p>\n

According to MBW’s<\/strong> sources, Braun<\/strong> owned the majority of Ithaca \u2013 a 64%<\/b> stake \u2013 until the day he sold it, in April 2021<\/strong>, to HYBE<\/strong>.<\/p>\n

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Chapter 2: The initial fallout (June-August 2019)<\/b><\/span><\/h5>\n

WHAT WE KNEW THEN…<\/b><\/span><\/p>\n

Everything kicked off on the same day the BMLG<\/strong> sale was announced: June 30, 2019<\/strong>.<\/p>\n

Taking to her Tumblr blog later that day, in a passionate public diatribe<\/a>, Taylor Swift<\/strong> accused Scooter Braun<\/strong> of “incessant, manipulative bullying”.<\/p>\n

This accusation was later rebutted by Braun\u2019s long-time client, Justin Bieber<\/strong>, who responded in a social media note<\/a> addressing Swift: \u201cScooter has had your back ever since you graciously let me open [concerts] for you\u201d.<\/p>\n

In her blog, Swift<\/strong> appeared to personally blame Braun<\/strong> for, amongst other things, the June 2016 music video for Kanye West’s<\/strong> Famous<\/i>, which depicted West and Kim Kardashian<\/strong> in bed with naked lookalikes<\/a> of celebrities including Donald Trump, Rihanna<\/strong> (who featured on the record), Vogue<\/i> Editor-In-Chief Anna Wintour<\/strong>, George W. Bus<\/strong>h, and Swift<\/strong> herself.<\/p>\n

Following its release, Vanity Fair<\/em> called the Famous<\/i> video “thought-provoking”<\/a>; Kanye West called it a “comment on fame”.<\/p>\n

Swift picked stronger words for it: “revenge porn”.<\/p>\n

Famous<\/i>, of course, contained an unseemly lyric from West<\/strong> that overtly targeted Swift<\/strong>: “I feel like me and Taylor might still have sex; I made that b**ch famous.”<\/p>\n

(Looking at the chronology, Scooter Braun\u2019s possible involvement in the Famous<\/em> video isn’t clear: According to a Billboard<\/em> scoop, Braun<\/strong> officially became Kanye West’s<\/strong> co-manager in March 2016.<\/a> That was after Famous<\/i> had been released via the Life Of Pablo<\/i> album in February 2016<\/strong>, and, say sources, after West\u2019s video for the track had wrapped shooting.)<\/p>\n

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From a music business dealmaking perspective, intrigue was raised by other comments in Swift’s June 2019<\/strong> Tumblr blog, this time directed at both Braun<\/strong> and the seller of her catalog, Scott Borchetta<\/strong>.<\/p>\n

Swift<\/strong> claimed<\/a> that following the completion of her six-album recording contract with Big Machine<\/strong> \u2013 marked by the release of Reputation<\/i> in November 2017 \u2013 she’d “pleaded” with Borchetta<\/strong> for the “chance to own my work”.<\/p>\n

Swift<\/strong> acknowledged in her blog that Borchetta<\/strong> and Big Machine<\/strong> had offered her this chance. But she alleged that they did so on an unacceptable condition: that she “earn” back the rights to each of her first six albums, one by one, for every new album she recorded for Big Machine<\/strong>.<\/p>\n

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Taylor Swift accuses Scott Borchetta of only enabling her to acquire the masters to her first six albums by ‘earning’ them back with new music, June 2019<\/figcaption><\/figure>\n
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Eight months earlier, in November 2018<\/strong>, Taylor Swift<\/strong> had announced her departure from Big Machine<\/strong> \u2013 while confirming a new, direct global deal<\/a> with UMG<\/strong> for her future works.<\/p>\n

In an Instagram post<\/a>, Swift posed with UMG boss Sir Lucian Grainge<\/strong> and Republic Records head, Monte Lipman<\/strong>, while expressing “heartfelt thanks” to Scott Borchetta.<\/strong><\/p>\n

One of the most important pieces of news Swift revealed that day? Universal Music Group<\/strong> was allowing her\u00a0to keep ownership of the master rights to her post-Reputation<\/i> music.<\/p>\n

Music business high-flyers have since characterized Swift’s UMG deal<\/strong> as one of the most artist-friendly major record label deals ever signed with a superstar.<\/p>\n

“She got a monster check and a very, very skinny distribution charge.”<\/p>\n

Ex-Warner Music boss, Steve Cooper, on Taylor Swift’s deal with UMG<\/span><\/p><\/blockquote>\n

Former Warner Music Group CEO, Steve Cooper<\/strong>, said last year<\/a> of the Swift\/UMG deal: “She got a monster check and a very, very skinny distribution charge.”<\/p>\n

Cooper further suggested that, from his perspective, the Swift\/UMG deal didn’t represent “the right side of economics”.<\/p>\n

(MBW understands that UMG’s<\/strong> “skinny” distribution margin in its Swift<\/strong> deal increases outside the US, especially for physical releases, while UMG also holds active global publishing and merch deals with the star.)<\/p>\n

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Taylor Swift’s Instagram post revealing her new deal with Universal Music Group and Republic, in which she expressed ‘heartfelt thanks’ to Scott Borchetta \u2013 November 2018<\/figcaption><\/figure>\n
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In her June 2019 Tumblr blog, Swift<\/strong> said: “I walked away [from the alleged Big Machine<\/strong> offer that would enable her to ‘earn’ back her albums] because I knew once I signed that contract, Scott Borchetta<\/strong> would sell the label, thereby selling me and my future.”<\/p>\n

Of the news that Borchetta<\/strong> had now sold that work to Ithaca<\/strong>, she claimed: “I learned about Scooter Braun\u2019s<\/strong> purchase of my masters as it was announced to the world.”<\/p>\n

Scott Borchetta<\/strong> had a markedly different take on Swift’s<\/strong> exit from Big Machine.<\/p>\n

After Swift’s<\/strong> Tumblr post had ignited global uproar amongst her fans on social media, Borchetta<\/strong> \u2013 who signed Swift<\/strong> to his record label in Nashville when she was a teenager \u2013 offered a counterpoint on Big Machine’s<\/strong> own website.<\/p>\n

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“Upon execution, BMLG shall assign to TS all recordings (audio or audio-visual), artwork, photographs, and any other materials relating to TS which BMLG owns or controls.”<\/p>\n

Clause in deal proposal between Big Machine and Taylor Swift’s team, August 2018<\/span><\/p><\/blockquote>\n

Under the heading, ‘So, It’s Time For Some Truth…’<\/a>, Borchetta<\/strong> posted an image of a purported textual deal negotiation between Big Machine<\/strong> and Swift’s<\/strong> team, outlining a potential new record contract post-Reputation<\/i>.<\/p>\n

In this document, deal point No.2 \u2013 requested by Swift’s<\/strong> team \u2013 read: “Upon execution, BMLG shall assign to TS all recordings (audio or audio-visual), artwork, photographs, and any other materials relating to TS which BMLG owns or controls.”<\/strong><\/p>\n

According to the proposal, BMLG<\/strong> acceded to this request. (There did not appear to be any mention of the ‘one album for one album’ structure suggested by Swift<\/strong> in her Tumblr blog.)<\/p>\n

However, there was a clear disagreement apparent in the document (pictured below): Team Swift<\/strong> proposed that, in return for her signing the deal, BMLG<\/strong> would have an exclusive global license to all Taylor Swift<\/strong> recordings, old and new,\u00a0for a period of seven years.<\/p>\n

BMLG<\/strong> instead requested a ten-year tenure<\/strong> for the new contract.<\/p>\n

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The portion of the Taylor Swift \/ Big Machine deal proposal posted by Scott Borchetta in June 2019<\/figcaption><\/figure>\n
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Within his blog post, Borchetta<\/strong> claimed that Taylor Swift’s<\/strong> father, Scott Swift<\/strong>, was a shareholder in Big Machine Records LLC<\/strong>, and that all shareholders had been informed, on June 25, 2018,<\/strong> of the company’s pending deal to sell to Ithaca<\/strong>.<\/p>\n

Wrote Borchetta<\/strong>: “On the 6\/25 call the shareholders were made aware of the pending deal with Ithaca Holdings<\/strong> and had 3 days to go over all of the details of the proposed transaction. We then had a final call on Friday, June 28th<\/strong> in which the transaction passed with a majority vote and 3 of the 5 shareholders voting \u2018yes\u2019 with 92%<\/strong> of the shareholders’ vote.<\/p>\n

“Out of courtesy, I personally texted Taylor at 9:06pm, Saturday, June 29th<\/strong> to inform her prior to the story breaking on the morning of Sunday, June 30th<\/strong> so she could hear it directly from me.<\/p>\n

“I guess it might somehow be possible that her dad Scott<\/strong>, 13 Management lawyer Jay Schaudies<\/strong> (who represented Scott Swift on the shareholder calls) or 13 Management executive and Big Machine LLC shareholder Frank Bell<\/strong> (who was on the shareholder calls) didn\u2019t say anything to Taylor over the prior 5 days. I guess it\u2019s possible that she might not have seen my text. But, I truly doubt that she \u2018woke up to the news when everyone else did\u2019.”<\/p>\n

\"Scott<\/figure>

“I guess it\u2019s possible that she might not have seen my text. But, I truly doubt that she \u2018woke up to the news when everyone else did\u2019.”<\/p>\n

Scott Borchetta, June 30, 2019<\/span><\/p><\/blockquote>\n

A few days later, Swift’s lawyer, Donald Passman<\/strong>, told the media in a statement<\/a>: \u201cScott Borchetta<\/strong> never gave Taylor Swift<\/strong> an opportunity to purchase her masters, or the label, outright with a check in the way he is now apparently doing for others.”<\/p>\n

Reading between the lines, the specificity of Passman’s comment is interesting: It is not a denial that BMLG<\/strong> offered Swift the proposed contract as depicted by Borchetta<\/strong>; it does, however, infer that Swift<\/strong> didn’t get the chance to buy her rights from the label via a simple fee in the same manner that Ithaca Holdings<\/strong> did.<\/p>\n

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WHAT WE KNOW NOW…<\/b><\/span><\/p>\n

Remember, MBW’s<\/strong> particular focus in this article is the money, and the paper trail, in this deal.<\/p>\n

With that in mind, it’s probably best that we recuse ourselves from wading too far into the personal allegations made by Swift<\/strong> against Scooter Braun<\/strong>.<\/p>\n

One thing we can<\/i> verify is Scott Borchetta’s<\/strong> claim that Scott Swift<\/strong> \u2013 Taylor Swift’s<\/strong> father \u2013 was one of the five shareholders of BMLG<\/strong>.<\/p>\n

Mr Swift<\/strong>, a former stockbroker for Merrill Lynch, invested early into both Big Machine and in his daughter\u2019s potential.<\/p>\n

MBW has obtained a subscription agreement between Big Machine Records LLC<\/strong> and Scott Swift<\/strong>, dated January 1, 2006<\/strong>, which grants Mr. Swift 416,666<\/b> common shares in the company plus 500,000<\/b> preferred shares, for a total price of USD $500,416.66<\/b>.<\/p>\n

(The previous year, aged 15, Swift<\/strong> signed her first ever record deal with the label.)<\/p>\n

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In addition, MBW has seen confirmation sent to Mr. Swift’s<\/strong> representatives from Big Machine Label Group LLC, in August 2019<\/strong>, confirming a payment to Mr Swift of USD<\/strong> $15.1 million<\/b>.<\/p>\n

This payment was made as a result of the sale of Big Machine<\/strong> to Ithaca<\/strong> in June 2019<\/strong>.<\/p>\n

Sources tell us that, at the point of sale to Ithaca<\/strong>, on the cap table of Big Machine Label Group<\/strong>, Mr. Swift owned slightly over 5%<\/b> of the company.<\/p>\n

This would make sense with what MBW has now discovered: 5%<\/strong> of the $300 million<\/strong> paid by Ithaca<\/strong> for the recorded music part of BMLG<\/strong> \u2013 Big Machine Records LLC \u2013 works out to $15 million<\/strong>.<\/p>\n

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Chapter 3: The second sale (December 2019 – November 2020)<\/b><\/span><\/h5>\n

WHAT WE KNEW THEN…<\/b><\/span><\/p>\n

During the second half of 2019 and into 2020, Taylor Swift<\/strong> continued to wage a campaign against Scooter Braun<\/strong> and the sale of her masters to Ithaca.<\/p>\n

In December 2019<\/b>, collecting a Woman Of The Decade Award at Billboard’s<\/em> Women In Music Awards in Hollywood, Swift<\/strong> suggested that the \u201cunregulated world of private equity coming in and buying up our music as if it is real estate\u201d was a \u201cpotentially harmful force in our industry\u201d.<\/p>\n

She continued: “This just happened to me without my approval, consultation, or consent. After I was denied the chance to purchase my music outright, my entire catalog was sold to Scooter Braun’s Ithaca Holdings<\/strong> in a deal that I’m told was funded by the Soros Family, 23 Capital,<\/strong> and the Carlyle Group<\/strong>.<\/p>\n

“Yet to this day none of these investors have ever bothered to contact me or my team directly to perform their due diligence on their investment. On their investment in me. To ask how I might feel about the new owner of my art.”<\/p>\n

Swift<\/strong> then claimed that “[Braun] never contacted me or my team to discuss it prior to the sale, or even when it was announced.”<\/p>\n

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