The Taylor Swift catalog sale saga: Following the money

4 years in the past this month, a significant music enterprise story was effervescent away in Nashville.

Scott Borchetta, founding father of nation indie powerhouse Massive Machine Label Group (BMLG), had put his firm up on the market.

Borchetta and BMLG’s reps had convened with a number of potential suitors, amongst them the three main document firms – Common Music Group, Sony Music Leisure, and Warner Music Group.

The jewel within the crown of BMLG’s catalog again then is now a matter of music biz infamy: The grasp rights to the primary six albums by international pop megastar, Taylor Swift.

Common, mentioned reports at the time, acquired near buying Massive Machine’s label.

But in line with Music Enterprise Worldwide sources near the finalized deal, just one celebration – Scooter Braun’s Ithaca Holdings – was prepared to considerably enhance on the $300 million pricetag Borchetta hunted for his firm.

In summer season 2019, it grew to become official: Ithaca was to purchase BMLG and its sister publishing firm for a mixed value that MBW has now confirmed was $330 million on the nostril.

What occurred afterward fuelled headlines, fan indignation, and music biz whisper-thons for months, and years, to return.

With the mud now comparatively settled on the cacophonous fallout from the Braun/Ithaca/BMLG/Swift deal, Music Enterprise Worldwide has prior to now few weeks – through a number of sources near the important thing transactions concerned – carried out our darndest to comply with the cash on this narrative.

By doing so, we’ve been capable of shed new mild on who acquired paid what, when, and by who.

Under, we stroll by way of a few of the standout moments on this story, piecing collectively what MBW knew prior to now – and what we’ve realized now.

In doing so, we paint a clearer image, by way of a monetary lens, of what’s certainly music’s most talked-about deal of the previous decade…

Chapter 1: The preliminary sale (June 2019)

WHAT WE KNEW THEN…

On June 30, 2019, Ithaca Holdings and Massive Machine Label Group formally introduced that Scooter Braun’s firm had acquired Scott Borchetta’s. The deal included the grasp rights to Taylor Swift’s first six albums.

In making the announcement, Braun mentioned of Borchetta: “He’s constructed an excellent firm stuffed with iconic songs and artists. Who wouldn’t wish to be part of that?”

Experiences on the time steered that Ithaca Holdings had acquired Massive Machine for round $300 million.

WHAT WE KNOW NOW…

In line with MBW’s watertight sources – who have been immediately concerned in negotiating the deal – the June 2019 settlement between Ithaca Holdings and BMLG was for a price ticket of $330 million.

That value comprised $300 million for Borchetta’s label group, plus an extra $30 million for Massive Machine’s publishing operation (together with its Luke Combs catalog).

Taylor Swift’s six-album grasp catalog at BMLG, say our sources, was individually valued by Braun’s staff as being price $140 million.

One other truth price clarifying, which will increase in significance in a while on this timeline: It was by no means identified on the time what share Carlyle Group, then Scooter Braun’s main investor, owned in Ithaca Holdings.

In line with MBW’s sources, Braun owned the vast majority of Ithaca – a 64% stake – till the day he bought it, in April 2021, to HYBE.

Chapter 2: The preliminary fallout (June-August 2019)

WHAT WE KNEW THEN…

The whole lot kicked off on the identical day the BMLG sale was introduced: June 30, 2019.

Taking to her Tumblr weblog later that day, in a passionate public diatribe, Taylor Swift accused Scooter Braun of “incessant, manipulative bullying”.

This accusation was later rebutted by Braun’s long-time consumer, Justin Bieber, who responded in a social media note addressing Swift: “Scooter has had your again ever because you graciously let me open [concerts] for you”.

In her weblog, Swift appeared to personally blame Braun for, amongst different issues, the June 2016 music video for Kanye West’s Well-known, which depicted West and Kim Kardashian in mattress with naked lookalikes of celebrities together with Donald Trump, Rihanna (who featured on the document), Vogue Editor-In-Chief Anna Wintour, George W. Bush, and Swift herself.

Following its launch, Vainness Truthful referred to as the Well-known video “thought-provoking”; Kanye West referred to as it a “touch upon fame”.

Swift picked stronger phrases for it: “revenge porn”.

Well-known, after all, contained an unseemly lyric from West that overtly focused Swift: “I really feel like me and Taylor may nonetheless have intercourse; I made that b**ch well-known.”

(Trying on the chronology, Scooter Braun’s doable involvement within the Well-known video isn’t clear: In line with a Billboard scoop, Braun formally grew to become Kanye West’s co-manager in March 2016. That was after Well-known had been launched through the Life Of Pablo album in February 2016, and, say sources, after West’s video for the monitor had wrapped capturing.)

From a music enterprise dealmaking perspective, intrigue was raised by different feedback in Swift’s June 2019 Tumblr weblog, this time directed at each Braun and the vendor of her catalog, Scott Borchetta.

Swift claimed that following the completion of her six-album recording contract with Massive Machine – marked by the discharge of Repute in November 2017 – she’d “pleaded” with Borchetta for the “likelihood to personal my work”.

Swift acknowledged in her weblog that Borchetta and Massive Machine had supplied her this opportunity. However she alleged that they did so on an unacceptable situation: that she “earn” again the rights to every of her first six albums, one after the other, for each new album she recorded for Massive Machine.

Eight months earlier, in November 2018, Taylor Swift had introduced her departure from Massive Machine – whereas confirming a brand new, direct international take care of UMG for her future works.

In an Instagram post, Swift posed with UMG boss Sir Lucian Grainge and Republic Data head, Monte Lipman, whereas expressing “heartfelt thanks” to Scott Borchetta.

Probably the most essential items of reports Swift revealed that day? Common Music Group was permitting her to maintain possession of the grasp rights to her post-Repute music.

Music enterprise high-flyers have since characterised Swift’s UMG deal as probably the most artist-friendly main document label offers ever signed with a celebrity.

“She acquired a monster verify and a really, very skinny distribution cost.”

Ex-Warner Music boss, Steve Cooper, on Taylor Swift’s take care of UMG

Former Warner Music Group CEO, Steve Cooper, mentioned final yr of the Swift/UMG deal: “She acquired a monster verify and a really, very skinny distribution cost.”

Cooper additional steered that, from his perspective, the Swift/UMG deal didn’t signify “the fitting aspect of economics”.

(MBW understands that UMG’s “skinny” distribution margin in its Swift deal will increase exterior the US, particularly for bodily releases, whereas UMG additionally holds lively international publishing and merch offers with the star.)

In her June 2019 Tumblr weblog, Swift mentioned: “I walked away [from the alleged Big Machine offer that would enable her to ‘earn’ back her albums] as a result of I knew as soon as I signed that contract, Scott Borchetta would promote the label, thereby promoting me and my future.”

Of the information that Borchetta had now bought that work to Ithaca, she claimed: “I realized about Scooter Braun’s buy of my masters because it was introduced to the world.”

Scott Borchetta had a markedly totally different tackle Swift’s exit from Massive Machine.

After Swift’s Tumblr publish had ignited international uproar amongst her followers on social media, Borchetta – who signed Swift to his document label in Nashville when she was a young person – supplied a counterpoint on Massive Machine’s personal web site.

“Upon execution, BMLG shall assign to TS all recordings (audio or audio-visual), paintings, pictures, and every other supplies regarding TS which BMLG owns or controls.”

Clause in deal proposal between Massive Machine and Taylor Swift’s staff, August 2018

Beneath the heading, ‘So, It’s Time For Some Truth…’, Borchetta posted a picture of a purported textual deal negotiation between Massive Machine and Swift’s staff, outlining a possible new document contract post-Repute.

On this doc, deal level No.2 – requested by Swift’s staff – learn: “Upon execution, BMLG shall assign to TS all recordings (audio or audio-visual), paintings, pictures, and every other supplies regarding TS which BMLG owns or controls.”

In line with the proposal, BMLG acceded to this request. (There didn’t seem like any point out of the ‘one album for one album’ construction steered by Swift in her Tumblr weblog.)

Nevertheless, there was a transparent disagreement obvious within the doc (pictured under): Crew Swift proposed that, in return for her signing the deal, BMLG would have an unique international license to all Taylor Swift recordings, previous and new, for a interval of seven years.

BMLG as a substitute requested a ten-year tenure for the brand new contract.

Inside his weblog publish, Borchetta claimed that Taylor Swift’s father, Scott Swift, was a shareholder in Massive Machine Data LLC, and that each one shareholders had been knowledgeable, on June 25, 2018, of the corporate’s pending deal to promote to Ithaca.

Wrote Borchetta: “On the 6/25 name the shareholders have been made conscious of the pending take care of Ithaca Holdings and had 3 days to go over all the particulars of the proposed transaction. We then had a closing name on Friday, June twenty eighth by which the transaction handed with a majority vote and three of the 5 shareholders voting ‘sure’ with 92% of the shareholders’ vote.

“Out of courtesy, I personally texted Taylor at 9:06pm, Saturday, June twenty ninth to tell her previous to the story breaking on the morning of Sunday, June thirtieth so she might hear it immediately from me.

“I suppose it would by some means be doable that her dad Scott, 13 Administration lawyer Jay Schaudies (who represented Scott Swift on the shareholder calls) or 13 Administration government and Massive Machine LLC shareholder Frank Bell (who was on the shareholder calls) didn’t say something to Taylor over the prior 5 days. I suppose it’s doable that she won’t have seen my textual content. However, I really doubt that she ‘woke as much as the information when everybody else did’.”

“I suppose it’s doable that she won’t have seen my textual content. However, I really doubt that she ‘woke as much as the information when everybody else did’.”

Scott Borchetta, June 30, 2019

Just a few days later, Swift’s lawyer, Donald Passman, told the media in a statement: “Scott Borchetta by no means gave Taylor Swift a chance to buy her masters, or the label, outright with a verify in the best way he’s now apparently doing for others.”

Studying between the traces, the specificity of Passman’s remark is fascinating: It’s not a denial that BMLG supplied Swift the proposed contract as depicted by Borchetta; it does, nonetheless, infer that Swift didn’t get the possibility to purchase her rights from the label through a easy payment in the identical method that Ithaca Holdings did.

WHAT WE KNOW NOW…

Bear in mind, MBW’s explicit focus on this article is the cash, and the paper path, on this deal.

With that in thoughts, it’s in all probability greatest that we recuse ourselves from wading too far into the private allegations made by Swift towards Scooter Braun.

One factor we can confirm is Scott Borchetta’s declare that Scott Swift – Taylor Swift’s father – was one of many 5 shareholders of BMLG.

Mr Swift, a former stockbroker for Merrill Lynch, invested early into each Massive Machine and in his daughter’s potential.

MBW has obtained a subscription settlement between Massive Machine Data LLC and Scott Swift, dated January 1, 2006, which grants Mr. Swift 416,666 widespread shares within the firm plus 500,000 most well-liked shares, for a complete value of USD $500,416.66.

(The earlier yr, aged 15, Swift signed her first ever document take care of the label.)

As well as, MBW has seen affirmation despatched to Mr. Swift’s representatives from Massive Machine Label Group LLC, in August 2019, confirming a cost to Mr Swift of USD $15.1 million.

This cost was made on account of the sale of Massive Machine to Ithaca in June 2019.

Sources inform us that, on the level of sale to Ithaca, on the cap desk of Massive Machine Label Group, Mr. Swift owned barely over 5% of the corporate.

This is able to make sense with what MBW has now found: 5% of the $300 million paid by Ithaca for the recorded music a part of BMLG – Massive Machine Data LLC – works out to $15 million.

Chapter 3: The second sale (December 2019 – November 2020)

WHAT WE KNEW THEN…

In the course of the second half of 2019 and into 2020, Taylor Swift continued to wage a marketing campaign towards Scooter Braun and the sale of her masters to Ithaca.

In December 2019, amassing a Lady Of The Decade Award at Billboard’s Ladies In Music Awards in Hollywood, Swift steered that the “unregulated world of personal fairness coming in and shopping for up our music as whether it is actual property” was a “probably dangerous power in our trade”.

She continued: “This simply occurred to me with out my approval, session, or consent. After I used to be denied the possibility to buy my music outright, my complete catalog was bought to Scooter Braun’s Ithaca Holdings in a deal that I’m advised was funded by the Soros Household, 23 Capital, and the Carlyle Group.

“But to this present day none of those traders have ever bothered to contact me or my staff on to carry out their due diligence on their funding. On their funding in me. To ask how I would really feel concerning the new proprietor of my artwork.”

Swift then claimed that “[Braun] by no means contacted me or my staff to debate it previous to the sale, and even when it was introduced.”

In April 2020, this time on Instagram, Swift publicly expressed her anger that Ithaca/Massive Machine was releasing an previous dwell hi fi of hers, relationship again to 2008, as an album on streaming providers.

She characterised this launch as potential proof that “Scooter Braun and his monetary backers, 23 Capital, Alex Soros and the Soros household and The Carlyle Group have seen the most recent stability sheets and realized that paying $330 MILLION for my music wasn’t precisely a clever alternative and so they want cash”.

By November 2020, this allegation had turn out to be moot: that month we realized that Braun had bought all the recording rights to Taylor Swift’s first six albums to Shamrock Capital for an undisclosed value, reported on the time to be “$300 million+”.

As information of the Shamrock/Ithaca deal hit the headlines, on November 16, 2020, Swift launched another missive on social media.

This time, Swift attached a letter she’d despatched Shamrock Capital the earlier month, upon studying of its acquisition of her masters.

She made two key new allegations:

1. Swift revealed that her staff had been “actively attempting to regain possession of my grasp recordings” for the prior yr from Ithaca Holdings. Nevertheless, she alleged that, to ensure that her to take action, “Scooter’s staff wished me to signal an ironclad NDA stating I’d by no means say one other phrase about Scooter Braun until it was constructive, earlier than we might even have a look at the monetary data of BMLG (which is all the time step one in a purchase order of this nature)”. She surmised: “These grasp recordings weren’t on the market to me.”
2. Swift mentioned that Braun would “proceed to obtain a few years of future monetary reward from my music masters, music movies, and album paintings”. This was the principle cause, she mentioned, why she refused to work with Shamrock to advertise her basic first six albums. As an alternative, Swift mentioned, she could be transferring forward with a plan to re-record her first six albums, noting her perception that this is able to “diminish the worth of my previous masters”.

These re-recordings are actually often known as Swift’s ‘Taylor’s Model’ releases. The third of those re-records, Converse Now (Taylor’s Model), is due for launch in July this yr.

WHAT WE KNOW NOW…

Taylor Swift was 100% appropriate in her declare that Ithaca Holdings paid USD $330 million for Massive Machine in June 2019. (Though, as we established earlier, this was for each the document firm and Massive Machine’s publishing firm.)

What hasn’t been identified till as we speak was the worth that Shamrock then paid Ithaca Holdings to accumulate Swift’s first six albums, a year-and-a-half later, in November 2020.

MBW has spoken to sources concerned with that deal, and realized that Shamrock’s transaction with Scooter Braun noticed the monetary firm pay USD $360 million upfront for Swift’s ‘Massive Machine’ masters.

Braun additionally secured the opportunity of an earn-out for an extra $45 million – depending on Swift’s unique recordings hitting sure industrial targets underneath Shamrock’s possession. That earn-out took the whole deal value to $405 million.

One thing else essential we’ve uncovered from round this time: Swift’s administration firm really did signal an ironclad NDA (seemingly coming into into preliminary negotiations over Swift’s catalog) with Scooter Braun’s Ithaca in late 2019.

MBW has obtained a five-page NDA settlement between Ithaca Holdings and 13 Administration LLC, dated November 22, 2019, relating to a “Attainable Transaction” between the 2 events.

Inside this settlement, Ithaca Holdings mentioned it was “ready to make out there to [13 Management] sure data in regards to the enterprise, monetary situation, operations, property and liabilities of Ithaca, together with with out limitation these associated to its affiliate Massive Machine Label Group“.

The NDA additional said that Ithaca could be prepared at hand over to 13 Administration “all personal, proprietary enterprise data relating to a Attainable Transaction, relating, immediately or not directly, to such celebration or its enterprise, shoppers, potential acquisition targets, situation (monetary or different), operations, property, liabilities, outcomes of operations, money flows or prospects”.

The NDA was signed by Jay Schaudies – a key member of Swift’s administration staff – on behalf of 13 Administration, and by Scooter Braun on behalf of Ithaca. It didn’t point out any reputational ensures for Braun.

Whether or not or not negotiations ever started in earnest between Ithaca and 13 Administration relating to a possible sale of Swift’s masters again to the artist – earlier than Shamrock stepped in – a deal was clearly by no means reached.

Chapter 4: The HYBE acquisition, and the way the homeowners of Swift’s masters, regardless of unhealthy blood, ended up profitable (November 2020 – current)

WHAT WE KNEW THEN…

After being made public, one a part of Taylor Swift’s October 2020 letter to Shamrock brought on some puzzlement (together with this author’s): How might Scooter Braun “proceed to obtain a few years of future monetary reward from [Swift’s] music masters” after promoting them to Shamrock?

In hindsight, the reply is clear: The recording rights to Swift’s first six albums might now be owed by Shamrock Holdings (through its Apollo A-1 LLC car), however they proceed to be distributed by their unique dwelling – Massive Machine Data, through Common Music Group.

Nowadays, after all, Massive Machine is now not owned by Ithaca – as a result of, in April 2021, Ithaca was purchased by South Korean music large HYBE in a $1 billion-plus deal.

WHAT WE KNOW NOW…

Scooter Braun may now not be the proprietor of Taylor Swift’s masters, however he is in all probability a billionaire.

Let’s run the numbers of his shopping for and promoting pre-HYBE deal.

Bear in mind: Braun’s Ithaca Holdings acquired Swift’s catalog at a $140 million valuation as a part of his $330 million acquisition of Massive Machine (label and publishing) in June 2019.

Braun then bought Swift’s catalog to Shamrock a year-and-a-half later for $360 million, with the opportunity of that determine rising to $405 million relying on the industrial efficiency of Swift’s first six albums within the years that adopted.

MBW has confirmed that Braun/Ithaca achieved a full earn-out from this deal in Q1 2023, making a $265 million revenue from Braun’s buy-and-sell of Swift’s recordings (i.e. purchase for a $140m valuation in June 2019; promote for $405m in November 2020).

“Scooter advised Shamrock that Taylor’s re-records would in the end bump her catalog on streaming, not harm it, within the long-term.”

MBW supply, near the Shamrock transaction

Some tittle-tattle emerged following the sale of Swift’s masters to Shamrock – as per the Financial Times – that, throughout negotiations, Braun had led Shamrock to consider that Taylor Swift wouldn’t re-record her unique albums.

That is disputable: the Shamrock deal was confirmed three months after Swift had publicly announced her intention to re-record her ‘Massive Machine’ albums.

Says a supply near Braun. “Scooter advised Shamrock that Taylor’s re-records would occur and would do very properly. He really felt that their visibility within the market would in the end bump the ‘Massive Machine’ catalog on streaming, not harm it, within the long-term.

“That’s why Shamrock put an additional earn-out determine in Scooter’s deal – to check if his ‘all boats will rise’ principle was appropriate.”

Then there’s the element of the HYBE deal.

MBW has realized through sources near the transaction that HYBE paid USD $1.20 billion to accumulate Ithaca (inclusive of Massive Machine, minus these six Taylor Swift albums) in 2021.

Bear in mind, Scooter Braun owned 64% of Ithaca at this level, with minority traders together with Carlyle proudly owning the remainder.

Ithaca, which turned over just under $132 million per year in 2020 – had $100 million of debt on its stability sheet when HYBE executed its acquisition.

So: After paying off the debt, Ithaca’s shareholders obtained USD $1.10 billion for the sale to HYBE, with Braun netting a 64% share ($704 million, pre-tax) from the majority-cash deal.

Following the HYBE acquisition, Braun famously handed $50 million of his private inventory in Ithaca’s new father or mother firm to artists and constant workers; he’s understood to have paid Justin Bieber and Ariana Grande, his two longest-serving shoppers, $10 million in HYBE inventory apiece.

And what of Taylor Swift? That’s maybe probably the most fascinating a part of this story.

Swift has remained impressively prolific since she broke away from her Massive Machine deal, releasing at least six new albums (all of which she owns) since 2019.

These have included 4 new studio albums (Lover; folklore; evermore; and 2022’s Midnights) plus two ‘Taylor’s Model’ LPs (Fearless and Crimson), with Converse Now on the best way this summer season.

Swift’s additionally by no means been extra profitable.

She topped the IFPI’s record of the largest revenue-generating artists in 2022, as Midnights, her most up-to-date studio LP, grew to become her fastest-selling album in historical past.

Forbes lately steered she is now worth a staggering $740 million.

One quirk of Swift’s all-time-high recognition as we speak (helped by a common uptick in music streaming consumption): general streams of Swift’s six ‘Massive Machine’ albums have been pulled skyward by her success within the years that adopted their sale to Ithaca Holdings.

Under, through Luminate knowledge crunched by MBW, you’ll be able to see the annual on-demand US audio streams of Swift’s six unique Massive Machine albums from 2019-2022.

Some key takeaways:

• The most well-liked data in Swift’s Massive Machine catalog are flying. Final yr, 1989, her hottest album from that interval, racked up not far off double the US audio streams it recorded in 2019 (430.3m vs. 736.4m);
• After seeing a year-on-year drop in annual streams in 2020 – because of the ‘decay curve’ of recognition since its launch in 2017 – complete streams of Swift’s final album for Massive Machine, Repute, have bounced up and up, numbering over 580 million in 2022;
• Nevertheless, Swift’s two ‘Taylor’s Model’ re-records thus far – Crimson and Fearless – do seem to have impacted on the recognition of her unique ‘Massive Machine’ variations of those albums, at the very least within the short-term. US annual on-demand audio streams of the ‘Massive Machine’ variations of Crimson and Fearless dipped year-on-year in 2022 versus 2021, although the unique variations of the 2 data nonetheless collectively pulled in over half a billion streams final yr. (When you have been questioning: The ‘Taylor’s Model’ of Crimson racked up 961.6 million US on-demand audio streams in 2022; the ‘Taylor’s Model’ of Fearless pulled in 401.2 million; 2022 was the primary full calendar yr that each ‘Taylor’s Model’ data have been out there out there.)

General, nonetheless, the image is obvious: Taylor Swift’s six ‘Massive Machine’ albums have been cumulatively extra fashionable than ever in 2022.

They collectively pulled in 2.46 billion on-demand audio streams within the US, in line with Luminate knowledge crunched by MBW (see under).

Regardless of the YoY dip in streams for Crimson and Fearless in 2022 (doubtless impacted by the presence and advertising of their ‘Taylor’s Model’ equivalents), that 2.46 billion cumulative stream rely for Swift’s six ‘Massive Machine’ albums was up by 150 million performs on the identical quantity in 2021.

And get this: in 2023 thus far, Swift’s hottest Massive Machine album – 1989 – has already been streamed (through on-demand audio streaming platforms) within the US greater than 560 million occasions… and we’re not but even midway by way of the calendar yr.

At occasions, contemplating her anger over Scooter Braun’s preliminary acquisition of them – and Shamrock’s subsequent acquisition of them – Taylor Swift may need wished her followers, each previous and new, to maneuver on from the primary six albums on which she constructed her superstardom.

But as she enters a brand new stratosphere of worldwide profession success – one by which she’s so fashionable, she actually breaks Ticketmaster – this appears an unlikely chance.

Maybe someday Swift will mellow on the possession of her first six data; maybe she gained’t. Maybe there are twists on this story but to be seen.

One factor’s for certain: Swift’s ever-escalating recognition, powered by a latest run of acclaimed albums – the rights to which she absolutely owns – seems to know no bounds.

In consequence, the worth of her work – each previous and current – retains on transferring in a single route.Music Enterprise Worldwide