CTRL + ALT + Swift? 7 Ways Record Labels Could Give Artists Back their Masters
Ctrl +Alt + Swift
Universal Music Group, the world’s largest label, is scrambling to protect its rights with other artists who might want to re-record their original music.
Backstory
Taylor Swift doesn’t own the “masters” (original recordings) from her first six albums. When she was 15, the masters were signed over to record label Big Machine, later sold to Scooter Braun (Ye’s ex-manager).
In 2018, Taylor signed a new deal with Universal Music, which gave her ownership of her new masters. But she couldn’t buy back her first six albums.
Taylor seemingly has bad blood with Scooter Braun. Even more, she’s passionate about artists owning their music. So she started re-recording.
Last year, private-equity fund Shamrock paid $300M for Taylor’s old tunes, but Braun still got a cut of the deal. Then Taylor announced she would re-record all the albums they’d bought.
Swift
What Taylor Swift is doing isn’t particularly new. But, as Kyle Munzenrieder reported back in November of 2020 for W Magazine, “Frank Sinatra actually did it first.” Many others, such as Def Leppard, and DMX, to name a few, have all done re-recordings of their own songs. He further states, “It may seem like a strange, unprecedented situation to casual music fans, but here’s a secret no one tells you: artists re-recording their own songs as a legal and financial tactic is far more common than you might think.”
All of these artists and bands that have done re-recordings understood the legal and financial tactics they were employing. The “T Swift Clause, as I like to call it, is no different. Taylor Swift understands what she wants and has created a threat to record labels. Why? Because it lets artists keep more control and more money. That’s why Universal is reportedly doubling the amount of time artists are restricted from re-recording. But as streaming platforms and social apps make it easier for artists to distribute music, leverage is shifting in the creators’ favor. As a result, labels including Universal are also making concessions, like increasing royalty payments.
In the future, conceivably, contracts could see artists give more earnings to the record label in the early stages of their career or more extensive buyout clauses for artists looking to leave a specific label.
But the most crucial point is that artists never lose the rights to their masters. An artist’s creative agency is arguably the most important tool they have to use for their careers, and stripping them of it is unethical at best and wicked at worst.
Without control of their own music and life’s work, artists run the risk of being pawns in a larger corporate game, which completely strips them of the originality and uniqueness that draws artists to music in the first place.
Labels will look to double the period to restrict re-recording and protect their assets. To be honest, artists that understand the business of owning their masters aren’t going to sign these types of agreements. Instead, record labels will start by making amendments to the agreements of their current roster. Many of these artists won’t have a choice in signing it or face the risk of being dropped or, worse, being shelved.
Newer artists should have an idea of how they wish to handle ownership of their master recordings and the permissions or designations of those works through the contract terms. If they don’t understand what owning their masters will mean in the future, record labels will convince them that they don’t need to own them. For reasons such as the ease of use in technology for recording and distributing, they should have it for longer to generate revenue and profit from the recordings before re-recording is allowed. Bottom line: Record labels don’t want to be excluded from a big slice of the pie. They want as much of the pie as possible, and having ownership allows them to do that.
CTRL + ALT
Here are seven suggestions I think major record labels should consider:
Better Splits
Record labels could offer better splits. According to an article from Medium.com, the artist split or artist portion for streaming royalties can typically range from 13% to over 20% if the label is a major record company. “These artist agreements will often come with album advances. This split percentage can be increased, or a deal can be made to lower the advance for higher royalty points. The split can be as high as 50% for indie labels but often does not include an advance”, so it may be more significant in ownership to the master recordings.
Guaranteed Upfront Compensation
Instead of an advance that will be recouped right away, record labels could present a non-recoupable upfront payment in exchange for the master recordings for a more extended period. The record label will spend this money on the artist anyway; why not let the artist have it, without recoupment, in exchange for your contracted talents and ownership of the master recordings for an agreed-upon duration? This remedy is a way to have an agreement without having the trapped door under your feet as motivation. It should be a mutually beneficial relationship between the artist and the record label and not a debt-payment service.
In this scenario, record labels will have to take more significant risks. On many levels, record labels are not taking a risk signing a talent, especially a popular one or viral talent. Record labels will do their due diligence and calculate potential profitability before signing an artist. Still, they subscribe to a sign-and-see approach when they have identified a talent they want to sign. Sign them and see what happens. If the talent does well with the help of their resources or not, the record label will profit. If they don’t, with such a small investment upfront with major potential on the backend, a smart record label doesn’t lose much, or they can win big.
Pathway to Ownership
I think the best option would be a pathway to ownership. How it can be pulled off is still up in the air, but a framework should be developed. Really quickly, as mentioned, Taylor Swift had something along these lines where after five years of a release, she could get back one album if she handed in a new album. This isn’t exactly what I’m talking about, but a pathway had been offered. Albeit, still in heavy favor of the record label. But perhaps something like how the rent-to-owning property process is used in real estate.
In real estate, the rent-to-own practice commits to renting a property for a specific period, with the option of buying it before the lease runs out. Or you have the option to buy the property at a later time.
My suggestion is for an artist to pay a portion of their revenue toward purchasing their masters. Or have the option to buy their masters at a later time. I understand this is an oversimplification but—just something to consider.
Time Allotted Ownership
Record labels could have a period to own the master recordings before handing them over to the artist. In that time, both parties must do everything they can to increase the value of the recordings. Hence, the label profits and the artists receive an increased value asset.
Milestone Ownership
Record labels could allow revenue generation milestones to shift the ownership percentage back to the artist. Once an agreed-upon ownership percentage is reached, the record label will assign the remaining percentage to the artist.
Exchange and Reduced Royalty
Record labels could exchange the master recordings for a small percentage they will keep in perpetuity. Kind of like, after a period of time, the record label would assign full ownership of the master recordings to the artist/songwriters for a small percentage where they receive payment against future revenue or profits. There is nothing like the royalty percentages customarily seen in contracts, just the opposite. The artist would receive the lion’s share of the royalty splits.
Buyout Clause
Lastly, how about a straight-up buyout clause. Set a date and a relative percentage to how much the record label would allow the artist to buy the master recordings for, say, ten years for $50 million. Now, to be clear, it has to be relative to the revenue generation, so if the artist hasn’t generated nearly as much as the buyout amount, then it’s a trap clause to own the masters. It has to be fair or compensatory to what has been lost.
What are your thoughts?
What should record labels do to give the master recordings back to the artists? Or better yet, what kind of deal would you sign to get your masters back?
Shaheim Kellum
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