by, Anoushka Chauhan
The complicated nature of copyrights and licensing in music often poses a ‘cliché’ roadblock to artists in the ownership of their works. Record labels buying the rights to an artist’s masters is predominantly observed in budding artists, often with low bargaining power. The most recent such instance in the music industry was seen with Taylor Swift announcing that she would re-record all her six previous albums to regain full ownership of her music’s rights. This piece analyzes the mechanism of copyrights and licensing in music through Taylor Swift’s recent tussle for her rights, while offering a concluding remark on whether Swift can ultimately stop any third party from creating a profit off her old albums, despite her re-acquiring the rights to her music.
Factual Matrix: The Background to Swift’s Contract
In 2005, Taylor Swift signed a 13-year contract with Big Machine Records, and proceeded to produce six studio albums with the company. Like many young artists with zero bargaining power, she signed off her music’s ‘master’ rights to Big Machine for a cash advance. After achieving immense global recognition in the decade following this contract, Swift attempted to buy back her master rights from Big Machine, which was sold to Ithaca Holdings. Swift later alleged that due to this transfer of rights, Scooter Braun, owner of Ithaca Holdings, was preventing her from performing her music live at awards shows. However, Braun denied these allegations. Immediately after Swift and Big Machine’s contract ended in 2018, she signed with Republic Records, under which she held both master and publishing rights to albums she releases in the future.[i]
Copyrights and Licensing in Music
Every musician or songwriter is concerned with two ‘sets’ of copyrights—master rights, and publishing rights. The master rights of a song are the rights over the studio recording of a song which is reproduced and sold.[ii] The holder of the master rights must finance the production of the song, and many new artists often trade these rights to record labels for a cash advance as the company undertakes the financial costs associated with creating and selling new music, and profits more from the recording.[iii] The publishing rights of a song, however, are vested with the artist or songwriter herself, as these are the rights over the lyrics and melodies that constitute the master recording.[iv] In essence, it is the songwriter who has ownership over the composition’s copyright, while record labels over the sound recordings.
In a pushback to Braun, Swift utilized this distinction to cut down Braun’s profitable exploitation of her music. Filmmakers or advertisers who want to use an artist’s music in their works must obtain two types of licenses—a master use license and a synchronization (‘sync’) license. The holder of master rights grants the former, while the owner of the composition’s copyright can grant a sync license.[v] While there is a distinction between the purpose of the two, Swift categorically blocked all sync licenses from which Braun and his company could profit.[vi]
While it inflicted considerable loss on Swift herself, it can be categorized as a disaster of due diligence on Braun’s part. The primary financers of Big Machine’s acquisition (and consequent acquisition of Swift’s master rights) ought to have carefully examined this distinction, and the potential harm Swift could inflict on the company by blocking sync licenses.
Can Swift Regain her Master Rights?
Most record labels holding master rights provide the artist an option where the copyright reverts back to the artist after the lapse of a specified time period, or for a clause where the artist may re-record their old songs.[vii] After the term prohibiting re-recording expired, Swift signed with Republic Records, where she held both master and publishing rights to all her future albums. Swift announced she would re-record all six of her albums with Big Machine, and as the contract no longer prohibited it, she would acquire the master rights and publishing rights to them as well, thereby cutting Braun out completely.
The catch, however, is that Swift will now own the master rights to only the re-recorded versions of her old albums, and not the original albums themselves. Therefore, whoever owns the masters of her original six can still reap profits by their sale through CDs, vinyl, and streaming services. This is because these require a ‘mechanical license’, which are compulsory granted under Section 115 of the U.S. Copyright Act.[viii] The artist can draw royalties from its use but cannot refuse to grant the license. This statutory protection of her original six means that they will stay on streaming websites, and sell copies as CDs and vinyl, and although Swift may profit from it, so will Shamrock Capital, the investment fund that purchased her master rights from Braun for $300 million last year.
Further, Shamrock is unperturbed by Swift extracting unprecedented profit from her re-recorded albums for several possible reasons. First, as mentioned above, Swift can not block mechanical licensing, and both the fund and Swift continue to make profit from the original six. Secondly, Shamrock co-owns the rights to the artwork of the original six, which means it could draw a hefty profit from Swift’s merchandise.[ix] Third, Swift blocking sync licenses for the original six does not inflict considerable damage to Shamrock—synchronization fees contribute less than 3% to the gross revenue in the American music industry, the rest being mostly from streaming over platforms such as Spotify[x]—which due to mechanical licensing, Shamrock will majorly profit from.
The take-away from Swift’s tug-of-war with her master rights is clear. Most of the ownership is determined simply at the negotiating stage. Knowing the nature of master rights and publishing rights and the use of licensing to block profits can give an artist considerable advantage. Although opting to own master rights at the get-go may not be a viable choice for budding musicians due to financial constraints, it is important to include a term wherein the artist may re-record their music, or have their rights eventually reverted to them. Ultimately, while Swift might outdo her own original six by the re-recorded ones, she cannot block Shamrock or Braun from profiting off the original six.
[i] Joe Coscarelli, Taylor Swift Escalates Battle With Scooter Braun and Big Machine, New York Times (Nov. 16, 2020), https://www.nytimes.com/2019/11/15/arts/music/taylor-swift-scooter-braun.html.
[ii] Chris Eggertsen, What are Masters and Why Do Taylor Swift and Other Artists Keep Fighting for Them?, Billboard (Jul. 3, 2019), https://www.billboard.com/articles/business/8518722/taylor-swift-masters-artistsownership-labels-rights-prince.
[iv] Leni, What Does it Mean To Own Your Masters?, Amuse (Oct. 15, 2020), https://www.amuse.io/content/owning-your-masters?cn-reloaded=1.
[v] Heather McDonald, Sync Licensing Vs. Master Licensing, The Balance Careers (Sept. 6, 2019), https://www.thebalancecareers.com/sync-licensing-versus-master-licensing-3971888.
[vi] Chris Mench, Taylor Swift is Denying All Sync Licensing Requests For Her Music Until Scooter Braun Conflict is Resolved, Genius (Dec. 13, 2019), https://genius.com/a/taylor-swift-is-denying-all-sync-licensing-requests-for-her-music-until-scooter-braun-conflict-is-resolved.
[vii] Mark Tavern, For The (Re-)Record: Here’s What You Need To Know About Re-Recording Restrictions, Synchtank (Aug. 6, 2019), https://www.synchtank.com/blog/for-the-re-record-heres-what-you-need-to-know-about-re-recording-restrictions/.
[viii] 17 U.S.C. § 115; See Legislative Attorney, Copyright Licensing in Music Distribution, Reproduction, and Public Performance, Congressional Research Service (Sept. 22, 2015), https://www.everycrsreport.com/files/20150922_RL33631_ac1ea4ba5b4b4e44eb3a831e1c9d124ce2deda0e.pdf.
[ix] Tim Ingham, Why Did Shamrock Capital Spend $300 Million on Old Taylor Swift Albums?, Rolling Stone (Nov. 17, 2020), https://www.rollingstone.com/pro/features/why-taylor-swift-scooter-braun-shamrock-1091742/.