- What if I told you
that Taylor Swift changed music forever?
And no, I don't mean by pioneering her own brand
of folksy, yet accessible pop rock.
I mean that she actually changed the way
that music gets made and the way that artists are able
to monetize the art that they create.
It's actually true.
When people look back on this age of music,
they're going to think about the Before Taylor Swift Age
and the After Taylor Swift Age.
Because, as she found out the hard way,
being a rock star comes with a lot of perks,
but there's also a dark side.
♪ Whatever time the deed took place ♪
♪ Macavity wasn't there ♪
No, not that dark.
But some of the most legendary names
in music have been screwed by terrible deals
with recording companies.
Bad contracts and greedy labels have left artists
like Rick James broke while companies made hundreds
of millions of dollars on their art.
And Taylor Swift's most recent album, "Fearless,"
Taylor's version, arrived at #1 on the Billboard 200
and promptly broke a bunch of industry records.
This is nothing new for Swift.
She's been a star since she was a teenager.
But it's the way that she achieved these milestones
that's worth talking about.
When Taylor lost control of the music copyrights
over her first six albums, she acted swiftly.
Yes, there's gonna be a lot of puns in this one.
She acted swiftly by re-recording her first album.
But why would any musician rerecord their album
in a way that is almost indistinguishable
from the first one?
Well, we can look to another example.
Like Swift, Prince signed his first music deal
as a teenager.
He gave Warner Bros. ownership over his entire back catalog.
Prince eventually sued and changed his name to a symbol
to try and stop the company from profiting on his name
and eventually hoarded his music to prevent corporations
from taking control of his work.
Similarly, Paul McCartney lost control
of the Beatles' catalog in the 1960s
and has worked for decades to get the rights
to his original Beatles recordings,
and that project is still ongoing.
And in this context,
Swift's bold decision to rerecord her albums
and reclaim the value of her own music
will influence every artist of her generation
and for generations to come.
(stately music)
Hey, Legal Eagles, it's time to think
like a greedy music label executive
or I guess an entrepreneurial musician.
Lisa "Left Eye" Lopez once described the music industry
as "a cutthroat business full of greedy individuals
who take advantage of young artists."
She would know.
TLC was one of the biggest acts in music
when they were forced to file for bankruptcy
because their original recording deal got them
just 7% on the sale of each album,
minus deductions for touring and promotion.
Understanding music law is essential
for any musician or songwriter,
but it's not like there's a school of music law.
And this is daunting for most people,
who usually have no experience in the law
or drafting legal contracts
when they get started in business.
And in the US, the music industry is governed
by the Copyright Act, but it also operates by tradition,
particularly in the music publishing side of the business.
So to understand what is so monumental
about what Taylor Swift has done and is continuing to do,
we have to learn a little bit
about copyright law and the music industry.
Now, to help understand how this works,
let's talk about a hypothetical.
Let's say you're a promising singer-songwriter.
You write your own music and record it in your own studio.
But how do you get paid for your music?
Well, it should be simple, right?
You write a song, record it, release it
as a digital download on your website
or on a CD or a cassette tape
or an LP if you're a dirty hipster,
and you get paid when someone buys it.
You get 100% of that money.
Yay!
However, your ability to market your own songs is limiting.
How will people discover you?
Where will they buy your stuff?
How do you get your songs on the radio?
How will you afford to tour?
What if you think your music would be good
in commercials or movies?
Well, this is where labels and music publishers
have traditionally entered the picture.
So congrats, the Legal Eagle Music Label Screaming Eagle
wants to sign you for a record deal.
I'm gonna give you $100,000 in advance.
You'll also assign 50% of your publishing rights
to Screaming Eagle Music Publishing Co., which I own.
Just sign this legally binding contract
and you'll be well on your way to superstardom,
and tomorrow, $100,000 will be transferred
to your bank account.
Sounds pretty good, right?
Awesome. Awesome.
Awesome. Awes, awes, awesome.
But wait!
Before you say yes or no, you need to read the contract,
and that's actually not what happened with Brad Paisley,
because Sony refused to give Brad Paisley data
on how many albums he sold because a contract footnote said
he couldn't challenge royalty payments until 2006.
He couldn't legally get the numbers.
So the fine print matters, and in that case,
he was probably shortchanged over $10 million.
It all starts with knowing the difference
between two different copyrights that are involved
in the creation of music, and side note,
there's actually at least six different copyrights
that are involved when you're talking
about the creation and publication of music.
Music is particularly complex
when it comes to copyright law,
so for simplicity's sake,
we're just gonna talk about the two main ones
when it comes to creation.
There's the musical work copyright
and there is the sound recording copyright.
But what rights are these?
Under the Copyright Act 17 USC section 106,
the owner of a copyright in a work
has certain exclusive rights to that work,
including the rights to reproduce or copy that work,
adapt and prepare derivative works based on the original,
distribute copies of it, perform or display it publicly,
perform a sound recording publicly
by digital audio transmissions, et cetera.
And how long do these exclusive rights last?
Well, since your songs were created
on or after January 1st, 1978, they last for 70 years
after the death of the individual author.
So let's talk about this first right,
the music composition right or the musical work copyright.
It protects the underlying musical arrangement
and the accompanying lyrics of a song,
whether that composition is fixed
in written sheet music, recorded, or otherwise.
And in our hypothetical, you created a musical work
all by yourself, so you own that copyright
until you sign the contract assigning it
to the Screaming Eagle Music Publishing Company.
And under our proposed agreement,
I will let you keep 50% of the music composition rights.
But that takes us to the second copyright:
the sound recording copyright,
which protects the actual recording
of a musical composition.
This could be a recording that's contained in a CD,
an MP3 file, a computer hard drive, or other phonorecords.
The Copyright Act needs to update its language.
But the Copyright Act defines phonorecords
as material objects which sound is affixed to
"by any method now known or later developed,"
and under this proposed contract
with Screaming Eagle Records,
the label will pay for all of the musicians
and the equipment that you need to record an album.
The official finished sound recordings
will be owned by the record company.
This is the version of the song that is publicly released.
These are generally called master recordings,
and Screaming Eagle Records will not need your permission
now or in the future to use these particular records
or to sell them.
How valuable are the masters?
So valuable that everyone wants a piece of this pie.
It's become a popular practice for producers
and song engineers to demand a percentage
of the masters for the work of their song.
And sometimes this is an advantageous arrangement
for your musicians, but be careful,
because it will keep eating into your split
any time that recording is played somewhere else.
So to recap, under our deal,
which would not be totally crazy in the music industry,
Screaming Eagle owns your masters,
but you get to keep 50% of the composition rights.
So this seems like a pretty reasonable deal, right?
Or is it?
Music publishing is not something
that's defined by the copyright statute.
It's a music industry tradition and expectation
that a music publisher will manage the composition rights.
Music publishers help leverage your songs to make money
and protect your catalog of songs from infringement.
And generally speaking,
music publishers have two significant revenue streams.
There are mechanical royalties and performance royalties.
A music publisher can pitch your song
to other artists who may record them,
or they can get music plugged into advertisements,
video games, movies, and the like.
This might be financially lucrative,
but it still means that as the musician,
you're giving up another slice of the overall pie.
So when will the individual artist start earning money?
Well, first, you've got to ensure
that you sell enough albums to make up the $100,000 advance
that you signed when you signed with the label.
That money was an advance, not a signing bonus.
And then you have to repay the music label
for any expenses it paid to help record your album,
promote it, and set up your tour.
TLC only got about 20 cents per album
after the label deducted for dancers, sound engineers,
video production, tour support, and radio promotion.
Left Eye said that the group made less than 1%
of the estimated $175 million in revenue
that the group's music generated.
So let that be a lesson:
only after you pay back the label in full
will you start earning royalties on your music.
But once the contract between you
and the first music label ends,
you might be able to sign a more lucrative deal elsewhere.
However, the original music label will own the masters
of the sound recordings in your albums
for as long as it states in the contract,
which could be as long as your life and then some.
The label will continue to get revenue
for the sale of each album and digital download
that includes any of the original sound recordings,
and that includes royalties or fees
from the use of the sound records in any movies,
films, TV shows, or advertisements.
And now you know enough about copyright law
and the music industry to understand what happened
with Taylor Swift and Big Machine.
Imagine that you signed a deal like this
when you were 15 years old, like Taylor Swift.
In 2019, Swift was named Artist of the Decade
for the six albums she made between the ages of 15 and 24,
mostly while she was signed to the record label Big Machine.
And not surprisingly, this soon erupted to bad blood.
But the trouble began when Scooter Braun,
who works with the Kardashian clan and Justin Bieber,
purchased the music label Big Machine.
Braun and Swift had publicly feuded in the past,
and once the sale went through,
that meant that Swift's masters were owned by Braun.
Big Machine was estimated to be worth
at least $300 million with Swift's catalog valued
at about $140 million at the time, so she was responsible
for almost half of the company's value.
But this was not a love story.
♪ Baby, just say ♪
- No! God!
No, God, please, no.
- When her contract was up,
Swift opted not to resign with the company,
but Big Machine was not exactly thrilled
with her decision to sign with another label.
So she says that they retaliated against her
by refusing to allow her to perform her songs on TV
and blocking her from using her recordings
in a Netflix documentary about her life.
Although the label denied this,
"The New York Times" got an email showing an executive
from Big Machine telling Swift's representatives
that the company will, quote,
"not agree to issue licenses for existing records
or waivers of its recording restrictions
in connection with the Netflix documentary."
Yes, Taylor brought the receipts.
The lesson: don't second-guess a madwoman.
♪ Baby, now we got bad blood, hey ♪
(sighs) Oh, boy. (laughs)
Now, Swift tried to buy her masters from Big Machine,
but Braun refused to sell them to her at any price.
Braun wanted Swift to sign an NDA
muzzling her right to talk about him
as a condition of negotiating.
Swift said no deal.
But this is a dilemma faced by many artists
who try to buy back their copyrights.
In the late 1960s, Paul McCartney lost his stake
in Northern Songs, the publishing company
that he'd set up with John Lennon.
McCartney also lost control
over the master recordings for the Beatles.
And when McCartney worked with Michael Jackson in the 1980s,
he told Jackson that it was important
to own the rights to his own music.
Jackson apparently jokingly responded by saying,
"One day, I'll own all of your music."
And, mission accomplished!
Jackson responded to this advice
by buying up the McCartney copyrights for himself
in a backstabby joint venture with Sony ATV
that cost him $47 million.
- For those of us who like living dangerously,
this one's for you.
- McCartney, of course, got nothing from the deal.
It also, shocker, apparently,
ruined the McCartney-Jackson friendship.
Now, the value of the Beatles' catalog soared.
In 2016, Sony ATV bought the Jackson share
of the Beatles' songs for a whopping $750 million.
But after years of litigation over whether British
or American copyright law applied to the sale,
McCartney finally got the chance to get his rights back
using the termination provisions of the Copyright Act,
which generally gives an artist an opportunity
to terminate transfers 35 years after the date of transfer.
But what did this mean for Taylor Swift?
Well, it meant that she decided to be proactive right now
to avoid ever being in a McCartney situation,
which brings us to why she rerecorded her albums.
17 months after Scooter Braun purchased Big Machine,
he sold the master tapes of Swift's albums
to a private investment fund.
The purchase price was a minimum of $300 million,
which could escalate to $450 million
if certain benchmarks were met.
The investment funds have been scooping up music rights
left and right because their value is so high.
For example, in 2020,
a firm purchased a 50% stake in Rick James's catalog,
including both publishing and recorded masters.
The song "Super Freak" is still one
of the most sampled riffs in music
and is still probably worth tens of millions of dollars,
if not more.
But when James died in 2003,
he left an estate worth just $250,000.
The investment firm that purchased the Swift masters
includes the George Soros family,
23 Capital, and the Carlyle Group.
According to Swift, they have not reached out to her at all,
which is a strange business decision,
since Swift is making them money.
Swift wrote, "Scott Borchetta told my team
that they'll allow me to use my music
only if I do these things: if I agree
not to rerecord copycat versions of my songs next year,
which is something I'm both legally allowed to do
and looking forward to, and also told my team
that I need to stop talking about him and Scooter Braun."
Braun's response to Swift's specific allegations
was basically- ♪ You need to calm down ♪
He posted about kindness on Instagram and had the gall
to assert that Taylor communicating with her fans,
quote, "greatly affects the safety
of our employees and their families."
So Swift just responded by re-recording her original albums,
because remember,
there's two different copyrights at work here.
There is the composition license,
the sheet music, the melodies, the lyrics,
and then there is the copyright
in the sound recording itself.
She didn't own the copyright in the sound recording.
Big Machine and eventually the private equity firms did.
But she did own the composition license,
so she just took the compositions and rerecorded them.
Effectively, Swift owned the abstract version of the songs,
and she had the funds available
to work in a studio to rerecord it herself.
She could hire the engineers and the other musicians
to help out on the album, and she could just make one
that sounded identical to the original album.
You might ask,
how does this re-recording impact the original masters
that are now owned by a private equity firm?
Well, it dilutes their values.
Fans are buying the new version of the album.
In fact, it went to #1 on the Billboard charts.
It also means that fans will stream the new versions,
reducing the number of plays that the original version gets
on streaming services.
And any company that wants to license Taylor Swift's albums
can now work directly with Swift, which cuts off income
to the firm that owns the original masters.
And you might think that the two different versions
of the sound recordings might compete with each other,
driving the price down, but in reality,
people generally wanna work with the original artist
because that artist is going to continue making new art
that they might want to license in the future.
It's generally better for a movie,
game, or TV show to license the new version
because they would have a good relationship
with Taylor Swift, who has an entire career in front of her.
So Taylor Swift made extremely important business decisions
that will not only impact her, but other artists as well.
The private firm that owns the original albums
also probably missed an opportunity.
If they had reached out to smooth things over with Swift,
the value of the original masters would be intact.
Instead, her fans are buying the new album,
which sounds identical to the original.
Swift plans to rerecord her other five albums as well,
and if Big Machine is bitter,
I guess that they can just shake it off.
- [Interviewer] What advice would you give
to anyone who wants to become a singer?
- Get a good lawyer.
- If only I knew some music producer
who could listen to the originally recorded masters
and compare them to the Taylor Swift recorded versions.
Man, that would be a really interesting thing to learn.
Especially if I knew
the most preeminent music producer on YouTube.
Man, that would be great.
Rick, as the preeminent music educator on YouTube,
would you mind listening to the original version
of Taylor Swift's "Fearless" and compare it
to the new version to see if there's any differences?
- I will.
So here's the original one
that was recorded and put out in 2008.
(upbeat pop music)
Okay, if I just listen to the beginning.
Let's check the new one.
(upbeat pop music)
Way better snare sound.
It sounds fuller.
This actually isn't fair,
'cause I had listened to the two of them back to back,
and the new one is far superior.
Taylor's voice sounds better.
The recording's better.
They did a really great version of it,
and the snare drum is much better in the new one.
- That's incredible,
that you can hear that much
of a difference between the two versions.
- They're pretty identical, tempo-wise.
They must've actually overlaid them
so that they got the tempo right on.
But, you know, they probably have a lot of the same...
I haven't looked, but I would imagine
maybe they have some of the same players playing on them.
But sonically, the new one is far better,
and I think her voice sounds better on it.
- So over time, you think
that she's become a better singer in-
- Absolutely, no question about it.
- Interesting.
Well, I hope
that this particular video doesn't get a copyright claim,
but if it does, then I will dispute it,
just like we did on your channel when we went through
and disputed all of the copyright claims
that you got on your videos, because this video is fair use.
- There you go.
- So there you have it.
To a layperson, the two songs sound pretty similar,
but to the trained ear,
you might even say that the new versions
that are engineered by Taylor Swift herself
sound even better than the originals.
Her voice has matured.
The technology has gotten better.
So if that's the case,
why would you even listen to the original masters?
Why not just always listen to the Taylor Swift version?
But the question is, what is Taylor going to do
with all of that extra money?
Well, she'll probably spend it on a great meal,
but we know that Taylor likes to do things herself,
so her best bet is today's sponsor, Hello Fresh.
Now, I am also a do-it-yourself person, and I have to say,
I was initially pretty skeptical about Hello Fresh.
I'm a pretty good cook, so I didn't think I needed the help.
But I actually loved it.
Even for an experienced cook like me,
Hello Fresh delivers new ingredients
and recipes that I'd never try on my own.
Everything I've gotten from Hello Fresh
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For example, I recently made yogurt-marinated chicken
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and meatloaf a la mom,
and every single one of those was fantastic
and not something that I would've made on my own.
So if you feel like you've been cooking the same thing
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And of course, everything was delivered straight to my door,
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And it's also super easy to save time.
Hello Fresh cuts out meal planning and prep
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Since the ingredients are pre-portioned,
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The package is almost entirely made
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So if you'd like to try Hello Fresh,
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go to HelloFresh.com and use the code LEGALEAGLE14,
or just click on the link that's onscreen right now.
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