Taylor Swift Pulling Her Catalog from Spotify Could Be Huge
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.
November 3, 2014 @ 12:01 pm
If you can’t stream an album, then your forced to buy it. Scott Bulshitta knows this. He’s not that stupid.
November 3, 2014 @ 2:26 pm
Yes and No on that IMO.
Some fans of hers may go out and buy the album now that they cannot stream it, but I could also see some fans going “screw it” and just downloading it off a torrent. I’m not sure there is a massive correlation between not offering it on streaming and album sales going up. It might force more people to buy it through Amazon, iTunes or Google Play, but it could also “force” some people to just illegally getting it.
As a Spotify user I can say I would be willing to pay $5-10 extra dollars a month if artists could get paid more, I know they want to keep it around the Netflix price and low enough to attract college students and young adults, but it’s always seemed unfair how little artists are paid from it to me.
November 3, 2014 @ 12:31 pm
Smart business strategy. Hopefully this will start a trend that will ultimately force Spotify to increase its payout to artists.
November 3, 2014 @ 12:52 pm
This move has to be Taylor’s call. No way this is because of the Big Machine sale. Swift is making this decision based on philosophy and art, not just for the money. Personally I hope more artists follow suit and these streaming services go extinct. People in America have forgotten what the true value of music really is and expect everything to be free nowadays. This could be an historic moment in music and I hope this sends a message to consumers everywhere.
November 3, 2014 @ 1:51 pm
I hope you are right , Josh . But they would have to shut down You Tube , Google , ALL the file sharing programs, satellite dish reception , and tons of other free sources of music including the 25-30 acts each week 52 weeks a year who appear on Fallon , Letterman ,Kimmel ,Fergusson, Meyer’s and Conan’s shows . It’s a free smorgasbord of music in these times . Not sure how they will ever turn that around .
November 3, 2014 @ 2:25 pm
There’s a huge difference between making an appearance on a talk show and having an artist’s entire discography at your fingertips for free. I agree that it’s going to take more than Taylor Swift leaving Spotify to create a more equitable valuation of music moving forward, and if you don’t make it accessible, people will just steal it. But there also may be pragmatic alternatives, and it will take moves like this to force the industry to look at them.
Make no mistake, Taylor Swift, not any label or technology CEO, is the most powerful person in music right now. She just proved that.
November 3, 2014 @ 2:21 pm
I don’t know if it’s Taylor’s call or not, but Spotify’s communication so far has absolutely smacked of fear and spin, and I think that’s the greatest evidence so far that the impact of this decision could be massive. Spotify needs artists like Taylor Swift. I have a sense we’ll be looking back on this day for years as a turning point.
November 3, 2014 @ 2:33 pm
I dont see Taylor Swift being powerful enough to bring down streaming by herself. Amazon, Apple, Google, etc. are all involved in the streaming game now and those companies will dictate the future of streaming music more than one artist ever will, no matter how popular she is.
Likewise, I’m not sure it would be a net gain for the music industry if streaming went away, it would just lead to file sharing going up again. I think it’s a totally generational thing at this point, the younger generation is willing to pay something for music, see Spotify being so popular and the above companies all willing to jump into that pie, but it is not at the dollar # that it was maybe 20 years ago.
November 3, 2014 @ 1:42 pm
With iTunes now in the streaming game, is it possible Swift’s team was approached with the promise of more support at the iTunes store in exchange for deleting catalog from Spotify?
November 3, 2014 @ 2:29 pm
iTunes has a history of not showing any preferential treatment to any artist no matter how big they are. Because as soon as artists demand things of them, they lose control of their format. That is why Garth never went to iTunes, because they refused to sell his albums as cohesive units. iTunes could have made millions on Garth.
Also, iTunes and Pandora are the two specific companies ramping up to re-negotiate royalty rates with artists and labels because they’re losing money. I don’t see them making any deal with Swift. We’re witnessing artists taking back control of their music.
November 3, 2014 @ 2:11 pm
There’s a few good takes here:
http://www.wonderingsound.com/feature/taylor-swift-spotify-streaming-album-essay/
November 3, 2014 @ 2:26 pm
The less of her on Spotify the better. Spotify is bigger than Swift – it is the future. She is certainly ‘it’ right now, but she’ll fall back into the pack like all the rest. She thinks she’s making some big stand for her art. Please. That’s garbage. If she thinks this is best, great… but it looks like someone swimming against the current. But if it makes her a few extra bucks, wonderful. Good for her. Her new album is also perfectly mediocre – all the more reason not to buy, just stream what you like. If anything….
November 3, 2014 @ 2:33 pm
Though I have my own concerns about how much of Swift’s stand is selfishly money driven, and how much of it is standing up for art, I have to say that she got Spotify’s attention, and big time, and I don’t get the sense this issue will just fade into the distance. The concern is it will stimulate a domino effect, and many artists will leave. Remember, Garth Brooks isn’t on Spotify either, and he may be the only one who might rival Swift’s sales. If Spotify starts losing big artists, it may be hard to maintain revenue. Their business model is fragile at best. It may be the wave of the future, but they may have to listen to the concerns of Swift and others to get there.
November 3, 2014 @ 4:48 pm
I don’t give a shit what anyone says about this, but I freaking love Taylor Swift. She is a genuine gal until she does something that says she’s not.
November 3, 2014 @ 7:47 pm
Whatever her reasons are for pulling her music, I agree with the decision.
I’ve never had anything to do with streaming subscriptions, so this doesn’t affect me at all, but for all the artists getting screwed out there, hopefully it’s at least a small step in the right direction.
November 3, 2014 @ 8:25 pm
I’m kind of ignorant when it comes to this stuff because, if I like the artist, I just buy the cd. I don’t even have an iPod.. How much do these artists make from their song being streamed? Do they make more when the song is actually purchased on iTunes? What exactly is streaming? Can you choose your lineup? How is it different from just listening to the radio?
November 4, 2014 @ 8:30 am
With a Spotify account, users can create a library of music from all the artists available and listen to it whenever they want with the paid subscription. It is different from the radio because they get to pick and choose. From what I have gathered on the Internet, artists typically get paid .70 per download on itunes. On Spotify, artists are paid between .006 and .0084 cents each time the song is streamed. After doing a little math, someone would have to listen to a song over 100 times to be beat out purchasing the single.
November 4, 2014 @ 10:32 am
…thanks for this Houston …I wasn’t clear on the figures .
November 4, 2014 @ 3:29 pm
Thanks for taking the time to explain all of that!
November 4, 2014 @ 12:24 am
I support moves like this. In my mind, artists have the right to control and distribute their music as they see fit and if the consumer doesn’t want to pay, then they don’t listen. Wu Tang Clan took it to the next level, releasing a double album that will only be available in special listening galleries and one, single release. In my opinion, if the music is good enough you should be paid. Spotify doesn’t pay and minimum wage isn’t going to cut it for a career musician to hone their craft.
November 4, 2014 @ 12:35 pm
Yes, artists (and/or their labels) have the right to choose how their art is distributed. An artist as big as Taylor can restrict distribution to certain channels, and her millions of fans will go out of their way to pay for her music.
But for the countless struggling artists out there trying to reach an audience, YouTube and Spotify are a Godsend. These technologies make their music available to millions of potential fans. That means that more music is available to listeners, which means that each artist is going to get less money.
As an artist, if you can’t afford to play by those rules, you should find a different career.
November 4, 2014 @ 4:19 am
YES!!!! Good for her. I’m sick of hearing everyone saying subscription streaming is the future. It’s suicide.
November 4, 2014 @ 10:41 am
Even if this move slows the glut of music out there it will be a positive thing , I believe , in terms of making music special again .
Most young people ( and many adults I know ) accept music as wallpaper …its just THERE –EVERYWHERE ..all the time . Familiarity with even the worst song and artist seems to somehow make those artists more palatable and acceptable by the masses . ( Ever caught yourself humming a BAD TV commercial theme song ? ) . Cable TV created tons and tons of viewing options ….but what percentage of all of those options are actually worth your time and dollars ? I think that in this respect , cutting the supple to increase demand may be the right way to give music back its worth AND keep the crap at bay .
November 4, 2014 @ 12:43 pm
Ok, so which artists are you going to tell to pack it up and go home?
It’s so easy and inexpensive to make and distribute music now that everyone feels like they have a shot. Do you really expect that a new artist with a dream won’t use the tools at his disposal to try to reach a world-wide audience?
There is ample supply of music right now because it’s so easy to make and distribute music. There is no way that the industry is going to take away those avenues. YouTube and Spotify (or services like them) are here to stay. If you can’t make enough money in the industry as it is, then you should get out.
November 4, 2014 @ 1:00 pm
This is a good point though. The glut of music supply out there right now in the marketplace is robbing opportunity from worthy artists just as much as anything. Everybody wants to be a superstar. It is ingrained in all of us at an early age, and is exacerbated even more now with so many reality singing competitions. Before labels and access to studio could keep some sort of control on who gets recorded (though that had its own problems). Now, anyone can make music.
November 4, 2014 @ 3:43 pm
‘ Ok, so which artists are you going to tell to pack it up and go home ? ‘
I think the tide must be stemmed by legislating streaming , Jared . Now I will say upfront , I’m ill-informed on the legalities of this issue so don’t ask me how…but since its hurting income of artists ( ie artists income has been DRAMATICALLY reduced by these sources ,) perhaps it could almost be looked at as a tariff/protectionist issue .
Trade agreements with other nations used to include tariff fees to make it a level playing field for all and discourage ‘dumping’ of goods and product by including fines in the agreement . Perhaps this is an avenue that could be looked at . Streaming sources dump tons of ‘product’ on the consumer at ridiculous royalty rates to the artists BECAUSE THEY CAN . What if they couldn’t …by law ? If they were forced by legislation to pay reasonable and fair royalty rates , ( similar to minimum wage laws ..? ) perhaps it would limit the numbers of artists they could afford to ‘stream’ /dump on people. This in turn would , hopefully , improve the quality of the artists streamed .
Again …..I may be talking through my hat here as I’m not up on the workings of this new source of music in terms of legalities and payments etc. I’m certainly open to being educated by anyone here who might be , however . I see many of these issues as akin to the tobacco issue . Once the facts were in on the addictive /destructive/economic /social/health costs , legislation came into play in a hurry .
Another approach may be to utilize a leverage already in place ..The American Federation Of Musicians . Shouldn’t they be going to bat ( since fees from members are collected annually ) to address these career threatening issues and attempt to stem the tide somewhat in terms of the devaluing of the product due to technology and BAD product in the same way that ANY union in ANY other industry would be mandated to do ? Perhaps the music industry should be entitled to broader cultural subsidies based on the need for , the use of and the quality of the product or service provided. This would clean out the crap in a hurry and ensure that those folks applying for subsidies are serious about their careers , their investments , their craft and their contribution .
Just spit-ballin’ here ….but these are approaches that may warrant a closer look .
November 4, 2014 @ 12:24 pm
It might seem like it’s not fair that artists get paid so little from streaming services, but it’s just the laws of supply and demand. We live in a time where it is very easy to make and distribute studio-quality music. That means that more artists are willing and able to do it. Those artists all have to fight for the consumers’ dollars, through album sales, digital downloads, streaming, concerts, etc.
Some artists are big enough that they can afford to artifically restrict supply to increase price (Swift, Garth, The Beatles). Fans will go out of their way to buy their stuff even if it isn’t convenient. But most artists have to play the game as it exists. It is a double edged sword – it’s much easier for an artist to work hard to gain a large audience without the backing of a label, but there are more artists fighting for a piece of the pie. You can’t expect there to be tons of great music available (as there is now) and everyone to get paid well. There is only so much money to go around.
Digital files are effectively free to duplicate and distribute, so supply is effectively infinite. That means that the value of the file is effectively zero. Sorry if that is harsh, that is economics.
November 4, 2014 @ 2:41 pm
Taylor just cares about the money, shes tries to hard to be an “inspirational” person by writing pop, singing “shake it off” (that suppossed to have a inspirational message, but come on, you could have tried to write a more better song than that repetative lyric ryhming trash) and then she removes her Spotify music, that does not harm other than give her less music, but really, she’s rich enough, if she really needs money she can buy a cheap house and live there. These celebrity are full of themselves, streaming gives fans an easy way to listen to the artists they love, we are the ones that need the d*mn money, stop being selfish TAY!
November 4, 2014 @ 6:54 pm
Some facts on music industry recording revenue/streaming (source: Recording Industry of Association)
Total Revenue 2013: $7.0 billion
Total Revenue 2010: $7.0billion
portion of revenue from streaming (1st half 2014) 27%
portion of revenue from streaming (2013) 21%
portion of revenue from streaming (2010): 10%
Note: The RIAA definition of “streaming” includes subscription (eg Spotify), soundexchange distribution (eg Pandora) and on-demand (eg youtube).
Also for the first half of 2014 streaming (as defined by the RIAA) is now essentially the same as all physical media.
In short (a) total revenue for music sales is basically flat the last 3 years (i.e. it may be too low, but not getting worse) and (b) streaming is becoming a large and meaningful portion of industry revenues and growing rapidly. For how much longer – who knows.
The above of course don’t include tour and merch.
Personally I think the issue with Spotify is that there should be more tiering – some call it the Netflix of music – but really Netflix has only a portion of movies for the $8/month while Spotify has 20 million songs (less the 60 or so TS now). Why not $7.99 for say the top 1000, $12.99 for the 21st century and $18.99 for the full 20 million (these are just illustrative – my point being there is some flexibility for Spotify to price discriminate)
http://riaa.com/media/2463566A-FF96-E0CA-2766-72779A364D01.pdf
November 4, 2014 @ 7:49 pm
There are so many ways to get free music that it”™s stupid no to stream it. Streaming is not about the money it”™s about the exposure. Maybe Taylor Swift doesn”™t need this, but she can”™t stop people from getting her album free.
I don”™t think it”™s a good move at all, we just have to look at groups like Radiohead. They put “In Rainbows” for free and they asked the fans to donate what they wanted, and it was a huge success.
November 5, 2014 @ 2:50 pm
Taylor Swift? why is she even mentioned here? She was never country.
November 5, 2014 @ 3:37 pm
This is an issue that goes way beyond Taylor Swift or even country music. Just because Taylor Swift is the principal of the story doesn’t somehow make it miraculously irrelevant to country consumers or artists. The Spotify and streaming issue and lack of revenue flowing to artists and songwriters is one of the most important issues facing music, and country music today. And this particular development could have major repercussions on that issue.
November 6, 2014 @ 9:59 am
As the money path in streaming media sorts itself out, I did run across this good explanation of the money trail in conventional radio. I’ve always wondered how they got around payola regulations!
http://entertainment.howstuffworks.com/top-403.htm
November 11, 2014 @ 8:32 am
Trigger, Im sure you have heard about Jaaon Aldean pulling his album from Spotify by now. As of this morning, I noticed Brantley Gilbert’s new album is no longer available. I definitely see the impact of Taylor’s decision already.
November 11, 2014 @ 8:40 am
Also, add Justin Moore’s latest cd to the list.