This story has been updated (see below).
The potential sale of the Big Machine Label Group—home of Taylor Swift, Florida Georgia Line, Tim McGraw, Rascal Flatts, Brantley Gilbert, and many more—just got a whole lot more interesting, and now has sprouted tentacles that could have major implications across the entire music landscape as Taylor Swift has unexpectedly pulled her complete catalog from Spotify.
Murmurings of an impending Big Machine sale first surfaced in a Hits Daily Double column posted on October 23rd, and were expounded upon by Saving Country Music on October 27th. Subsequently The New York Post released a story on November 1st reinforcing the presence of behind-the-scenes chatter on an impending sale. Reports have Big Machine President and CEO Scott Borchetta asking $200 million for the label group that includes the subsidiary labels Valory Music, NASH Icon, and joint ventures with Universal Republic Records, Republic Records Nashville and Dot Records. Big Machine is an independent label distributed by Universal Music Group—one of the parties rumored to be interested in purchasing the star heavy label.
From the beginning, the lynchpin of any deal has been centered around superstar Taylor Swift who has one more album to release with Big Machine before the expiration of her contract. Making matters that much more intriguing, and potentially making the value of Big Machine never greater, is the development that Taylor Swift’s new album 1989 released on October 27th has become nothing short of a historic commercial blockbuster. Preliminary sales numbers have 1989 selling 1.3 million copies in its first week—the best one week sales performance for any album since Eminem’s The Eminem Show released in May of 2002. When taking into account the flight from physical sales and now even digital downloads in the face of streaming services such as Spotify, this sales feat is nothing short of miraculous.
One of the factors being given credit for Taylor Swift’s tour de force in sales is the Spotify embargo she usually puts on her releases for the first 60 days to stimulate more album sales. Scott Borchetta told Rolling Stone near the release of Taylor Swift’s Red in 2012. “Why shouldn’t we learn from the movie business? They have theatrical releases, cable releases. There are certain tiers. If we just throw out everything we have, we’re done.”
Scott Borchetta had mostly held pat to this Spotify approach until recently. Releases by other Big Machine artists in the last few months such as Tim McGraw and Florida Georgia Line were released straight to Spotify, though Brantley Gilbert’s Just As I Am released in May did not, holding to the 60 day embargo. Sales for Brantely’s album where much higher than most industry experts expected, and the album has now sold over 600,000 copies—this from an artist who is not considered to be on country music’s top tier.
Taylor Swift’s 1989 did not appear on Spotify upon release, though the lead single “Shake It Off” was available. Then the shocking news came down Monday morning that Taylor Swift’s entire discography was pulled from the Spotify network, singles and all.
“We love Taylor Swift, and our more than 40 million users love her even more,” Spotify posted Monday morning after her music disappeared. “We hope she’ll change her mind and join us in building a new music economy that works for everyone. We believe fans should be able to listen to music wherever and whenever they want, and that artists have an absolute right to be paid for their work and protected from piracy. That’s why we pay nearly 70% of our revenue back to the music community.”
Billboard on Monday also posted quotes from a Spotify employee with “intimate knowledge of the situation” saying, “This came as a complete surprise. Big Machine is in the process of selling itself, and that can’t be forgotten here. [They’re looking to] increase the multiple for the sale of that company. Scott Borchetta is a very old-school thinker. He’s wrong.”
However there may be an element of spin going on from Spotify, or multiple elements of spin. Though Spotify is trying to link the Big Machine sale to Taylor Swift pulling her music, every other Big Machine artist still has all of their music available through the streaming service.
Also in Spotify’s official comments, they speak more specifically about the philosophical and financial dilemma Spotify is posing to the music industry at large. “We believe…artists have an absolute right to be paid for their work and protected from piracy. That’s why we pay nearly 70% of our revenue back to the music community.” Why would Spotify bring up this point if the concern was the Big Machine sale and not Swift seeing the financial benefit for herself and other artists at large by exiting the streamer? Also, is Scott Borchetta though to be an “old-school thinker”? Most in the industry consider Borchetta the opposite, and it very well could have been Swift’s decision, not Borchetta’s, to pull the catalog from Spotify.
In a Taylor Swift op-ed from the Wall Street Journal posted in July, she said, “Music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for. It’s my opinion that music should not be free.”
The impact of Taylor Swift removing her music from Spotify, especially after she just revealed herself as the biggest artist of the last decade-plus and possibly of a generation, cannot be overstated. This could be the moment of leadership music has been waiting for that spurs other artists to stand up to the incremental loss of revenue presented by the streaming paradigm, and it could also have a big impact on Spotify’s standing in the marketplace. Or it could simply mean you can’t stream Swift on Spotify. Either way, the implications of Swift’s decision should be watched very closely, and could have big reverberations throughout music.
Whether the Spotify decision is linked at all to Scott Borchetta’s Big Machine sale is difficult to determine without access to the specifics of any deal. But to be sure, 1989‘s resounding commercial success is necessitating a shift of perspective on how music is sold in America, and the standing of Big Machine Records as one of the most important and influential labels in music today.
Meanwhile streaming services like Spotify, Pandora, and others continue to have issues showing how their business model can become profitable, with some looking to negotiate the royalties paid to artists down even more.
***UPDATE (11-4): According to Scott Borchetta of the Big Machine Label Group, the company is not up for sale. Borchetta told All Access, “If you notice, any time we put a Taylor album out this little item comes up again. We are not for sale, but Taylor’s great new album ‘1989’ is!” Of course, companies are notorious for refuting any sale rumors … until they eventually sell. So this should be taken into consideration. As should the fact that if it is true that Big Machine is not up for sale, this would refute the Spotify insider who told Billboard the Big Machine sale has to do with Swift pulling her music.