Report: iTunes Is Buying Big Machine Records
The Big Machine Label Group is arguably the most powerful and most important record label in country music, and is quickly becoming one of the most important labels in their entire recording industry. With a stable that includes the biggest star in the world in Taylor Swift, along with Florida Georgia Line, Tim McGraw, Rascal Flatts, Justin Moore, Reba McEntire, The Band Perry, and many others, it has become one of modern music’s most influential power brokers. And according to numerous sources, it is in the process of being sold to iTunes.
According to HITS Daily Double, a deal is in process for iTunes to purchase the Big Machine Label Group for $250 million. Big Machine’s current distribution deal with UMG is up, and Taylor Swift has one more album left on the label before her contract expires, leading to speculation Big Machine wants to sell before they risk losing their superstar. The deal would include all of Taylor Swift’s music.
iTunes has since denied that any deal is happening, but this is standard operating procedure between two big companies until any deal is formally in place.
Rumors that the Big Machine Label Group would be up for sale are not completely out-of-the blue. In fact in many sectors it has been expected. As one of the few remaining independent labels of its size with the type of talent and established deals with radio and production entities, Big Machine makes an enticing acquisition for larger companies. But adding iTunes to the list of suitors sprouts new tentacles to the story that includes Taylor Swift’s unprecedented pulling of her catalog from Spotify—a move then similarly taken by Big Machine artists Brantley Gilbert and Justin Moore who pulled their most recent albums from the format. Gilbert has since added his 2014 album Just As I Am back to the streaming giant.
In late October of 2014, rumors also emerged that Big Machine was looking to sell at a reported offer price of $200 million, but President and CEO Scott Borchetta flatly denied the reports, saying sale rumors come up every time Taylor Swift releases an album. But this time we have the name of a specific suitor, as we did in 2011 when Sony was said to be in negotiations for the label. The deal never went through.
Purchasing Big Machine would make sense for iTunes as the company looks to restructure to face the new reality of music streaming, and has been using acquisitions to do so. Apple purchased Beats Music last year to bolster their line of headphone gear, and to bring on board the company’s streaming music service, which is supposed to launch in the new iTunes version in June. Adding an entire label group would give iTunes unique leverage in the marketplace. Meanwhile Taylor Swift’s Spotify position makes the star the perfect enticement to get consumers to sign up with the new service.
If iTunes is indeed interested in purchasing Big Machine, and this was the impetus for Taylor Swift pulling her music from Spotify, it leaves open the question of why Taylor said her move was more of a moralistic motivation about taking a stand against giving her music away. One of the most under-reported portions of Taylor’s Spotify move was that she did not leave other streaming services, like Beats or Google’s streaming options.
But nothing is finalized or confirmed, so attempting to measure the intentions of the individual players in any deal may be a little premature. However where there’s smoke, there’s fire, and this is the second indication in the last six months that Big Machine is looking to sell.
In an interview with Scott Borchetta by The Hollywood Reporter released on Thursday (2-5), (which incidentally quotes Saving Country Music as jokingly calling him the ‘Country Music Antichrist’), the subject of Taylor Swift’s last album on the label, and the expired deal with UMG were broached. If Borchetta knew something, he wasn’t showing his hand. Though he did offer some interesting hints.
“No comment. It’s called a nondisclosure agreement,” Borchetta said succinctly about negotiations with UMG, and then “We have one record left with Taylor Swift, and that’s all I can say,” about Swift’s status.
However later in the interview, Borchetta seemed to hint that if there was a sale or a new distribution deal, it wouldn’t be with a major label. “I’m looking at a deal that makes sense for the future. There are plenty of deals that make sense for today and made a lot more sense yesterday that don’t make as much sense for tomorrow…There are days where I feel like we’re an island and that we’re not aligned with a lot of the thought processes of some of the major labels, so I’m trying to make sure that the next move that we make is one I’m going to feel good about tomorrow.”
So maybe dealing with iTunes is the solution, or striking a unique distribution deal with iTunes would be a forward-thinking way to avoid the pitfalls of the major label world, which can be constricting to a dynamic and forward thinking CEO like Scott Borchetta.
The Big Machine Label Group was founded by Scott Borchetta in 2005 after he left DreamWorks Records, and includes the subsidiary labels Valory Music Group, Dot Records, NASH Icon, and a joint venture with Universal Republic Records, Republic Records Nashville. The label began as a partnership with Toby Keith, but Keith dropped his affiliation with Big Machine in 2006 to start his own Show Dog-Universal label. Keith still owns a stake in Big Machine however, and this is one of the reasons he remains the highest-paid entertainer in country music. Taylor Swift’s father, Scott Swift, also owns a stake in Big Machine. Taylor Swift was Big Machine’s first signing.
Scott Borchetta also recently singed up to be a mentor for American Idol, and to sign the eventual winner to Big Machine, creating an even larger profile for the company. Borchetta owns 60% of the label group, and the company employs 91 people total.
Stay tuned as the drama surrounding the potential sale of Big Machine continues to unfold.
February 6, 2015 @ 3:48 pm
If true, this will really shake up the country music industry.
“If iTunes is indeed interested in purchasing Big Machine, and this was the impetus for Taylor Swift pulling her music from Spotify, it leaves open the question of why Taylor said her move was more of a moralistic motivation about taking a stand against giving her music away.”
Moralistic and financial motivations do not always have to contradict each other. For example, someone could be profiting from renewable energy technology while also genuinely believing in the environmentalist cause.
February 7, 2015 @ 8:51 am
I agree with the first part, that money isn’t always at odds with moralit. But take off the rose coloured glasses, renewable energy will never be profitable on the free market without government subsidies. At least for the next 100-200 years.
February 8, 2015 @ 12:52 am
I wouldn’t bet on that. Photovoltaic technology is advancing rapidly, and there is a strong chance that solar panels will become the primary source of energy within the next 50 years.
February 6, 2015 @ 4:36 pm
That is something. Since T. Swift’s dad owns part of Big Machine, would the decision to pull her music from Spotify to boost the sale price be considered insider trading? I’m not very educated on that subject.
February 6, 2015 @ 5:01 pm
Big Machine is a privately-owned company, meaning it’s not traded on the stock exchange, so there couldn’t be any insider trading. Insider trading would be if it was a public ally-traded company, Taylor Swift’s dad knew she was going to leave the label, thus devaluing the stock, and selling his stock on that knowledge to gain bigger profit.
February 6, 2015 @ 5:41 pm
I sure hope this doesn’t affect Rascal Flatts negatively…oh wait…I forgot…I could care less about this label or anything within 20 blocks of it…
February 6, 2015 @ 5:45 pm
Do you use iTunes? Stream music?
Then this deal could very well affect you.
February 6, 2015 @ 6:03 pm
As long as they don’t try to buy mu guitar, the affects will be minimal. 😀 I never used iTunes – tried a time or two – worst written software I’ve ever seen. I do stream via Rhapsody though. Mostly Taylor Swift on an infinite loop. 😀
February 6, 2015 @ 11:34 pm
iTunes is far more lucrative than streaming. I purchase all of my songs on iTunes.
I would suggest that you keep trying, regardless of how hard the software might be. I am sure that Portland has quite a few folks with computer skills who could help you out. If that does not work, then you could always head up to Seattle and talk with someone from Microsoft or Amazon…
February 6, 2015 @ 11:27 pm
Lmfao…..love your commment!
I wish Rascal Faggits would disappear for eternity…
Lil Dale just doin his thang sippin on sum cold jack daniels
February 7, 2015 @ 9:56 am
thats not nice summer jam. yur won of my faverite comentars an to good of a comentar to.talk like that. and rascal flats are a purty good band if u give em a chance. probly the best band of the erly 2000s. Im sure Trigger wood agree me n my gang is won of the beter albams thats ben releesed over the last ten years. aww well hell I dont no.
Hawkeye hates when people besides him can't spell
February 7, 2015 @ 12:44 pm
Did you like flunk English or something in school
February 7, 2015 @ 5:35 pm
“probably best bands of the 2000’s”
exactly. that was BACK THEN. they have been terrible for quite a number of years.
February 7, 2015 @ 3:30 pm
Are the Rascal Flats still around ?
February 7, 2015 @ 3:32 pm
I always wished Gary ( RF ) would just pick a note and stay on it …..!
February 6, 2015 @ 6:08 pm
Deals like this should be prohibited. When a major content distributor owns a major content creator, that creates huge conflicts of interest (see Comcast owning NBC Universal). ITunes will have a huge incentive to give BMI favorable distribution deals, while withholding content or charging exorbitantly to other distributors. It’s anti competitive and anti consumer.
February 6, 2015 @ 7:58 pm
I think we are about to have a major streaming service war in the coming months/years.
While Spotify is being singled out as the enemy by BMLG artists, I found it interesting that Jana Kramer released her latest single exclusively TO Spotify. While Kramer is no major player, she’s not unknown either.
Like Trig said, there are other players in the game as well, Google, Beats and then artist driven stuff like Reverb Nation, Soundcloud and My Space, not to mention the free music capital of the interwebs, YouTube.
I know nothing. Just observations from a dude who likes music.
February 6, 2015 @ 9:43 pm
I used iTunes when I first started buying music but was never a real big fan of it. I buy all my music from Amazon now and a few CDs from stores here and there. This wouldn’t end up affecting all digital music websites would it?
February 6, 2015 @ 9:47 pm
I’m not very sure, but isn’t her music available on other streaming services, but only for premium users? I don’t think it can be accessed for free on other services. Not sure though, someone needs to check.
February 6, 2015 @ 10:45 pm
i want to party with Scott Borchetta. that would be my make-a-wish.
February 7, 2015 @ 12:06 am
This could get very interesting if the deal does happen. And could get ugly depending on how iTunes leverages the power that would come from owning a label with such big names.
Perhaps pulling music from other sellers such as Amazon to make iTunes the only place to digitally buy recordings from those artists? Similar to how Garth is making people use Ghost Tunes, but on a larger scale.
February 7, 2015 @ 2:27 am
Garth isnt making anyone doing anything. Hes not with itunes, because of the single download policy, and Garth is a album only artist and Garth doesnt like the small cut that the song writers get.
February 7, 2015 @ 10:05 am
Since his name came up …. Garth is currently in my city (Pittsburgh). He’s doing 6 shows in 4 nights – doubling up on Friday and Saturday. I’m bothered by this very sterile, business-like (corporate) approach to scheduling his shows. You really have to pull back the reigns and save a little for the second show, shorting the people who payed $69 a ticket for the first show – don’t you? I get it’s a Vegas, lounge act approach and maybe Elvis did the same, but I can’t imagine The Beatles doing this. Nor any of my favorite artist, most of who fall off the stage after their last encore drunk or in exhaust trying to figure out how to recoup their voice within 20 hours.
February 7, 2015 @ 3:34 pm
‘Nor any of my favorite artist, most of who fall off the stage after their last encore drunk or in exhaust trying to figure out how to recoup their voice within 20 hours’
Doesn’t the G man fall off the stage sober after just ONE show ?…..
February 7, 2015 @ 5:58 pm
Note to hoptowntiger94 GARTH does not hold Anything back in a concert! He played a couple double headers in Nashville in 2010 to help with the flood of 2010 that hit town. Garth gives 100% on every show, so do not worry about anything held back. Every ticket holder will be blessed with one of the greatest shows they will ever see! Garth plays several shows so there are plenty of tickets and the scalpers that should be in jail do not have the leverage to get those high ticket prices and that people in the market get to see him. Simply one of the very best performers EVER!!
February 21, 2015 @ 10:38 am
Garth does give everything. I was at his second show in Boston, January 24th and it was the most amazing concert I’ve ever seen. We were waiting downstairs and you could actually hear the music from upstairs…you could feel the beat of the drum and I have to say that having the first show get out and then letting the 2nd show in was so smooth. Of course we had no idea how it was going to work but it was perfectly fine. There was plenty of time for folks to get to their seats and before you knew it, the show had begun. No opening act which was fine because I sure didn’t go to see an opening act. But it was all Garth and it was amazing. He never gives less than all he has.
February 7, 2015 @ 12:32 am
Im guessing this is the reason, Garth went with Sony and not big machine records.
February 7, 2015 @ 9:22 am
Not to mention the crappy almost non-existent promotion of his wife’s HHPOL.
February 7, 2015 @ 7:42 am
The battle seems to be behind the labels – who are the major owners of Spotify and Applie – who makes hardware.
Spotify has its issues but it is putting 70% of revenues into the hands of labels (how they labels share their Spotify revenue is a different story). Not sure that having music controlled by a company like Apple that sees streaming as a loss leader to sell Hardware is a good thing.
February 7, 2015 @ 10:42 am
Trigger, you realize iTunes isn’t a company, right? iTunes is a service owned by Apple. A service cannot purchase a company.
February 7, 2015 @ 1:16 pm
The report from HITS Daily Double is that iTunes would be purchasing Big Machine for $250 million. iTunes is a subsidiary of Apple, and who knows, maybe they’re thinking of starting a record label as part of the venture, and looking to acquire Big Machine to do so. Obviously this would be a massive, forward-thinking deal if it actually went down, so I’m not sure any of us attempting to plug conventional thinking into the equation will get us anywhere.
My guess is Big Machine and Apple are in heavy negotiations. If it ever goes down still remains to be seen.
February 7, 2015 @ 3:42 pm
I’m not a business guy …..but iTunes owning the biggest label in the world . Isn’t that opening the door to a giant record store monopoly where they only have to stock the shelves with artists THEY own ? What would stop iTunesfrom force- feeding us only what THEY want to feed us ? Isn’t that like McDonald’s buying all the other hamburger chains and having the option to ONLY sell the Big Mac in all of them .
Please ….someone tell me I’m misguided , confused , way off track , blissfully ignorant of real world things , asleep , naive , all of the above .I …..think I can take it ? .
February 7, 2015 @ 5:21 pm
I wouldn’t characterize Big Machine as the biggest label in the world. Compared to Sony and some of the other majors, especially when you consider their back catalogs when they contain the archives of Hank Williams, Johnny Cash, The Beatles, and Elvis, Big Machine is the young scrappy pup. Sure, they have the biggest current pop star in the world, and they may be growing quicker than anyone, but Big Machine is still very much a mid-sized independent label privately owned. It doesn’t mean the result of these two entities merging won’t result in something positively evil.
April 8, 2015 @ 9:01 am
Toby Keith owns part in BM too and get a check every month from them.
Scott is smart to take the money and run while its on top. It won’t be for that
much longer.Just like the Tech bubble was years back, the smart ones took their
money and ran, the other ones went out of business or valuse dropped through
February 8, 2015 @ 6:42 am
Assuming the reported “categorical denial” by iTunes/Apple is true I doubt Apple is in serious talks. Apple is a publicly traded company and is subject to US Securities & Exchange regulations in terms of disclosure of material information. Basically if they are in talks, they can’t lie and say they aren’t.
If they were in talks the legally correct response would be to say something along the lines ‘we have a policy of not commenting on media rumors’ , ‘we all always considering various strategic alternatives to enhance shareholder value’ or ‘decline to comment’ (the latter was the approach when reports started to circulate about acquiring Beats). This is even more true when from a financial perspective Apple buying Big Machine is equivalent to me buying a case of beer. whatever negotiating advantage they could get by issuing a ‘categorical denial’ is far, far offset by the hot water they would land in with the SEC.
February 8, 2015 @ 12:42 pm
When Live Nation was in negotiations to buy C3 in October of 2014, both C3 and Live Nation categorically denied any negotiations were occurring.
Then in December, Live Nation bought C3, for the same amount as the leaked report said the sale price was for, and for a 51% percent stake, just like the leak said.
I would say it is more common for companies to categorically deny rumors of sales right before they happen than decide to not comment or confirm them. Because of non disclosure agreements, they have to lie. Otherwise they would be breaking the law ironically. I don’t see this as a SEC issue whatsoever. It’s partly the SEC regs that make them lie until a deal is struck and made public.
What we do know is Big Machine does not have a distribution deal any more. They MUST sell or partner with a bigger entity in the coming months. It will happen. The question is with who.
In my opinion, Apple denying the rumor tells us nothing, if not giving further evidence that it in fact is true.
February 10, 2015 @ 7:58 am
Thanks for the reply – I don’t at all disagree with you that Big Machine is on the selling block it is just that if Apple did issue a categorical denial they aren’t the likely buyer. Just to be clear though – on the Live Nation sale they specifically ‘declined to comment’ (per the NY Times article in your original story). From a legal perspective ‘declining to comment’ and ‘denying’ are two very different things. It may sound like semantics but it is an important legal distinction.
Having said the above, and trying to connect the dots, there is an another interesting prospect. A report in a Apple following site (one that talks about rumours but one that I understand has a very good track record) indicates that the Beats streaming music product is likely in the next iOs update. Given Taylor’s recent decision to withdraw her music from Spotify, could it be more likely that as part of the relaunch of Beats (or whatever name Apple will use) you might be seeing a lot of Taylor Swift? For example you could see her catalog exclusively on Beats and that TS is the face of the new service when Apple spends its billions on advertising for the service. If I were Apple and I wanted to get a top notch artist to be the face of the brand Taylor Swift would be one of the two names that would jump to the top of my list (Beyonce would be the other). How that helps Big Machine, though, is something else. But it would explain why there are talks with Apple going on – just because it isn’t an acquisition doesn’t mean there is something else going on (and I agree that while it may not be a ‘fire’ there does look like there is smoke here).
February 10, 2015 @ 11:39 am
I definitely think Apple or Itunes or Beats could use Taylor Swift to help launch the new roll out. Remember, they did a similar thing with U2, even though it was sort of bungled by making it mandatory.
Also, Live Nation declined to comment in the C3 deal, but C3 called the report “inaccurate,” when the deal was eventually EXACTLY what was laid out in the New York Times.
Obviously not saying the iTunes deal will go through, but there’s a lot of things lining up to where it has to at least be considered a possibility.
February 7, 2015 @ 10:43 am
While I don’t Luke big machine, please do not let this happen, yes I use iTunes but, I don’t like apple, they jack up prices for often over hyped and subquality products, keep them in the sectors they occupy and don’t let them expand country music is leaving bro country, there’s still remnants of it, but its mostly gone, the way I see it there’s three groups of people who like country music the bros, those who like older or more underground country, and the pop country people, I feel those who like older and underground country music teamed up with the pop country people to kill bro country or at least fatally wound it, outside of the bro country remnants and Sam hunt the edm trend is dying as well, country is returning to a state it was in between 2005-2010, pop country, iTunes will perpetuate this, at least with borchetta if he thinks he can make money on a traditional sounding artist he’ll let them have control of their work
February 7, 2015 @ 2:06 pm
This seems like a terrible idea, but also a natural evolution of the “streaming wars” in music. We have seen things like exclusive releases and songs to iTunes, Spotify, etc. for some time now, so I guess Apple is tired of paying for exclusive rights to have a handful of songs and instead sees this as a chance to essentially “own” entire record company rosters.
Beats streaming service seems to be floundering in comparison to Spotify in terms of subscribers and Google has stepped up it’s interest in the music streaming industry by essentially combining one somewhat popular service (Play Music) with an extremely popular service (YouTube) making them for of a viable player. Plus, let’s not forget Deezer will be launching in the US soon and they have built up quite a following in Europe in recent years and could make a run at Spotify as well.
It seems iTunes is taking a page from the Netflix book, that being that they know they can only pull in so many people by essentially offering the same content as every other streaming service and instead are banking on being able to offer “exclusive” content such as Taylor Swift albums and the like, much the same way Netflix has been banking more and more on their original shows and content to sell their service.
I suspect for fans this will suck, if for some reason you are a fan of a Big Machine artist you will essentially be forced to purchase/use iTunes/Beats/whatever they rebrand it as or illegally download the content. I’m in no way advocating illegally downloading, but as we so often see in many industries the less competition, the less the consumer wins.
I guess Tim Cook and Apple are finally starting to throw around some of the cash they have been sitting on for so long now.
February 7, 2015 @ 4:11 pm
This would be very bad for music consumers. Anytime one entity has this much control over every step in the chain it is bad for the consumer. Apple’s label (BMLG) makes the music, Apple’s store (iTunes) sells the music, Apple’s streaming services (Beats, etc) provides the music which you listen to on Apple’s devices (iPhone, iPod, iPad). Start to finish.
February 7, 2015 @ 5:18 pm
April 8, 2015 @ 9:04 am
JAY z is in the mix now too for the streaming.
February 8, 2015 @ 6:43 am
I’m surprised…they just signed Craig Wayne Boyd who won last season of The Voice and now creating a connection with American Idol, BLMG can stand on its own and be THE clearing house for new Country Music…they’d be like Columbia Records…the first of their kind!
February 13, 2015 @ 2:06 pm
any artists signed to Republic Nashville (Eli Young Band, Cassadee Pope, Flotida Georgia Line, etc.), Dot (drake White, Craig Wayne Boyd, Maddie & Tae) would NOT be a part of this deal. Same with Zac Brown Band, Danielle Bradbery, RaeLynn or Idol winner/contestants (UMG retains their rights). Gilbert, Moore, McGraw, Reba all would have options to leave too (they own masters).