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Taylor Swift includes demands on Spotify equity in new deal with Universal

By | Published on Tuesday 20 November 2018

Taylor Swift

You can stop speculating about who Taylor Swift is going to sign her new record deal with, because she’s signed it. With Universal. How boring. Although there is an interesting thing about this deal. It not only benefits her, but all artists at the major label.

A clause in the musician’s new deal states that Universal must commit to sharing any money it makes from its shares in Spotify with artists on the label. The money will be non-recoupable, and she reckons it will be paid out on better terms than those of Warner and Sony to their own artists.

“It’s really important to me to see eye to eye with a label regarding the future of our industry”, says Swift, in a statement on Instagram. “I feel so motivated by using new opportunities created by the streaming world and the ever changing landscape of our industry. I also feel strongly that streaming was founded on and continues to thrive based on the magic created by artists, writers and producers”.

She continues: “There was one condition that meant more to me than any other deal point. As part of my new contract with Universal Music Group, I asked that any sale of Spotify shares result in a distribution of money to their artists, non-recoupable. They have generously agreed to this, at what they believe will be much better terms than paid out previously by other major labels”.

“I see this as a positive change for creators – a goal I’m never going to stop trying to help achieve, in whatever ways I can”, she goes on. “I’m so happy to have Sir Lucian Grainge as a partner in these efforts”.

What happens to the Spotify equity all of the majors, and larger indies through Merlin, received in the past once they were able to cash it in has been a widely discussed issue in recent years.

The indie labels committed to share any income from offloading shares in Spotify with their artists back in 2014, through their Fair Deals Declaration. Sony and Warner then made similar commitments in 2016. Then in March this year, after staying tight-lipped on the matter, Universal said that it would also share any money earned from selling that equity.

So it seems that Swift is talking up getting Universal to agree to something it was already committed to doing anyway. Although, there have always been questions over how exactly the money would be paid out – and to whom. What is the percentage split between the label and the artists? Does the money go only to artists currently signed to the company, or those who were signed when the equity was received? What about independent labels using major label distributors and their artists?

Swift’s statement doesn’t make it clear how she actually nailed down a better deal for other Universal artists. Another question has always been over what money artists who haven’t recouped would receive, so it’s possible she cleared that up. It could also be that – like when she ‘changed’ Apple Music’s mind on artist payments during its free trial – the company saw an easy PR win and just went with it, actually giving up very little.

Universal Music CEO Lucian Grainge was certainly keen to talk up how artist-friendly Universal is, although Universal’s announcement of the deal did not specifically mention Swift’s equity clause.

“Few artists in history approach Taylor Swift’s combination of massive global hits and creative brilliance”, he says. “She is so multi-talented, she can achieve anything. I have such enormous respect for Taylor, in particular for her use of her hard-earned influence to promote positive change”.

He goes on: “Because of her commitment to her fellow artists, not only did she want to partner with a company that understood her creative vision and had the resources and expertise to execute globally on her behalf, she also sought a partner whose approach to artists was aligned with hers. With these shared beliefs, there is so much we can accomplish together, and all of us at UMG are enormously proud to be embarking on the next chapter of her career alongside her”.

As well as all the selfless stuff, Swift also gets to keep her master recordings for anything she records under her new deal. So that’s nice too.

Swift signed her initial deal with Nashville-based independent country label Big Machine in 2006, aged sixteen, having first met label founder Scott Borchetta two years earlier. Building her initial audience as a country artist, she started a pivot to pop on 2012’s ‘Red’, leaving country behind entirely on the 2014 follow-up, ‘1989’. Releasing her sixth album, ‘Reputation’, last year, she completed her obligations to Big Machine.

Although it has been reported that Big Machine fought hard to keep her, with one of the world’s biggest pop stars out of contract for the first time, there are always going to be significant offers on the table from elsewhere. And from Swift’s point of view, seemingly the ability to do good for other artists was a big draw. The move to Universal also makes sense, in that the major has distributed her work internationally for some years, via an alliance with Big Machine.

Recognising Borchetta’s influence in getting her were she is today, Swift said in her statement: “I want to express my heartfelt thanks to Scott Borchetta for believing in me as a fourteen year old and for guiding my through over a decade of work that I will always be so proud of. I’m extremely grateful to get to do what I love, especially with the people I’ve been fortunate enough to work with”.

With Swift now installed at Universal, other artists on the label now just have to sit back and wait for that Spotify money to roll in. There are, of course, a lot of artists signed to Universal, so it might not end up being very much. And Universal has to be convinced to sell off those shares too. While Warner and Merlin have dumped all of their Spotify shares, and Sony has offloaded around half of what it owned, Universal is still to sell even one.