Taylor Swift (Acquired’s Version)
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You're looking very good in that scarf, sir.

I as I you fans or had the .

best out the red scarf who got.

The true got. Easy, you will see me down story.

On welcome to season and ten episode one, the season premiere of acquired the podcast about great technology companies and the stories and play books behind them. I'm been gilbert and I am the cofounder and managing director of seattle based pioneer square labs and our venture fund, psl ventures .

and i'm David rose and tall and I am an Angel l investor based in separate o and .

we are your hosts. SHE is billboards woman of the decade. He was the first woman to ever win the coveted album of the year grammy y twice, and now she's wanted a third time. SHE was the highest paid celebrity in the world in twenty nineteen, more than kyi, lebron James, Roger federal or even beyond they.

Her fan base is so passionate, and she's accumulated so much power that he is leveraging IT to reorganize the power dynamics of the music industry in front of our very eyes, taking IT back for artists, and of course, standing up for a women everywhere. You knew her when he was fifteen, twenty two. And now she's accomplished all of this at the still unbelievably Young age of thirty two.

That that was good. I like that.

I like that. You probably know her all too well.

She's mono OK OK. You could even say .

she's fearless, a mad woman, or David, or that sheep never go out of style.

Today we are telling the .

story of the business of Taylor swift.

Have a fun. One thing I want to do, I thought we should guess each others favorite .

teeth swift album. Let's see. I think. Yours used to be one hundred and eighty nine, and now its reputation .

of reputation is so good. I did not like IT at all before starting the research for this. And now I am such a fan. But no one thousand eight ninety nine is my number two. My number one is fearless.

fearless and uncommon. Pick my friend.

I know I love IT. I just love IT so good. And the song feel is so right.

What's mine?

I think here's this one thousand nine .

hundred eighty nine. Mine was one thousand and eighty nine, and I am an ever .

ara focal or fan now, oh oh, in foker over every .

more you can put on an album with Taylor swift and expect me not to just like the whole album the best. Okay listeners, now is a great time to tell you about long time, a friend of the show service now.

yes, as you know, service now is the A I platform for business transformation, and they have some new news to share. Service now is introducing A I agents. So only the service now platform puts A I agents to work across every corner .

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Yep, with service now, AI agents proactively solve chAllenges from I T H R customer service software development. You name IT. These agents collaborate, they learn from each other, and they continuously improve handling the busy work across your business so that your teams can actually focus on what truly matters.

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Yeah, so learn how you can put A I agents to work for your people by clicking the link in the shower notes or going to service. Now, doc m slash A I dash agents. We also want to tell you listeners that if you are new to the acquired community, you should make IT official, join the over eleven thousand smart people at acquire data.

M slash, slack. Most of you know this, but we also have a second show called the L P show where we cover nuri er deeper topics on how to race venture capital, things like that recently. Uh, what's going on with the very cool startup italic, which brings manufacturers directly to consumers.

You get access to that by searching acquired lp show in the podcast player of your choice and without further or do David take us in and listeners, as always, the show is not investment advice. David and I may have investments in. The companies that we discuss in the show is for informational and entertainment purposes only.

We may on a few music security station teals out there. I don't know if we would recommend we were at the end of the ever will will decide if we recommend buying into music master securities, ation deals or not. Amazing, this is was like shocking to me.

There is no official like big book biography out there about tea with but there is actually quite a good book out there. It's unofficial, of course, but it's really well researched by uh mana Michael Francis Taylor who is a brit and IT is called Taylor swift the greatest star and a IT was form the backbone of a lot of the researcher and story so big. Thank you to Michael for writing. okay. On december thirteen th, nineteen eighty nine, lucky thirteen at the reading hospital in west reading, pensylvania, not far from where both of us were born, and spent her childhood .

years the wonderful southeast pennsylvania .

delivery region. A baby girl, one Taylor alison swift, is born to parents Scott kingsland swift and Andrea gardener swift, my named finally. So her dad's got is a stock broker for maryland.

That sort of all I ever heard on him too.

based on what I could find out. He comes from like a long line of wealthy sort of filled off the area family, if you seem kind of filled off via story, like he was born on the main line in brand mar lak, his great grandfather. So Taylor's great, great grandfather was a gaining.

Charles s. Boldy, who was an italian immigrant, came to filled alpha in eighteen seventy seven. You know, we got to go back to the eight hundred because it's quiet. Uh, we had to start at nineteen eighty nine, of course.

And he opens a coyer in the field of the area, supplying the railroads, and becomes like one of the biggest oh oh coal magnets for roads in the fold of area. So he makes a fortune. Uh, he invested in newspapers.

He invested in banks. He a like like stars of banks, uh, he buys a ton of fill off the area real estate. What's to say? The family has a lot of properties speak of her mom SHE also comes from quite and interesting family. Before having Taylor, Andrea had worked in marketing for various financial services firms, uh, and then decided to stay home to be a mom to tailor and and a little brother Austin, uh, but entries childhood was pretty unique and herma margery had quite a different path.

Margin was an Opera singer. Is that right?

And Moore, so Andrew is dad. Robert Taylor, grandfather was the CEO of an engineering company that did a lot of work in the south and particularly in the cuban and so an area was growing up. They lived like all over the country and spend a lot of time in cuba um before the revolution.

And then importer eco and her mom, margry, had a college degree in music, which was pretty rare at that time. Yeah, I think he was born in like the twenty years, I want to say. And while they're living in the cavity in cuba, importer rio SHE, I am believing Andrew was already born at this point time.

SHE decides that he wants to, like, become a professional singer. SHE gets her own T, V show that SHE hosts and SHE is selling out clubs performing. So he is saying Opera SHE wasn't just an Opera singer.

He also saying pop tunes, uh, as well, and sort of like tailor to come, not just country singer also saying the options anyway, margry and I believe also robbert eventually end up moving in with the family, the sweet family in writing and live a tailor and do obviously big input on her. So by age three, Taylor clearly has gotten the physical gene from margery. She's in the singing.

The family also has A B naturally at the jersey shore at stone harbor. And supposedly tailor would just like go up to strangers on the beach and start singing to them. He has a great quote.

My parents have video of me on the beach at like three going up to people and singing lion king songs for them. I was literally going from tie to tale on the beach saying, hi, i'm Taylor. I'm going to saying I just can't wait to be king for you. Now, when SHE is six, a few years later, her parents, by her, her first album, which is lean rimes, remember.

lean away.

So through lean, of course, tee gets in the country. Music can help. perfect. Is this what is country music? The defining characteristic of country music is storytelling, the perfect retailer. And SHE pretty quickly discovers shi, a twin who win addition to being also in a great country artist, wrote all of her own songs.

Um so he .

decides, I can't tell you do this as well. So he started to go to local venues, coffee shops, bars, doing open mike nights, carrio game and IT. Turns out that one of her regular carrio gy venues in the reading area is a roadhouse just outside of town owned by former country star pat garrett.

He's kind of the only country star in the area so at his roadhouse he would have pretty big acts come through when they were intel, Charles Daniel or George joes and legs and uh if you won, Carry okay, you get to open up for these um so Taylor just start tearing around. He is a great court, he says. I was kind of liked an annoying fly around that place. I just would not leave him a loan.

How old is SHE hear? Ten, twelve, thirteen, ten. An enormous amount of parental support for a ten year old to be a fly hanging around some place to it's interesting.

I thinking a lot about this, and people talk about the tailor was many ways, sort of born standing on their bed, had all this privilege support from her parents. Absolutely true. On the other hand, it's also pretty rare for anybody and often, especially people from wealthy families, to have like that kind of level of ambition.

Like her parents weren't pushing her to doing this. They were supporting her. But like he was absolutely the one that was driving, like, i'm gona do this. I'm gonna be iata and lean rams. I mean.

IT shows up her entire career that he has a chip on her shoulder, that no level of accomplishment is ever enough. And SHE needs to set her site on the thing. I get the sense he is the type of person who has trouble celebrating wins, uh, before immediately focusing on whatever is next and that you cannot manufactured. Okay, so she's .

singing in the road houses. He starts getting on the national anthem circuit locally. He sings the nationality them, uh, for the reading fills the local minor league .

baseball team. H.

so IT begins. So tailor, one night is watching the V H, one behind the music on fail tail. And story goes, and he is watching this and realizes that, oh, nash will is where was signed and discovered in all these artists, all this country artists, they're all based out of nature.

So he says, I got IT into my head that there was this magical land called nash el where dreams come true, and that's where I needed to go. I began absolutely non stop tormenting my parents, begging them on a daily basis to move there. So of course, I read this, not like, I wonder why nash fill is the epic of country music and makes sense in the south, popular in the south, but why nash fill over means self on every other .

episode that we talk about on the show talking about tech business. This is the part we're talking about silicon valley, and it's amazing that we have a completely different version of that in the .

country music scene, not only country, but blue grass, like all IT nasrin is the epoca. So IT turns out that the reason for this is that there was an insurance company based in there is an insurance company based in national real in the tony called the national life and accident insurance company. And their slogan was we shield millions.

And they decided that as a marketing stunt. They we're going to go buy a local radio station in nash, bill, and change the call sign of the radio station to W, S. M, and have to be like we shared millions radio so they do and uh, what are the things they do do with the radio station? Is they do live barn dancing that they broadcast on the radio station on saturday night.

Come, I do. People like, this is what where you go with this. IT become so populated, they like, oh, we got to build a venue for this.

And let's make IT a show and let's like really go all out and as ever, getting tons of customer acquisition through this so they build what becomes the grand old apply for this show, this insurance company. And that then becomes like the venue for sort of early country's yle music. And like john y. Cash, dali, parton and Williams, like they all come up in natural. So that's why music, city, nature, real is the place to be.

Wow, I love how random I mean, it's it's not that it's random. It's complexity theory is that there is so many factors that go into something that this sort of unpredictable event of this insurance company sponsoring a radio station to this huge uh, amount is is such as enough of a catalyst to bring together, surely at a movement that was already happening, but to happen there.

Yeah okay, back Taylor or SHE finally wears down her parents who say we're not onna move there but like maybe on a school break you why why you recorded demo and we will go down the nash field will drive around. We'll take IT some labels and we'll see what happened.

So in march two thousand, one Andrew, uh, take Taylor down, a nash fill SHE comes back to pennsylvania pty, handed no record deal, surprised, surprised, just walking into office is on her own, didn't get her deal, but she's undeterred. This is tailor. So i've talk talking about and a the next year in two thousand, two SHE gets the chance to saying amErica the beautiful at the U. S. Open in new york.

Slight twist on the national m. e's. She's branching out from her single song .

so amazingly like the strategy IT works. IT works in the audience, uh, in attention at the is a talent agent in new york named dana montreal and he hears her sing he's part of britty speers management team and he's like on that girls got talent. So he gets in touch with the open organizers.

He calls every getting touch with their family. And as a client go, okay, great, an agent. Now they then go back down the nash el, back down the visit, grow, done. Walks are in to all the studios.

This is like the big three record labels. Second office, that's a nash fill, right? They have nash field specific offices for country.

yep. And some of them is no, it's very much like the movie industry. Like some of them, it's you know capital records, nash byou, whatever. And some of them they have other labels.

Or if you go look up universal music group, you can see that there's a thousand labels within and you know U M G.

And I think for a lot of these big label groups, they'll even have competing holy own label. So there might be two or three or four R, C, A labels in nh, villa in new yorker in hollywood. yeah.

So this time, once again, tailor does not get a record deal, but R, C, A offers her a development deal, which you know is not the record of, obviously is like, hey, we're going to invest resources in you and make a record that we're they going to release and we'll get IT on radio and see you do. Uh, a development deal is like we think you have potential. We're not ready to commit to a full record. It's like a small check from i'll participate in the around or not gonna ad IT though.

And I assume this is like limited investment but limited upside. And it's more about making sure you have relationships, the right people and we can keep an eye on you should you start to really shine exactly.

And I assume that there is also a roofer on an actual deal in there. Uh, but a spokesman to tail IT is not end of signing with R, C. A.

So let's see that plays out. Uh, on the back. This though, this is the ammunition he needs with her family to be a bomb.

Dad can be moved in as well, so she's about to start high school in the fall. They do, you know, I mean, god blessed her parents. They are like, okay, let's moved in as well as they do.

That is so crazy. It's probably like point one percent point of one percent of our audience out there is able to relate to that. Like the parents moving for the kids aspirations in career at this Young of age is its extremely common to move for mom. Dad got a new job, but we want to be closer to family. Almost never is there a story, and you know, an ordinary person's life of the family picks up and move for the kid.

Yeah, I mean, like this happens .

like the stuff of olympians and future Taylor swift. You know.

she's so frequent smart. I think SHE kind of realized to this both through her agent and now being in this world with this development deal, there are a lot of people they are trying to make IT. Like if you want to make IT, you're really got to stand out and you've tt a have something great that makes you you and what's the natural thing? SHE would say all the time that he didn't think he had the best voice, but he was an amazing song writing.

So SHE doubles down on song writing that he has this great quote. When I first started writing songs, I was pretty lonely. I was about twelve, and at school in pennsylvania, I wasn't popular, and I didn't have many friends and never knew where to see the lunch, but song writing became a release. I found that when I was alone, a lot of the time kind of on the outside, looking into their discussions and the things they were saying to each other, I started developing this really keen sense of observation, of how to watch people and see what they did. From that sense, I was able to write songs about relationships when I was thirteen, but not in relationships.

IT is so true she's got these like love songs, uh you know, as a middle school or that she's written and it's so clear both from her observing the world, but also like her watching T, V, and understanding common storylines from T, V shows and movies about people falling in love, that he sort of rights country music, inspired by the feelings that he thinks those people are having.

And she's really freaking good at IT. So word starts to get around nash fill that there's this girl who has a development, the Allen, who shows some promises as artist, which are really freaking kids, song rater. So in may of two thousand and fourteen, Taylor, still a freshman in high school and is fourteen years old, SONY A T, V, which is one of the big publishing levels, signs her to a song rating contract as their Youngest song writer ever, that they have ever signed. So again.

not a record deal, but he has a deal as a song writer. And IT could be .

songs for her, could be songs for other people, like, doesn't care they to publish her as a song. Grider, 嗯， the C. E O of SONY A T V aswell says this from the time he is among the few artists who are born with a gift that just rolls out of her. I still marvel at how this Young girl with limited life experiences at that point could raise such lyrics and Melody. He was born with a that gift.

wow.

amazing. So SONY pairs her up like fourteen. They pair her up with a really established song rider in the national circuit, woman named laz rose, who, written for timo, grown others, the of course, end up becoming super close collaborators.

But some songs the tailor will end up collaborating on that you might know, demigod, tear drops on my guitar, pictured, a burn, fearless White horse. You belong with me. And then it's going to come up a later. But their final collaboration, do you do know what that is?

No, i'm no idea.

All too well.

really.

yeah. Wow, brings her back.

Current number one for Taylor swift.

Oh my gosh. Longest number one song in history. This is one of the most bone headed like business move of any type. And like i've got back like the netflix blockbuster blockbuster .

had in the bag and should not have lost a netflix. And due to shareholder, agent and executive was forced to make an enforcer.

yes, forced to make an unforced. This is just a fully unforced R R. C. Tels daily.

They see what's going up on and they're like, you know, we do like you're singing. We think you're talented singer, where is not feeling your song writing? No way.

Yes, yes. So they tell you they want to keep her in development for at least another year, then I gna give a record deal. But what they want to do with their in development, they want to have you enough of this performing your own singer .

song rider stuff will feed you some good music.

And you can think that we feed you team before. Oh my god. I mean.

it's just it's a classic like underestimate Young talent and IT happens in every industry. And I think people are so used to watching the standard path that they sort of assume that if you're you know one of the greatest of all time, but you're super Young, well, you should do what other super Young people do, do that. You know, kids pop stuff, kids pop. But that that sort of thing, it's so like, I mean, it's it's almost the tailor quote of for the tail lyric of when you are Young, they assume .

you know nothing. I from I didn't just want to be another girl singer. I wanted there to be something that set me apart, and I knew that had to be my writing.

Basically, there are two types of people, people who see me as an artist and judge me by my music. The other people judge me by a number my age, which means nothing. It's not really a popular thing to do in nashville to walk away from a major record deal.

But that's what I did. And what she's referring to is when R. C. A does that, he tells them, SHE tells them to go off off SHE walks out on her deal .

so that is stringer along.

Yeah, it's not like he walked out on a record deal, which I don't even know if he could have if you signed IT. SHE walks out on the development deal, but that's what she's talking about like this is crazy. Everybody's dream and natural is to make IT and having a development deal is a huge part of IT.

And she's just like, no, i've got a development deal with a major label. but. Ah they don't believe in what I want to do, so i'm walking out.

So in bright to star migrates to understand R, C, S. Decision to be as generous as possible to them here is to Better understand the shifting music landscape of the time. IT was not exactly a golden edge for country music.

Teenagers were no longer buying into IT in significant numbers, and the music coming out of nfl was seen in some circles to be floundering and heavily reliant on its aging fan base. And that was definitely true. Like there were, you know, we were both growing up at the time, like what was like the number one thing the kids would say all over the country about the music they like, I like anything but country.

a country. Yes, there was a lot of alternative rock. The hip hop had was sort of graduating out of what hip hop had been in the eighties and nineties and becoming more pop. But I was still like heavy or rock.

yeah. And so R, C, A is kind of like, look, we've got a fourteen, fifteen year old who we do think has talent as a performer or a country music level. SHE wants to write her music. Obviously, that can be aimed to teenagers, but teenagers don't listen to country. We need to change to this year. So this is such a acquired team that we see all the time, like, is IT that there was something inherently wrong with country music, or, uh, to its nature, that made IT not appeal the teenagers are. Is that no, of course, that is just that nobody was making country music for teenagers at the time.

I remember thinking like, well, i'm not like a country type of person and so IT was less about the music itself and more about do I identify with the type of person who I perceive to listen to that thing. And it's the same with any other sort of music is often the same with movies to it's a it's a form of like self identification and community building that just so happens to sound like this.

I think that's right with me. Think of the auto industry and tesla, right? Like before, tesla IT wasn't like cool the via at least in silicon to be like a car person and like body dream a Price because I I don't know about cars. But is IT that really like cars weren't something that could be part of people's lives in the same way anymore? Or just that nobody had made a car targeted at that demographic.

right that you could use to signal within your community.

Yep, so tea swift decides in her own intimate, able fashion that she's gonna host her own audition this time. So rather than going back on the circuit out to all the labels now that she's a free agent, SHE books the bluebird cafe in nash fell, which is like a legendary venue and was where garth Brooks was discovered. SHE invites all the level exacts in town. Become, see her perform. She's the Michael .

of its of the team country music industry in nash fell, right? She's like holding an auction for her herself rather than trying out.

So one of the exec who shows up at eight of what I think a rental well attended is a man named Scott for cheta.

A Scott is an .

executive you want a universal sub labels in, and he's planning to leave universal and start his own label. So he finds tailor after the show, any pitches her and says, hey, like I, I want to sign you and I want to sign you to A A real record deal. I want to make an album with you.

I'm about to leave universal though, and start my own india level. And I want you to take a risk of me. And I really believe in you. I believe that you can write your own songs. You can make country music.

Teenagers like, I think this is really going to work and till he doesn't agree right away, IT takes a little bit of time, has got pitching her and her family to do this, but they decide to do a Taylor. As this quote you can tell, when someone just really gets you the best part of getting a record deal wasn't just that was a record deal. IT was the right deal for me and with people I believe in and they believe in me to underscore .

how much of a chance they were taking on each other. Taylor swift was Scott new label big machines, very first client, so both of them taking a chance on each other. And I don't know if I was in conjunction with doing this record deal or a little bit before, a little bit after, but there is another transaction that happens between the sweet family and big machine, right?

Scott needed some financing to get this off the ground. Like IT cost money to make an album, to distribute an album, right? So where does he get the money? Well, one place he gets IT from a minority investor is tailors dad, the swift family invest one hundred and twenty thousand dollars in big machine for a three percent stake in the label.

Three is has been reported in a few different three percent, four percent. So but somewhere in that park.

park somewhere, they call the two to four percent. The majority of the outside capital though comes from, I don't think this has been talking about that much, just blew my mind when I figured that out. I think I already told you who IT comes from comes from toby keys, the like big country singer who apparently is like a huge business model in nasal and in the business of country. There is a big four article from a couple of years ago talking about how is worth like half a billion dollars.

He's been a super, super savi business person outside of his musical career.

So tov, invest the majority the money to get IT going. And big machine does a distribution deal with universal with his former major label for distribution. And um they're .

often running yeah because history has been so tagish between big machine and Taylor based on what would end up happening, which we will definitely get to ah IT is worth underscoring.

SHE didn't have a .

record deal and this was a person who was willing to give her a record deal on an unproven artist. And I think in the same way that we will need to throw this entire episode advocate for the rights of the artist and the person, really creating something that people love. There is also real value in the world and taking a chance on someone. Now that doesn't mean you have infinite upside from taking a small chance once, but IT is worth recognizing that this was a risk.

right?

David, think this is a good area to do. Little sidebar on how music licensing works.

Solo, like what does that mean when Taylor signs this record deal?

So this has been a fun side project for me over the last few weeks, diving into all of this. The thing to keep in mind, as you listen, is to remember, the purpose of copyright law is to spur innovation and creativity. This is true across copy rides, is true across trademark, patent IP in general.

So keep thinking back on this purpose to spur innovation and creativity as you hear the whole rest of the episode. To keep thinking back, are these laws being used as intended? So there are a few really great sources on this, if you're interested in learning more. The first is an excEllent crossover podcast between uh the verge and switched on pop, which will link to in .

the shower notes yeah switch on pop so good .

uh the other is a book from uh the legendary music attorney done passman on the music business, which is on its tenth edition. That so many sort of revisions there have been based on all these changes recently.

But two big things to remember here, when a piece of music is created, there are two copyrights that come into existence, the sound recording copyright, the first one, which is also called a master recording, or a master, which traditionally is owned by the record label. So this is literally what IT sounds like. IT is a copyright on the literal recording of the music that they did in the studio, the way that came out, and can be heard by your ears. And historically, a label takes ownership of these masters or recording copyrights in exchange for assuming the financial risk of betting on distributing, promoting the artist work. So that's the first copy rate.

IT feels like the old school venture capital industries to me. Like when are you back in the eighty eighties, seventies, when the investors would take them majority of the company for putting up the money to do IT?

yes. And ultimately, everything's market. So it's just determined by supply and demand and market terms that need to be agreed upon in order to take the appropriate risk. And as you are staying with the venture capital industry, the market terms have changed tremendously to take that type of risk because the appetite for capital, because of the returns that can be generated.

But in the music industry, there are certainly only like three levels when you get down to IT. And there are a lot of people who want to be starts.

So the second one is the musical composition copyright or the publishing, right? And now these are like the written lyrics and the Melody, uh, and are traditionally held by the song writers themselves through their music publishers. The way can kind of think about this sort of the idea and the execution the musical composition copyrights is kind of like something you could put down on sheet music.

This is like the idea of the song, but you haven't actually played a note. And then once the notes are played and recorded, that's the that's the master. So back now to the musical composition copyright I mentioned.

These can be held by song writers, but usually throw a music publisher. The publishers tend to deal with these composition copy rates the same way that the music labels deal with the masters and history ally. These publishers would take fifty percent of the royalties that come through the composition copyright today. They actually take a lot less so for bigger song writers. IT might just be that the song writer pays the publisher a fixed fee to do some back off stuff. Um so for all intensive purposes, you can think about IT like the song writer themselves owns their own musical composition copy rates, the polishing rates uh and they they can make the decision on whether or not they want to license that for specific purposes and a quick decide on publishers even though they don't have a lot of relative power today to like the labels are big stars, they used to be insanely powerful in the era before recorded music, when the publishing rights were the major rights.

all right, the seat music was like IT exactly.

And since the singers didn't used to be the same as the song writers, and the that meant that the artist and the recording levels were like totally at the mercy of these publishers who owned the peat music rights, which is like a fascinating little walk down history. And so these are the two big building blocks upon which everything else is built. Some uses of music require one of these approvals, uh, and some other use cases require both.

So there are sort of two different parties. Whoever owns the sound recording master right and whoever owns the publishing right, both sort of have a veto right on who can use the final product for the use cases that do require both. And depending on the use of the music, the splits and the income that is generated are wildly, wildly different.

So one little final thing here, just because I might be sort of having and your head, what about code writing? Song's writing credits, interestingly enough, can be split any which way and are privately negotiated by the song writers with each other. So it's possible that for some types of approvals that require the publishing license, there might be multiple people who wrote the sign together that each have to sign off for that use case.

And the money can flow in totally unique ways, too. So could be fifty, fifty IT could be ninety, ten IT could be a flat fee. Let's say Taylor brings a guest on who someone you've never heard of SHE may pay a flat fee or a five percent royalty or something .

so like for liz rose. And you know, with all too well and timgar on the lake, there's some deal between her and Taylor.

right? But all independently, privately negotiated.

interesting. So you said at the time, typically the publishers would keep like fifty percent of the songwriting economics and the writers will keep fifty percent even. That was very good from the artist perspective compared to the splits with the labels on the master side, right?

exactly. yeah. When you sign a distribution deal where a record label fronts you, the money you make the album, they then on the master, your royalty stream, again, independently negotiated.

But you only end up with like ten percent, fifteen percent, maybe if you're really big artist and get like twenty, twenty two percent. But the vast majority of those economics are going to the record label. And this is where we should mention the idea of recruitment, right? You only get to participate in those revenues if you've recouped .

your the advance .

because yeah yeah ah yeah the front .

so it's book .

publishing exactly. And so if a record label signs to deal with you and they give you five hundred thousand dollars, well, doesn't matter if your cds are flying off the shelves or your spotify streams are happening, uh, for the first five hundred thousand dollars that should be paid out to you. The record label s are onna keep that and you only get to participate in your ten fifteen percent whatever IT is after you've recouped the events.

It's like a VC preference stack gap table and .

is literally exactly what that is. And I want to talk .

about that later. It's so busy and it's so from just like a different .

A A right the way IT .

costs a lot of money to make an album and IT costs IT even more boatload of money to get IT on radio and get distribution IT and get fans to do customer acquisition for IT.

And more important than that, and this is, I think, what represents what sort of like often perceived as a predatory deal. Most of these startups, most of these artists, are gonna fail. And the record labels or the book publishers or the VS are going to have sunk all this money in to get to a point where we can even see if it's going to work. And when ninety plus percent, I don't know the failure rates in the music industry, but when you know ninety plus percent of startups fail, well, you need some kind of economic split so that the benefit of the winners that you bet on can more than up for all of the losers are Better on.

right? Just like, can you see fun? But this is what now I think is completely changed. Yes, yes, all that's true in the old world where you got ta invest all this money before, you know, if somebody has an audience. So back to swift ft. So SHE in bag machine, they started making the deb album while making IT tell you, puts up a myspace page. So what all the teenagers are doing at .

the time you going directly.

her fans, imagine that going direct to her fans, even though she's not on the radio, even though nobody spending, getting money here, he also chooses IT for the production. Again, scot, big machine. They've got real money.

They've got to be key behind them. Theyve got universal like they've access. So a lot of resources tailors like, no, I want the guy who did my demo to be my producer and the chapman, who SHE has a great vibe with.

And most important, no, I want to control this. I want to control what this sounds like. I wrote this together with liza with a lot of them.

But like i'm the songs like I am in control here. So in june of two thousand and sex, they released the first single from the forthcoming album. It's timar a thanks to my face, just twenty million in her actions.

Wow, crazy.

Then on october forth, the album is finally released and tail rates in the line of notes on the album. I love everyone who has inspired me to write a song, whether you know IT or not, I love anyone who has ever turned the volume up when my song comes on the radio, anyone who has bought this, anyone who can sing along to my songs when I play them live, anyone who's ever requested my song on the radio or even remembered my name.

If you ever see me in public, I want to meet you. I will thank you myself. You have let me into your life, and I will never be able to.

Thank you enough that I love you. I love god for putting you in my life. And little P. S.

To all the boys who thought they were cool and break my heart, guess what? There are fourteen songs written about you. 好吧。

did SHE say that this? You literally know that. So footy SHE knows where her power comes from.

And her power comes from the fans who she's connecting with directly. I want to meet you. I want you to come up to me, say hi to me in public. I will thank you myself.

Watching what he did for the next fourteen years after that in cultivating community on tumbler is crazy. SHE has twenty seven thousand interactions with fans on tumblr over the years. Wow, that is her personally liking or rebo g ging or commenting like SHE gets, use social media to directly interact with my community.

Yeah, she's connected with teenagers all around the world on the internet. And what are they gone to do? They are onna.

Go buy the album, especially in two thousand and six where I was frequently buying cds .

IT cracks the top two hundred in november two thousand six and then slow build over this, you know, social media empire. I don't even know what you call that the Taylor is building .

and and to contextualize this, this is before instagram .

has launched. yes. And I think .

IT maybe even still before tumblr or right around the time tuber .

starting so well over a year later in january a two thousand and eight after sixty, sixty three, three weeks in the top two hundred, IT becomes the number one album in the world. wow. IT ends up in total on the number two hundred. It's been two hundred and seventy five weeks on the starts. Like what other artist and album could do that.

especially from a sixteen year old?

SHE was fifteen.

And when I came out, yeah, wild.

totally wild. So Taylor, she's so smart. She's building this whole direct relationship with her fans. Social media, innovation, pioneering in so many ways. He also is a master of the traditional way of doing things to. So what is the traditional thing that an artist would do after they drop their first album.

depress?

You're probably not on your first album going to go do a headliner tour yourself. You're gonna be the opening act for other s so first he starts opening for hoody. In the blow fish is the first they act the g open sport, which is awesome.

Then asa flats, rasa flats, is gna. Come back into big machine. Later, a perfect. Then George street, brad pasty. And then finally, timgad faith.

So literally, the first single timer, gra SHE, ends the opening act phase of her career opening for tim ga. And fatal. Uh, there is this unbelievable quote from bread pasty at the time about why he wanted to come open for her.

He says, I called my manager when I heard her album and said, we have to get her out on tour for her. Do we've written that record at sixteen? It's crazy how good IT is.

I figured i'd here and think, well, it's good for sixteen, but it's just flat out good for any age. SHE is Operating at a level I will never reach already in the ground breaking way that he is taken a new audience and said, i'm a country singer and they love IT. Wow, that's amazing.

Strong words. So fast for the two november two thousand. eight.

The country is in the financial crisis. Leman brothers is gone under its dooming gloom. Bittle, great session of that stuff.

Airbnb, a uber starting tailor.

drops the second album, my favorite album, fearless. Oh my god, there are so many banks on this album. Fearless fifteen love story, he, Stephen White horse and you belong with me. There are just the first six tracks in order on this album.

Wow, I thought you were naming of the hits.

Those are just the first six tracks. Uh, now they are probably the best six track acts on the album, but yeah is a hell of an album. So unlike the deb self title album, which takes a year of like this slow burn social media campaign to hit number one, IT deuse at number one on the billboard had two hundred years where IT stays for eleven weeks, the longest since santana's supernatural in one thousand nine, nine, nine, the longest in the top ten by a country artist, uh, ever and he becomes the Youngest artist to have what will go on to become the best selling album of the year and the only female country artist never to have the best selling album of the year.

There's another couple things about this album that I think worth pointing out because she's more of an adult now and having real world experiences. SHE is starting to shift her song writing from being uh like love songs and break up songs about things that he may or may not have experienced that are sort of theoretical into. I'm now doing autobiographical music, and this is about me as a, you know, mid teenager, and the things that i'm experiencing. And that would go on basically .

until vocal .

folklore, and ever more, when he starts to shift and start running songs about fictional characters and historical characters and other people. Again, SHE had this sort of like autobiographical thing of, here's what I been going through the last couple years of my life for the next decade of her career. And this is really where that kind of starts.

That such a good point, because the origin of the first album. And you know all those quotes about her amazing SHE was as a song writer yeah what about her powers, observation and imagination and being able to write other people's stories from her perspective? But you're right. yeah. Then there's this like along along from our perspective here in january twenty twenty two uh middle period of reading about her own experience and then he comes back to storytelling yeah and she's also .

starting to take a little bit of heat here for becoming less country and becoming a little bit more pop, which is like a funny for shadow. Because what does he do with that? Like he does one thousand nine hundred eighty nine later. And it's like, you know what? Score IT full on pot .

as a active feel. SHE wins the album of the year, the grammy for album of the year, making her the Youngest artist ever to in album of the year. So then he goes back out on tour, not as the opening act this time, of course, but as the headliner, her first real tour, that around the fearless tour, playing bigger runs like sample center, medicine school, garden, most of these places like course, through her online dire connection with fans.

They know when tickets are available cover, they sell out in like a minute. The tour gross, over sixty three million dollars. SHE plays in front of over a million fans. And then write the middle all of this on september thirteen th, two thousand and nine in new york city, radio city music all.

Yes, I hadn't realized this happened on a thirteen thirteen.

of course I did. Of course IT happened on a thirteen 5。 It's still your swift tailor wins best female video for you belong with me which to be clear .

is is not the biggest video word of the night no.

no, no, no. There is best overall video still to come in the night but somebody either is unaware about that IT doesn't .

care some drunk wrapper s this was the big prize.

Um I think we all know what happens next. It's kind of fuddy i'll like talk about the the kind retailer moment on acquired um but this actually becomes like such a huge part of the business story of .

tailor's career。 It's funny IT inspires so much of her next decade plus it's a seminal point in everything that he does from there. And everything that he does from there inspires a lot of change in the music business.

And so this point I made IT almost like that mean where like you tip over a small little thing, and that a huge impact happens years later. And I will let you finish blah, blah, blah. Like that was a catalyst moment that would change the economics of .

the music industry much well.

and not a credit with that that would pace Taylor off enough to actually changed the economics .

of the music industry. Well, we create a with that. This was such a butterfly laughing its wings moment in so many ways. There's the specific to, there's the tailors music and canada's music, which forever changed, probably for the Better, creatively. Yeah, I mean, kane's my dark twist, advanced beautiful .

dark twist fantasy, phenomenal tortured album I mean, like one of the all time, there's an amazing podcast.

Yes, dissect season too.

Yes, the disease season on that album. It's like one of the best twenty hours you can spend uh, going in listening, if you like, music, to how that album came to be member full pack religious speaking so fondly of knee on the Taylor swift episode but the torture that he put himself through after being made yet or what did obama column what a jacket as a jacket as yeah like the president I said, calls you a jackets for that. And like he goes into hiding and emerges you creatively a from that wounded state with that amazing album.

So I think there's three levels of butterfly when flapping here. Yes, one is musically, creatively for Taylor ank. ya.

Two is the business of the industry, which we're onna get into on the rest of the episode here. I think you could maybe argue there is also an element of like even bigger than that. The obama thing I didn't put two into together until just .

this morning is this the cya tram relationship?

Yeah, do no way.

okay. How does this go? Obama in? I think he was .

like either CNN or C N, B C, or something like he's setting up for an interview and in the pre show, set up with the cameras rolling, some boy's talking about the the internet, the V M S. And of course, obama has two teenage daughters who love Taylor swift. He says something like that.

He seems like a perfectly I Y Young lady is a jack s and everybody laughs, right? Well, ky, easily could dude from chicago, there's like a real connection there in the past, and he feels so betrayed by obama twenty, twenty years around. And there's a lot, a lot happening in that moment.

There's some fascinating things to watch to if you go watch the videos surrounding that moment because, of course, know cAnnier rs up on stage, says that Taylor, here's buying from everyone doing kye kind of thinks they're doing her. So she's kind of stand their hat, smiling, frozen, like, what do I do? She's of course, performing in the like right after this. So SHE ends up going off stage, collecting herself and successfully performing and she's asked on the red carpet SHE responds with such posts that there like, what do you think of kyi west and she's like, I mean, I don't I don't really .

know the guy yeah .

and they're like where you are fan and he goes, I mean, yeah, he's kyi and if you can just see the like the disappointment draining from her face of like canyon west for as bigger Taylor swift is now SHE wasn't taller swift yet, but ky. West was already ky. west. And so to be a person to have, can I say that about you on stage, is obvious how that is so dbl.

And then the deepest ony of all is that what kind of was upset about is that he felt that beyond, they have one of the greatest videos of all time for single ladies, which did, which everybody agreed on, because he won video of the year later in the night.

Also, that video is like, that is so simple and pure and genius. That is, no doubt one of the greatest videos of .

all time totally was IT all done in one take.

IT sure looks like IT. It's really impressive.

It's super impressive. The things we never thought we'd be talking about on acquired. But like I little, this is like the intel crisis. You can understand the impact of this moment. no.

And basically all future Taylor swift conflicts stem from this two like we'll get into the cuter stuff and that of course, comes from the fact that cuter Brown was kyi's manager. There's deciding to drug a history again, which again will get to but it's it's like all of the future conflicts really do stem from this yeah and here's kind of the sick thing about at all. There was a tremendous amount of emotional turmoil and there was a lot of negatives, especially immediately afterwards. Both of them are way Better off today than if this never happened.

absolutely. I think that's the other dynamic here of like what what was Better for both of their followers accounts on your twitter is just starting to come up at this point in time. This is probably right around the same time as the famous uh, raised to a million followers .

right on twitter yeah.

So after this the following year, speak now comes out till your third album. And once again, something I didn't really realized until the research. Why is a called speak now? What is, what is IT about? Taylor wrote all of the songs on speak now. He wanted to prove you can't say anything about me that I like, oh, I get the song writing critics but really this is writing everything or somebody else is writing everything. Like, no.

right? It's to basic, strip yourself down and show and say, like, this is all one hundred percent me so if you like this, you like me yes there is no covey's there is no possible way .

to say um but SHE ba la ba and I think people like that because all seventeen of the tracks, fourteen on the main album, three bonus tracks, all chart on the blackboard, hot one hundred, all of them on the album. With that one point, eleven of the tracks can currently on the top one hundred. wow. So IT becomes the only album in history to have seventeen hundred, one hundred hits. Four of water in the top ten.

Is that crazy? Seventeen percent of the most popular songs in amErica are from your new album and represent one hundred percent of your new album.

Now, speaking of song writing right after speaking now comes out, tailor starts a new relationship.

My hope is to have no tailor relationship conversation on this episode. Think it's kind of impossible.

I know, I know I didn't want you to do this one well covered by the media, unfortunately, doesn't last very long. There is a big blow up. At the end of IT, he turns twenty one.

Doing this in the other party in the relationship famously does not come to her only first birthday. Yes, it's bad. So he started reading a song about IT.

And this song SHE would write for over a year. And this is the one that he brings back with rose for, even after having just done speak now proving to the world, I do everything myself. This one was. So there was so much in this song that he wanted to say that he felt like he needed some help from her old collaborator. Course were talking .

about too well. Jack j.

how this guy is a freeing masterpiece, like, is a masterpiece.

A lot of this stuff in this story is like win, win in for everyone, especially Taylor. I think that kind of keeps being the punch line. The addendum is, except jack john hall, it's like they had a pretty short relationship that ended up bringing him into the conversation around her life in a way that is just like he's kind of a punching bag and like the fact that she's rereleasing albums from this point in time. Now it's like why we judged this of a good and get just very unfortunate timing for him.

But this song is incredible.

I will say I also did the paton Taylor swift Taylors version ride and on thirty minute ride, ten minutes of IT is the ten minute version of all too well as a bold fellow on choice.

No, no, no, no. It's not ten minutes, ten minutes and thirteen seconds.

Of course, IT is, of course.

IT is. So this is the first very, very extended songwriting session for material for the new album, which would come out in twenty twelve. Of course, we're talking about red yeah.

So they make the album tailor and and big machine usually uses me and jack man again as her producer. Uh, you know it's all it's straight over. Tackle down the middle.

Taylor stuff exactly what? You know, a label and the music industry would say to do, you've just had this like, great, Normally give the fans more of what they want, they make the whole album. And Taylors like, no, this is too similar to the old stuff if i'm not learning and growing and doing new stuff, i'm not going to do IT. So big machine wants to release the album and she's like, note, i'm going to radio IT.

Is that how I ended up with a twenty two track album that could be .

maybe that's why there's so many tracks. So if this is when he brings in max Martin and shell bec, the famous swedish producers who had work with great experience and backs and they just done marine fives moves like jagger and he's like we're we're going full pop with a lot of and we're going to have a whole new a whole new sound how that's right.

Red was super poppy even before we hit one thousand nine .

hundred ninety nine but it's got this schizophrenic y right like there's some country on IT still but then there's max marton and shell back on IT too. So I think it's great. The other thing I didn't realize about read until now album title is red.

Uh, and if you look at the cover, you know it's Taylor sort of looking down photo of her face. There is a reference. I think there's like a double easter egg e in this Taylors.

The whole stick is double, triple control easter eggs nested in the album mark that and the inside booklet t of the album and all other crazy stuff. I an research .

so I can think of two ex. One is the obvious one is it's referencing journey metros blue album. We got a link to that .

from the shown notes because the thing that you send me like the album cover is .

clearly modeled off of blue and shot to their face looking down and uh you blue versus red. I think the other one is probably referencing is the lean rimes album.

Interesting I think I want to point out here is we've been on a pretty steady track today where SHE releases a fifteen to twenty sung album every other year. So you get o six, o eight, twenty ten, twenty twelve, twenty fourteen. So she's averaging writing and releasing writing and recording ten songs years so we'll just see plant that for now that was the first decade of her career uh and we'll come back to IT yep.

and IT would be again another two year break before the next album, which is, of course, nineteen eighty nine.

twenty bops air warms, like popular videos that come along with at all. This one to me was Taylor swift hitting the mainstream and saying, I am for everyone. And if you look at her instagram follower account today of just about to hit two hundred million, SHE is indeed for everyone.

He is like, totally transformed herself to, you know, the she's always tried to have a little bit this, like girl next door, you know, everyone's friend trying to do the right thing, vive. And here she's just like blowing the doors off that and being like, you like apple pie america. I have Taylor swift for you. yeah.

And I think everybody in the orbit on team Taylor knew that like this was gonna really big because you read was IT was half pop. But like IT was really successful, red did not win the grammar for an album of the air, which I think Taylor still kind resents.

And SHE hadn't won one sense. Fearless, right?

Yeah, I don't think so. I don't think.

Speak now. Red and win. Speak now. Didn't win. And it's hony worthing didn't win. Yep, it's as if it's some kind of loss if the album that you released that you didn't become the the album of the year.

which I think is how Taylor .

use IT that is totally how taller views IT. In fact, that's the opening scene of misery on as when he gets the call, that reputation wasn't nominated. And SHE immediately switches into this mode of saying, oh, okay, well, I will write a Better album I that's okay.

i'll make a Better record only didn't win was nominated like that's .

like whose which in retrospect CT, that was a mistake.

yes.

But okay, let's go to one thousand and eighty nine. Welcome to new york. Blank space style shake IT off bad blood while these dreams. I mean, it's unbelievable.

She's always put to the boundaries like he does two things, one which is just so fun and totally in the tailor. Cultivating the direct relationship with fans, SHE picks a small number of fans based on their like engagement on social media, how engaged they are in social media. And SHE does this set her various houses and properties around the country? SHE invites them over for secret listening sessions of the album.

Before IT comes out under N. D. A, they can talk about with on the album. And SHE baked them cookies.

incredible.

And of course, like photographs and videos s the whole thing imposed on on social media like this frequent, brilliant, right.

And the law that comes from those ten people getting to say was there and eventually post pictures or anything like that just get tremendous simplification of anybody feeling like that could happen to them totally.

So in july.

what you are, we in twenty fourteen.

right before the album comes out in october, SHE rates an opped in the wall street journal saying that SHE completely disagreed with spotify and the music extreamly industry and that he believes that everything about the way streaming is happening is hurting artist.

He says, quote, in recent years, you've probably read articles about major recording artists who have decided to practically give their music away for this promotion or that exclusive deal. My hope for the future, not just in the music industry, but in every Young L I meet, is that they realize all their worth and ask for IT. Music is, are, 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, and my prediction is that individual artists and their labels will someday decide when in album Price.

Point is, I hope they don't underestimate themselves or under value their art. Now, what's he saying here? I like her specific beef is with spotify free tear.

The ad supported tear just doesn't generate the royalty is for people who listen to a stream that you would if you were a pink member.

And I think there's kind of two levels to tailor your objection here. One is yeah that the money, like lots of people are doing my music for free and i'm not getting paid or i'm getting paid very, very tiny amount for IT.

Very, very little.

I think the other is he genuinely, as he says in this piece, has an issue with people thinking that music should be free. She's like, no, like, I made this. This is art is valuable and nobody should get to consumer without paying for IT.

Yes, this is where we're really starting to see Taylor viewing herself as the poster child for the music industry. And when I say music industry, i'm in the artist and SHE views herself. She's even referred to herself uh, on camera, which is great as the a resident loud person of the music industry, which I think is such a great and in a little bit self a facing way to put IT where she's looking around he says, I believe this.

We're going to hold a hand basket here and like someone's going to do something it's gonna me again. This is the first time that she's like really embracing that role. You let's take a moment to talk about the decline of the music industry and then I want to talk a little bit about how the royalties actually work in streaming.

So first of all, the music industry peaked in nineteen nineteen ninety nine with about fourteen fifteen billion dollars in recorded music revenues. So this is shipping cities basically. I mean, when you look at this line and will link to the r wonderful tablo diagram of this, IT is like ninety plus percent shipping cities that was a gold mine for the music industry.

And then IT starts declining. And like, very clearly, naster happened. And then I fell like crazy.

I am looking at two thousand and five. IT was at twelve billion dollars. And then just five years later, it's at seven billion dollars in two thousand and nine.

C D. Sales fall like crazy. Music streaming hasn't really kicked in yet. And so there is just no money being made in the all time low for the entire music industry for recorded revenues with like seven billion dollars in twenty fourteen and fifteen.

So it's like right around this time where streaming hasn't started generating real revenues yet, the industry is basically been like flat to declining for the last six, seven years. It's brutal out there. And so what Taylors are of looking at is like if we continue to put all our eggs in the streaming basket, uh, I don't know. So why is he saying, ah, I don't know. Well, let's resume our previous conversation from when we were talking about the different types of licenses and the different .

type of copyrights. Oh, I get away.

Let's do alright. So talked earlier about the uh, publishing right and the master right, which you could think of as the publishing is kind like the song writing. The master is kind like the recording.

So now let's talk about the different ways each song could be played in which licenses are actually required for each and what the typical economic break down is for each one. So well, we're on the topic of streaming. Let's start with that.

Well, when you stream a song on spotify, the vast majority of the payout goes to the master recording. So I think the label, and when I say vast majority, let's call IT eighty percent, a much smaller portion, twelve percent on average, goes to the owner of the publishing, right, typically the song writer. So that eighty percent goes to the label, which then gets distributed to the artist, the singer or the ban, depending on the royalty rate that they negotiated, which as I mention tends to be tend to twenty percent going to the artist.

So you're they had like eight percent. Now eight to ten percent.

right? Exactly ten percent of the eighty percent. So then if they're also the song writer, which Taylor r frequently is, let's say that they take on the vast majority of the twelve percent, so it's call IT ten percent. So from a spotify play, it's reasonable to assume that a single song winter would receive about eighteen percent for both of those credits. It's sort of useful to know that figure and what licenses get used in streaming.

And is the baLance of the subsides like eighty percent of the master license holder and then twelve percent to the yeah I .

don't totally know where the baLance goes. I might be like B M I N S cap or something .

every morning is bounce to spotify?

No, this is the baLance of what ends up getting paid out on a play. So it's it's like ninety two percent to license holders in eight percent two, I don't know. Got so radio, even though you kind of feel like you're doing the same thing when you're listen to song on the radio versus listening to and on spotify, it's actually totally different, which is really stupid.

But the way is a song play on the radio is technically a performance. So the rights associated with that are similar to if you decided to go on tour and play your song. So in traditional radio, the split is totally flipped from what we just talked about in streaming rights.

So the majority of the revenue actually goes to the song writer, believe you are not interesting, but the recording artists actually don't make that much. So in the old world, if you were a song winter, you wanted a chart topper because that's how you would make your money. And if you were the singer or the artist, you wanted IT too, but you wanted IT for marketing purposes because then people would go buy your cds, which is where the artists would and the record levels would actually make their real money.

interesting. And of course, Taylor is getting, you know, both of these, but feels rightly so, like you should be getting more of each right.

And in any song riter economics, SHE gets way more of the split than in any masters related economics. Another example is songs that are played as a part of, like movies or commercials. These are granted via something called a sync onions ation license or sink rights.

There's a split between both the publishing and the master, right? For this one. I think they're about event or the closer together. Importantly, both copyright owners need to agree to grant this license.

So this is why even if an artist doesn't own their masters, but they did write the song, they can still decide if IT gets using a commercial. It's a veto, right? And so this is a smaller overall revenue stream for the industry. But there is sort of a fascinating element to IT there where even if you don't participate meaningfully.

the economics of something.

you still have a veto right over IT. And interesting. So we have all heard this notion. Streaming doesn't pay many tailors loud about IT here.

I think a lot of people know like, uh, well in the music industry, you know streaming doesn't make the money but the things like touring deo, so let's put some numbers around that. At least on spotify and spotify like services, it's about point four cents per stream. And then that sent that that that point four cents gets cut up between the label rights org ization, except the artist. And so it's reasonable this is a crazy thing, but it's a reasonable ballpark to say that million streams can net about four thousand dollars for the artist and their .

label in revenue.

And if you have a ten percent royalty, that means as an artist, you make four hundred dollars for a million streams.

哦， of that, so brutal. And that is.

if you are recouped against your advance, wow, otherwise is zero. Wo so for a very popular artist, know you can too x this by having a twenty percent royalty of these dreams were on apple music or its subscription only, and therefore a higher payout per song, that could further double IT. But even if you have a twenty percent royalty on apple music treme that still you makes sixteen hundred box for a million streams as the artist.

So tail is not wrong here. Like this is no bad. yeah. And if you compare this to .

the old world, our artists used to make like a dollar per ceety salt, like a few to ten percent yale and a ten dollar. There are some retail stuff you pay but like you make around a dollar. And so you know a million people listening to one song in the old world, or more accurately, because you are buying cds, hundred thousand people buying your album would be like a hundred thousand dollars for the artist. So you're used to people listening to your recorded music, letting you real dollars if you're coming from the old music industry, right? And the line I wrote my notes a day, if you can kill me later, is an artist is never, ever, ever going to make a lot of money from streaming like ever ground.

I love you, I love you. I love IT. Um alright. So Taylor swift.

twenty seventeen, right before their reputation to our were flashing for A A little bit uh, so like she's Taylor freaking swift at this point. Only two point four million dollars of her total income from everything he does comes from streaming, which might sound like a lot but she's like a number one artist at this point .

yeah she's making between fifty to one hundred fifty million a year depending on whether she's touring or not .

yeah and for even a Better illustration, you to that same year made fifty four million dollars total and only six .

hundred thousand of IT came from streaming.

Wow.

like ver ever. Okay, so we are talking about one thousand and eighty nine. Taylor drops the album on october seventh, twenty fourteen.

IT sells one point three million copies of physical digital in the first week. It's huge on streaming till i'd written that up in in in the wall street journal back in july. So before this, everybody is gonna here.

He drops the album a week later on the november third after having been out for a week, Taylor pulls her entire catalogue off of spotify, not as nineteen ninety nine, but all of her albums gotten off of spotify. Power move, totally power move. IT would take until uh over two years later in the twenty seventeen when, uh tea swift will come back to spotify before the reputation release.

Actually think this was just about two years. I think IT was three. Oh, you're right. IT was three. IT was three years. yeah.

Quote from Daniel c, when tears were finally comes back, I should have done a much Better job communicating this. So I take full ownership of that. I went to natural many, many times to talk to Taylor team, spent more time explaining the model why streaming mattered.

And the great news is, I think he saw her. Streaming was growing. I think SHE saw the fans were asking for IT.

So eventually, when the new album being reputation came out, he came to stop home and spend some time here figuring out away that made sense to her. Wow, this is the C. E. O. I like I am obviously involved here.

And by the way, when he says her team, there's a an organization that's pretty big, I don't know. It's twenty employees, fifteen and twenty that called thirteen management. And IT is is is her whole team. The other entity is associated with that, one for merchandise, one for the fan club, like there's all these like real businesses that are sort of surrounding Taylors with the artist, and there's a lot of people that work on those.

So we're going to come back a little later to talking about why SHE changed her mind on streaming and went streaming can do for her now. But there's one more thing in this chapter.

apple music.

Yeah, apple music exist back that IT was beats of SHE was cool with beats because beats was paid. There was no free tier in beats.

yeah.

After apple bought beats, we covered this back at our beats episode way back in the day. This is so fun. When they were gonna launch, we launch IT as apple music. In this is june twenty fifteen, they announced that everybody's gna get a three months free trial of apple music before you have to pay. Well, what they didn't announce to the world was that the back end of that for artist was going to look just like spotify and artist, we're going to get paid during that three months. So Taylor, Taylor, like, oh, no, no, no, no, no, no.

Taylors comment on this, which is unbreathing believable, is in, quote, we don't ask you for free iphones. Please don't ask us to provide .

you with our music for no compensation to, on her own social media, to her own, you know, audiences. I find IT to be shocking, disappointing and completely unlike this historically progressive and generous company. Three months is a long time to go unpaid, and IT is unfair to ask anyone to work for nothing. And then then, as you said, we don't ask you for free iphones. Please don't ask us to provide you with our music for no compensation.

Here he is taking on her role of industry loud person again. And uh, the best far is that E, D, Q. Tweet back .

at her OMG. So literally within twenty four hours, apple changes its stance because of Taylor. Apple doesn't change its stance for freaking anybody.

Apple is the biggest company in the world change. They are developer. Like, this is unbeliever, less than twenty four hours A D Q tweet.

We hear you at Taylor swift thirteen because of course her and tell the team and the artist. I don't know where that and the artist comes from. Like, no, this is about daily. Yeah so then later that day in the interview, he says when I woke up this morning and I saw Taylors note that he had written IT really solidified IT that we needed to make a change overnight. They change IT and they say we're to eat the cost during the three months free trial .

for p customers and pay artist Taylor swift. First is apple Taylors with winds that is uh, a rare, rare or thing.

Yeah you might be wondering, well, how did does tailor make all this money if it's not from streaming and you know obviously digital bum sales? He makes a good amount of money from that SHE makes money from endorsements, various emerge other stuff. The one thousand and eighty nine tour gross, two hundred and fifty million dollars.

So that's a quarter billion dollars from the time. Now that gross and IT is quite expensive to put a tour on, like you pay for the arena, you got, you know, fireworks crew, other musicians like this. This is not high margin revenue.

but of not .

software. But still, two hundred and fifty million dollars is a lot for a one tour, for one album. IT becomes the highest cursing U.

S. Tour of all time, beating the rolling stones. wow. Sadly for the nineteen eighty nine tour, but not sadly for Taylor, that record would be broken a couple years later by the reputation tour.

which grows two hundred and sixty six million .

dollars in the U. S. And three, forty five world wide. Yeah, that's a lot of money.

And I have to imagine that still the highest growing toward to the day because who would have performed after with .

no coit IT is not. So this is where it's interesting like you can't really do apples to apples with different artist tours actually gets eclipsed by ensuring tea swift busy with his uh, divide tour oh, but I think the reputation tour, i'm going to get this wrong. I want to say he had called fifty dates, forty fifty dates, something like that. The divide I went on for years and had, like kito, I don't know, two hundred days or something like that.

I think he still holds the record for the highest single year growing to her that.

Is also hard because I see to how often do you perform. You can perform two hundred times in a year.

right? Yeah, it's really hard to Normal. alist. This is you need to do the same thing that people do in retail where they like do same store sales.

So you're like what's your average uh, Price per arena per show? okay. So interesting on touring. That's the reputation tour. We did sort of flash forward here and we just started talking about reputation.

Reputation was inspired by a series of events and is a very different album than its predecessor of one thousand nine hundred eighty nine. It's much darker. It's a making a loud statement.

In fact, there were two years before IT where SHE didn't release an album versus her typical every other year. So there was a whole sort of year that he did, some reflecting, some changing, some grieving, some being angry. What s happened that predated reputation?

Well, first I have a confession to make. So until, like, I don't know, twenty four, forty eight hours ago, I was still in the camp that, like, I mean, I know all this context, one just me personally enjoying the music. I didn't like reputation, and I thought I was I know I was with the majority when I came out that I was a weaker album yeah.

And as you brought up the opening scene of this americana is reputation not even getting nominated for grammar, right? Like everybody agreed. And then recently, IT has become very cool, much like chinese air ates and heroic album to say no. Actually, reputation was really great. IT was just ahead of its time.

How dare you bring on into, and I will say like so reputation has some just like amazing songs ready for IT. I did something bad. Look what you made me do anyway.

I didn't like IT, but now doing all the research we listen to, I think it's great. I love IT. I'm now in the camp of it's fantastic .

yeah interesting when some albums are Better after years go by.

I really like end game ah .

also great with a geran.

of course. By the way.

David and I are not music critics. There are like four rolling stone podcast linked in the sources that aren't like an amazing music columns, discussion of each of these albums, if you want to do some, like real musicals. And also this on IT. But anyway, OK, what inspired reputation?

Okay, so yeah, what what inspires IT? On valentine's day, february fourteen and two thousand sixteen, ky. West releases the life of poo. I don't know that actually ever listen the life of people, people all the way through, but I think it's pretty, pretty good album. But of course, that has the song famous famous, which has the famous line and the I don't think we need to say here, right? I think people know what IT is.

right? Yeah, absolutely not. Is a pretty offensive line, uh, made more offensive by a music video where Connie .

finds all?

Is that at all? Is that a model? But something that looks a lot like tayer swift and it's nude in the video is is just like so much about this is so offensive and printers to look at and the album comes out.

And I don't think we need to go into the whole like kim Snapchat thing here. But so nice to say canyon in his team deemed the appropriate to release this album with this song to the world. And where you can't ship in album without a lot of people signing off on IT, including your manager, and things were signed off on.

well, I mean, literally in the video of the famous phone call, rick rubin, the faver producer, is in the backer in the he produce, I don't know he produce that song, but like he was there. Yes, lots people involved.

I guess we should allude to at least like what I did. So there's this like terrible lyric that ky, after the album comes out, says, oh, Taylor and I actually to talk about this and he approved and I was like, no, I didn't. And then later on, kim karaha releases some stamp chats that are like, I secretly taped a orkney is secretly tape this conversation.

And here is you saying that IT was OK, but he didn't fully say IT was okay. He didn't approve. The worst part of the line anyway is mercy.

There is lots of discrepancy over this. Taylors like, what the hell? I thought this thing was dead and buried five, six years ago. And here we are dredging IT up again.

again, yeah again.

How could this not send you into some like emotional interests such that you're not releasing your next time when you thought you were, that IT changes where you are creatively, that IT inspires a whole new look and feel and tone to your music.

A lot of popular opinion turned against Taylor or and that's GTA be here for too. That's got ta be really .

helpful totally. And popular opinion kind of fairly turned against her like he was saying, I don't know, SHE exactly said we never talked. But SHE kind of implied, like there is no agreement and what the snaps touch.

So is like you definitely had a conversation. You were very thoughtful about how this is onna come across when this gets released. You may not have hurt that one lery, but like you totally talked. So then Taylor sort of has to change her positioning to the public after she's getting sort of lab based ted and people are turning on her and say, like what I didn't hear that line and that sort of what I meant and it's not a great look.

No, it's it's not.

And so for the first big time, a person who derives a lot of her pride and a lot of her sense of self and has always gotten very positive, largely positive feedback from fans, is now seeing an a mentor of negative feedback. And IT, really, he talks about this in miss americana. IT really requires a psyche reset, where SHE has to retrain herself on who I am in the world and why am a person of value, and why I need to value myself, and how I should think of myself that is not connected from. Did a million people tell me i'm great today?

Because a lot more than a million people were telling her he was stuck rate at that point. yes. So yes, that's that's the background for reputation.

And you know other than like this being hugely influencing the creative aspect of the work, this comes up in a really big way very soon. In the business aspect of tailor swift, all right listeners, our next sponsor is a new friend of the show. Huntress is one of the fastest growing and most loved cyber security companies today. Its purpose built for small emit sized businesses and provides enterprise grade security with the technology, services and expertise needed to protect you.

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Yeah, that's the other thing of our reputation. Men, reputation was such a landmark turning point.

the career in huge way.

But I think this is the thing about tailor. They're going to talk about him much more in playbook that like every album is a turning point in her ker, like SHE reinvents herself every single time. And I just have so much respect for that, like that is so hard to do.

So we talked about the rights that you license when you you give your masters away. The way these record deals work is they sign you for certain number of albums and they're saying, look, if i'm going to take the risk and front new money for this first album, i'm they're committing to or getting the option to your next x albums. Taylors was six. That's a about market from what I could tell.

Yeah, I was going to ask, is that Normal?

I think so. I had actually used to be more, but it's like eight to ten, but it's come down in recent years.

So this was her sixth album in the last one. SHE was under contract with big machine for Taylor. Does all of Taylor stuff, but he doesn't have any issue with big machine per say.

There's no bad let there. But the industry is like, well, this this is going to be a big moment. A variety article from around the time comes out that lays out what they see as tailors for options for what to do going forward. Uh, now that this deal is expecting and they note that probably the most important factor in her decision is going to be the master licenses, certainly for future albums that shall make, she's not going to take a ten to fifteen percent cut going forward.

But they suggest, say, people in the industry are saying the Taylor is such a big star that depending on how things go with big machine in this negotiation, he might be able to renegotiate the past split on old albums that she's done if big machine is involved going forward. So they say there's family four options here. One, Taylor actually genuinely could just ditch labels altogether and go run this whole thing herself.

I think the bigger reason SHE and other people don't do this is if you do go this path, you essentially have to build a whole false stack company around yourself. And that takes a lot of time and energy. And if you are an artist, and the primary thing you do is create, make music. That's a distraction in time.

Away from that. There is way more stuff involved in the back office of music than you can father. I mean, of course, there's like we need to make sure it's on all the streaming services, but you also kind of need to be in retail even though there's not a lot of cds sold.

If you're teller swift, your cities are being sold. You need to be able to make cities. You need to be able to make merch. You need to be able to handle all the inbound requests for people who want to use your music for certain things. You need to work with the rights organizations to go around to events who are illegally using your music and make sure that their a listening for that and making sure there's a lot matching license and if not, sending them the invoice for IT.

And this is an unbelievable amount of things that if you go through the traditional value chain, through the record labels that you canna get the other big component that I sort of failed to realize until reading, again, reading donal passwords book is just so enlightening. It's like the venture deals of the music industry is the right. I think the best way to put IT, if you're a retailer, if you're a streaming service, you can't really piss off one of the big three because their cloud is to take everything away from you or even, let's say, you a retailer.

And these don't matter as much anymore. But let's say your selling, like for the indian artist who dealt with you individually, they can be the last check that you pay. But you Better make sure you write in the checks to everybody who's on the label because they sort of work as a group. And so there's all these ways you know, you want to make sure that you're getting on the right playlist on spotify. There's all these ways where is really helpful to be a part of something really big for negotiations.

Maybe this is part of the unset point of in this variety article, exactly Taylor, or is really one of the few artists, maybe the only one who could do that, right? That second point that you're mentioning, I think, applies to almost every artist, but literally SHE made apple change their policies in twenty four hours, right? So he could bit it's unlikely that she's gonna decide to do that just because she's an artist.

He wants to be an artist. Option number two that they layout is he could sign with a different kind of major label ecosystem altogether. So SHE remember, big machine, a label is part of the universal heritage and ecosystem.

Yeah, Taylor, or could jump to one of music group SONY, or you one of the other big groups. And SHE already has the SONY relationship for song writing. That's not unreasonable. Probably gonna come down till like economic son who's willing to pay the most in that arena. Three SHE could leave big machine, but stay in the universal lego system in sign with, you know, apparently it's self for one of the other sub labels within universal, an option for, as he could stay with big machine. Now ultimately has, we all know, SHE choose this option.

Three SHE doesn't play staying with big machine.

SHE definitely does.

They even publish what looks like some screen shots of legal document going back and forth and having proposed changes. And IT sort of seems like from those. What big machine is angling for is if you sign with us for they want ten years, Taylor as seven, then by staying with us, you earn back the rights to all your masters.

So if you stay with us through the second term, then the masters from your first term become yours. And there is no way to know what the economic spotts are any of the other terms of disagreement. We don't even have a substantiated that, that screen shot, that big machine decided to put out as real. But what we do know is that big machine was willing to let her have her masters from the first six albums if SHE signed with him again. And we don't know the terms were .

so SHE signs with republic records, which is another universal sub label, and specifically its universal pop, some label. Now this makes tons of sense. Big machine is a country label and independently owned. But in the universal ecosystem, republic is a popular like, this really is what makes sense.

And and not only that, but Taylor and big machine head been working super closely with republic to get all of tailors songs that when they wanted pop radio play to get on pop radio stations. Republic was the one handling that because every sick machine didn't have those relationships. So when this is all announced, like it's very amicable, at least that's what this is presented desk. Taylor is staying in the universal family.

She's moving from a country able to a pop that makes lots of sense.

And again, we don't know what the tender and tone of the negotiations were up to this point. But once this happens, this really, really changes the business dynamic for big machine. And again, we don't know how much people knew this was onna happen beforehand, but here's the reality is estimated that revenue from Taylors work was eighty percent of big machines total revenue.

Now they had other artists. They had rest flat. They are other folks both current and passed. They own the masters of in the past. But Taylor or was so big, eighty percent of the revenue of the company while Taylor is still signed with them. You know that's like .

Operating revenue. And even after Taylors not signed with them, it's still you're Operating revenue because .

the nature of what this acid is IT really goes from becoming I think in my view, this is all my interpretation that eighty percent of big machines revenue turns from being Operating revenue into being like a cash for streaming asset revenue, like whole nature of the company changes like you were a label who worked with Taylor swift and you are produced actively producing music with her and distributing and everything to now you've got her library and that's very different, right?

That's a great point. Yeah, it's now an income producing asset.

Yes, for sure. To your point, you need people to know any of the phones when somebody wants to use this in a commercial and have their relationships the label bit like probably, I don't know, eighty ninety percent of your Operating activities around that. You know the Taylor swift to aspect of your business .

now just like disappear.

right? IT changes the nature of what big machine as a company is and specifically turns IT into this lake at the time, you would think probably predictable cat flow asset.

by the way, this cash flowing asset that you own is subject to someone else having extra feelings about the cash for ability of that asset. exactly. So what's the first thing that comes out in terms of some scuttle? But on on the steel, well.

it's an extended period of time before all the drama and all the beef and everything comes out around big machine and the masters. I suspect what happened is that as soon as this change happened, all the dynamics we are talking about become evident. IT now becomes pretty clear that like big machine is now a security of all asset essentially, and probably should be sold.

Scott chatt could hang onto IT and keep their roald associated from the old t with masters. But like there's not that much else going on a big machine as a label. It's now this cat flow. I said the market is hot for security. Zed, I P licensing deals harder than ever, probably he's going to sell. The reason I think this is now becomes a separate phase of the negotiations is because had Taylor made a different decision and stayed with big machine, either fully or in some form, all these dynamic would be different.

much less likely to sell exactly.

But when he made the decision to leave, now that sort of kick off the sale process. So now lots of people are interested. They run an oxy uh reportedly event speaker who I didn't realize the data. Taylor swift briefly is interested in buying lots of P, E. Shops or buying.

I think, for, but the idea was to like build music into the discovery tab that they owned .

or something interesting. Well, they are run a sale process. Now here's the question. Is Taylor part of the sale process could tailor reasonably have just bought either big machine itself or the masters, which were the majority the value of big machine?

I mean, either, yes, he could have out right if he was the highest bitter or he could have lined up financing to become the highly bitter.

Taylors current network is five hundred and fifty million dollars, so just ever half a billion at the time. At this, according to form, at the time form thought I was proud. Ly, around three hundred hundred and sixty million. The ultimate sale ends up happening for between three hundred and three hundred and thirty million. SHE, for sure, could have, yes, I would a bit like most of her networks by hour, but he would lined up financing, just like everybody else lined up financing to do this.

Now, did they pick up the phone and call her and say, do you want to make a bid that we don't know?

He claims that he was never offered the chance to outright by either big machine or the masters themselves.

which is, of course, fascinating because 第一 owners。 And you can see this on the secretary of state website for the state of tennesee of big machine records. And i'll see there are only five members in this.

L one, of course, is the C E O, skype china. Another, of course, is topic h. There are two that we don't know, at least daily I can find the research. And then, of course, the fifth is scot swift. So in order to make a sale, uh, it's not that you need god vote.

And what apparently happened this because there was an undisclosed remen involved that he didn't want to attend because he of course, we wanted call Taylor, but he did not attend the vote to decide to sell this or not. But IT is crazy that the swiss family is one of five shareholders of big machine. And when the sale inevitably does happen.

everybody knows this is gona happen. Tale even says that he knew that once you went somewhere else, IT was obvious that big machine was gonna sold.

Yes, now who did you get old to? As we are saying.

there's a lot of private I could be interest and IT does get sold to a private equity backed company by the name of ethic holding. Specifically, IT is backed by car al David.

whose s cold lings managed .

by the C E O of s cohosh dings is scooter Brown, uh, and scooter himself, very well known famous talent manager in the industry, artists like Justin n. Bieber, and for a time ky. West.

and for a time, ky. West, and for a time. Well, can the west put out famous? Can the west?

Yes, you made point. Lots of people knew that famous was being worked on and was coming out. And there are people in that video that obviously were there.

Certainly, scooter probably knew about IT. Would any of that changed? Can you doing this? Like, I don't know.

So to cut the chase, Taylor comes out with a post about this and says, this is my word's nightmare. Not only that I wouldn't be given the opportunity to buy my masters, but also bysset ter Brown. And it's not totally clear.

And IT doesn't need to be public because people can have private spats is like, okay, so he managed knee during that time. There was one thing on instagram that Justin bieber posted at one point that had square Brown in IT. That said, like, what's up, Taylor, that SHE screen shot and used to show that in some way scooter has been taunting her.

What's not totally clear is like why there's beef and why it's her worst nightmare. D to be scooter, but SHE, absolutely. Once he decided that that was true, made a giant tic deal about that. And I have no value judgment on that, but this served as an explosive point for her in her family base.

Then things just get even more interesting from a business time point. There's this home morass of rights issues around .

what you can't canna do, music tailor recording copyright, the song ray copyright. So she's been vetoing all these opportunities to use them, uh, in sick licenses. So I go you want to use in that commercial and that could make a bunch of money for the people that on the mastery.

Meanwhile, all this is playing out in the court of public opinion publicly.

Lots of people are listening to Taylor swift. That's definitely happening.

Unlike thirteenth singer Kelly Clarkson tweet at Taylor, just thought you should go in and rerecord all the songs that you don't know the masters on exactly how you did them. But but brand, you are in some kind of incentive. So fans will no longer by the old versions.

I'd buy all the new versions. Just a different point. This tree exists, will like to IT is out there.

Now here's it's really interesting, where did Kelly come up with this idea? Well, IT turns out that uh, aside from being like you know the great country artist herself, her mother in law at the time, I think SHE since got diverse. But her mother in law the time was with the mcintire, and reba did this no way. Riba did this for several reasons with old albums, but certainly one of which that ribbon had told Kelly was that by remaking albums from the earlier part of her career and releasing them later when he had a Better record deal, SHE was obviously gonna get more of the upside on. That is amazing.

And the one hand, you like, come on, that's so much work. Who would do that? You have to invite back all your collaborators. You have to rerecord every single track because you can use any of them. Your voice has changed your thinking about all these access.

You really want to think about them anymore, jack.

But Taylor is monaco and on a war path, and SHE does IT.

Couple weeks later, in August of twenty, twenty, and Taylor goes on good morning amErica and announces that she's going to do this if he doesn't reference the Kelly Clarks into but I I think it's just as plausible as not that like this is where the idea comes from.

not probable cause, but plausible cause.

But Better to your point, other artists, familiar prints, had threatened to do this before billing. This isn't something you do at the weekend. This is really it's like making a whole new help like IT is a lot of work .

and the release and the promotion tailors time on this earth is short. And her time of being a celebrity is short, unless he manages to constantly keep reinventing herself and for her to dedicate prime years of her career to this project, going and and spending all the time doing this, instead of creating the next album that shows how much you want.

This is completely empty user that tailor could recreate her old albums and keep making new albums, even anything close to the paste that he had been.

Yes, David, you're fearing this chart that I made last night. I made a rolling two year average graph of the number of song's Taylor released to smooth out the curve basically. And he used to released albums every other year. And it's basically two thousand and six to twenty nine is red, around ten songs per year that he was releasing. And that in twenty twenty SHE release, twenty five and twenty twenty one SHE released forty six SHE minister released two brand new albums, while also doing two rereleases during the pandemic.

Best thing that ever happened to telly swift, I guess.

So lovers, the first album, uh, on the new labels that right .

public comes. And twenty also really good. Go watched if you haven't.

But then there was a big tour plan for lover. Lover first that was gonna take all of twenty, twenty. That tour gets cancelled.

And the crazy thing is he announced the rerecording plan, even while lover was gonna happen, the lover first tour. So he was like, oh, sure, i'll be hd tour all year and i'm gna do this.

I think this is one of the really good things that from .

the pandemic and far more or yeah foker .

ever more and feel less and red and yeah and the long concessions, i'm always .

torn in trying to decide why is SHE rerecording? Is IT vindictive and emotional or is IT because there is an enormous amount money at stake, if he does. And it's both definitely. But IT is fascinating that he has this kind of dull motivation here where one of them is I definitely wanted to buy my masters and kind of bomb that I couldn't get on. But oh my god, now scooter has them.

so I must read and destroy. So surprise, november, the long pond studio sessions comes out as a film on disney plus, where they all get together at long, on studio, in person for the first time, and play the songs live. They are there together, run around the same time in tony twenty. Irony of ironies, ethical and scooter and big machine sells the asset of the masters of the first six albums.

just Taylors big machine .

in the Operating company, all the other masters of other artists. They have everything that stays with the the holdings. They sell only the tailor masters to a private equity firm for about three hundred million dollars. So about the same Price that they paid for all of big machine a year earlier.

And assuming that eighty percent of the revenue in that so that there there are still left with some twenty percent chunk of value.

So nice little mark up a year, some rash at stuff. Some others, I think might be some tim work that they do with the private, actually firm that the salad is shamrock capital.

which sounds in enough.

Now the minute I saw this, I was like, oh my god, because a story, you know, media, investment banking. And one thing we were talking to, one of the P E firms, we were talking to A B capable. They did a lot of media deals because they started as the family office of the disney family.

So crazy.

Now there is no direct connection anymore. Like if this is more just coin stance.

but like, wow. And it's really e disney, which is the sun of roy o. disney. I think I have that right.

Who was he was the one who is kind of like agitating on the board, the C E. O. Transition, if you read right of a lifetime. Interestingly enough, they did this without talking to tailor.

And if I were doing diligence on an asset where someone has announced that they intend to, on a war path, devalue the thing that I am buying, especially when i'm buying IT and an appreciation to our was most recently marked in the last year, I would probably call that artist and say, like, should we do this deal, what would you do? If we do this deal, can we find a way to work together? Apparently that doesn't happen.

And by the way, just to underscore how unlikely IT was that he would continue and go through and do this, there is a strategic article from April of twenty twenty one, so only nine months ago where pen thomson says it's easy to see how this plays out going forward. Swift probably doesn't even need to remake another album. SHE is demonstrated her her willingness and the capability to make her old records and her fans will do the rest. But then he dropped .

red ban at that when the fearless tail his version came out, which again wasn't till people twenty twenty one back to december twenty whenever more comes out because focal ir had come out just a few months before and was obviously huge when everyone comes out. Tea swift has concurrently from these two albums, twenty two of the top fifty songs on the billboard chunks.

IT is remarkable to as you go and listen how good the rerecord ings are. They're both faithful to the originals in all the ways you'd want them to be.

Oh no, that's just every more and and focal.

So this doesn't include redden .

that does not include feel. Well.

well, I do want to make that point, but it's not related. They're both faithful and Better because she's matred so much as a singer.

So twenty one feel less Taylors version comes out. Deb is at number one, as did vocal or as did even more so Taylor becomes the first artist in history to have three albums come out debut at number one in less than a year.

All graphs of Taylor swift look compounding there .

has never been a more up as IT goes to the right, at least in her industry. We ve got to talk about what he calls the tailor's version. It's brilliant.

It's so brilliant .

because what else to call like twenty twenty one version, or you remake remastered.

you want to identify with Taylor. This is the version for you, dear fan base i've been cultivating for sixteen years. If you love me.

you'll listen in my version. And then in november of this year, on november twelve, Taylor sends me a birthday present. Thank you.

Taylor was a really, really nice birthday present. I didn't notice at the time that of one month about releases, retailers version, the fearless tailored version was so good. It's my favorite alpha.

I love you. I mean, this has the many version all too well.

the many version.

the video associated with that, the other music video that came out that's directed by black lively.

the live performance. Yes, you know, jake, john, how may have been a joke to her ten years ago, but come on.

give the guy break. I mean, he just picked he .

a bad timing was bad timing. Indeed.

there is A A couple of points before we round out the story here that are worth making about her deal with U. M, G. And one of them will be straightforward and one of them will be a fun deep dive into spotify history.

So here's the strait forward. One Taylor negotiated may be the best, most artist favourable record contract of all time. The way that her deal with U M G works is SHE actually maintains the ownership of her future master recording rights and SHE licenses them.

To the label. I owned this the minute we press the album and you can use them. But that is not an unlimited period of time.

The U. M. G only has the license up to ten years, at which point they will regain full control .

so they could go make U M, G, S version of poor. And never.

actually they couldn't because he owns .

the song writing credits.

That's right. yes. So Taylor has cut this just freaking believable deal. And Taylor s quick to point out, will actually the bigger part of the negotiation for me was the thing that I negotiated that involves all other artists benefiting from my contract.

And what does that mean? Well, this is where we have to take a quick trip down memory lane. So think back to two thousand and eight.

If you lived in the U. K, you could use spotify. I think maybe germany, if you lived in the U.

S, you couldn't. So it's this Young emerging things about about two million users in the U. K.

No brush. Metal is in vote. Kind of looks like dark. itunes. Well, spotify really, really needs the labels to play ball.

And what are they going to do? Go down clouds round and list a bunch of indie music on there? Like Daniel has a specific vision for mainstream music listening happening in a streaming way. And so the three big labels and some indian labels collectively together get offered the opportunity to buy spotify shares and an extremely favorable able Price.

And so h whatever the basis is, it's like tribute low and they own eighteen percent of the company, huge demand, I mean there as big as A V C or or bigger than A V C on the captain. And so there, you know, incentives to play ball for the first able future and make this asset go up. They, from what I can tell me, to baLances sheet investment.

So IT comes out of the shareholders coffers and festival to today, the universal music group is estimated to owe about three and half percent, wow. So that today is worth about one point five billion dollars at the current market cap, which is basically all the capital since I was a super, super low basis, super early investment. So U, M, G, unlike the others, never saw this share.

So that's been great for the spotify stock because it's appreciated the last few years since the IPO. So what did the other two big labels do? Well, Warner first, and they gave some of the money to artists. They gave twenty five percent.

They so they give twenty five percent the of the .

sale proceeds of spotify stock. You might think why are they giving any, which is kind of a reasonable of thing to think because they made a baLance sheet investment. From what I can tell, they may have been given the shares, but I think IT .

was an investment. Yeah, right? I mean, that seems like awfully generous in an industry that isn't exactly reynand for generosity.

right? You might say, well, why are we transfering value from our shareholders to our suppliers effectively? Well, bar is santis suppliers. This is a much tighter relationship.

And in some ways, if by doing this, the labels actually accelerated the move to streaming and IT may not have happened otherwise, then the artist as a stakeholder group, or sort of hurt by the labels, deciding to collude, really and do this because all three of them did IT. So interestingly enough, warrior does this. They only give twenty five percent of the appreciate, but they do IT as a credit that will be recouped against earnings from albums.

So they sell IT. And if they say, this is great, you can have this as basically of additional advance and you can pay us back for IT. So that's community. So SONY was kinder.

They said that the money that they gave to artist was not acceptable, totalling two hundred and fifty million dollars of a total wind fall for for all of the artist. This is about a third of their stakes. So it's more than than what Warner did, and it's not acceptable in Taylors negotiation as a sticking point in her contract with U.

M. G, SHE force their hand to do the best deal of any of the labels by far is not public, but people think it's at least the same thing that warn or did twenty five percent but nonrecoupable. And given the size of U M G stake from the holding, that would mean something like seven hundred million dollars would get distributed to artists .

with zero need to pay IT back. 嗯。

that's levered. That is like some new customer coming to you and saying, by the way, in order to do business with us, not only do you need to give us a screaming deal, but you need to kind of change the way that your other existing contracts work that I have nothing to do with .

and pledged this asset that is nothing to do with me.

yes. Now of course she's gone to make some money, but I think other people actually will be much larger recipient of the seven hundred and fifty million when that ultimately get distributed.

And certainly in terms of impact to those other artists who don't make as much as Taylor on an ongoing basis. So I said earlier that tailor came around on streaming, and streaming has actually been good to tailor until he's been good to streaming.

What is the biggest part of that? Now this was not in the works when Taylor or did come back to spotify, but has been huge for her, the television, right? Imagine a world where streaming was not the primary paradise due which customers consume music. Even the brilliant calling them tailor version should still still have to go convince people who are they owned. Feel, listen, read to go to by the cds.

Now it's very easy to swap out in your playlist or if you're just like if you're not a play lister, you're just searching you're like a good the newest one. Taylor's version that sounds right.

I ve noticed. I don't I can't imagine this suggest for me. But if you ask your favorite virtual assistance to play red or fearless or all too well, are they playing .

Taylors versions? Of course.

they playing Taylor's versions, who was yet another factor that enable tailor that really do this remark strategy in a big way. So Taylor swift .

has an astonishing two hundred million followers on instagram, which makes her the fourteen th most followed in the world. But there are four people from a single family that are ahead of her. Who are they?

Uh cardan yes.

there's stardom and then there's ludicrous argument. And IT is amazing that there are so many places in the story where it's Taylor and her crew versus ky in his and it's create, as I was just looking through, who has the most influence on instagram that just did like total reach that the cardan's an genre west, I know not together anymore, but tim cya has as nuts.

yeah. Well.

I mentioned to you that much a electric came up again. Oh yes, in the research on i'm sure at this point you can probably .

guess why universal .

music group yeah. So universal music group is now a totally separate entity. But at one point was part of M C, A universal, which Michael ovis sold to.

I didn't realized that they were still together at that point in time. I thought they had .

already been filled out. Yeah, totally crazy. So the a fast working all the way to today. U M, G owners are, uh, of course it's probably traded, but the vd still owns ten percent of IT.

Vincent balloray, I don't not not familiar with that OS eighteen percent pursuing square holdings owe ten percent as the famous uh bill actions reset don't call IT us back activity. Do you know who owns twenty percent of U M G. That we have done an acquired episode on and uh is a big part .

of acquired law .

tenant .

tenant yes, which may have come as part of a swap with tencent music in that I P O. I think something like that .

crazy how interconnected this weather.

We don't yet have total earnings numbers for twenty twenty one for a Taylor, but as I mentioned earlier, her network estimated by forbes in the August of twenty twenty one was five hundred and fifty million, up from three hundred and sixty five less than a year before. So I think it's fair to say he had a pretty good 2020 one， totally for a sense in the music artist industry, how SHE stacks up all time for just music sales alone.

So we're not including touring. We're not including merge, just like literally consumption of paid consumption of the music. Now this doesn't include streaming.

Uh, it's been accounted for wing here. So you can sort of compare errors here. Taylor is thirty first of all time in highest pure music sales. Now you might say like thirty one. I mean, that's like that's a great is impressive.

IT feels a little little, but I do think the way that the streams are counted is disadvantage related to the way they used to count album sales because they equate fifteen hundred and streams to one album, which is a little bit like OK. So you're started like saying that it's one hundred and fifty license per album, which might be a little bit generous like that I released in my cities one hundred and fifty times.

Yeah, okay. He is the only artist in the top fifty who started her career after the year two thousand. And he started in two thousand six.

Everybody else in the top fifty started at least one, if not multiple, decades before tailor. Now you look at other artists who started in the two thousand decade. The only others, there are three others in the top one hundred tell us thirty one. The next is a dell at sixty six.

So this is like comparing lebron mid career to Jordan. If you're trying to compare Taylor swift now to the beatles.

beatles in number one now switching over to the touring side, the reputation tour is the nineteenth highest german tour of all time.

including ones that run for multiple years.

Well, that's the thing is like when you factor in number of dates on the tour, IT has significantly less dates. I think that has less dates than every higher rank tour above IT. And most of them, IT has significantly less states. The other thing I looked at here, which was pretty hard and fluffy as you can look at, uh, various publications have estimates on highest earning a list of highest starting artists for the year and they all have different methodologies and almost undeniably by any measure uh twenty sixteen, twenty nineteen, twenty twenty and probably twenty twenty one SHE will be the high starting artist.

Totally amazing.

Okay, that's my trivia. Now I tweed the other day that the first episode of season ten has a direct connection to standard oil on, I bet nobody can get IT.

So I bet a lot of listeners at this point, no exactly what the connection is.

but this is the most amazing part.

And we gave no hands. We've told almost no one about this.

almost no one, but one person .

who guessed IT out right immediately unnailed IT .

direct reply nailed IT. No inside knowledge, no awareness of what was happening. Is Christina from veta amazing?

That is how good he is.

Christinia c. OPPO.

that was a dead on guess. And IT is scary how much you knew that the last great american dynasty was indeed the linkage between the standard oil trust and Taylor swift in twenty thirteen.

of course, tailor bought the property known as the holiday house in road island ah that was previously owned by rebec hardness and bill harkness, one of the direct dependence of drag fellers inherit of standard oil .

fortune air to the standard oil name.

There's a lot of fun stuff out there about rebeca, and he was eccentric, SHE funded. Lots of stuff in the arts, particularly dance. The stories is in the song about stealing the dog dying. A key line definitely did not steal. A dog may have died a cat killing, but there was .

some of daily are right. Seven powers. So as long time listeners know, we are adapting, using hamilton and helmers seven powers framework, which is an analysis of what enables a business to achieve persistent differential returns. In other words, how can I be more profitable than there are closest competitors and do so sustainably? So David, I guess let's think about Taylor as a business, not about like her previous rights or U M G as a business, but like the business of being Taylor swift and having all the assets SHE does and all the control that he does over what he controls and not over what he doesn't control. So you're Taylor that that's the analysis I didn't get to.

The only scale that we can really analyze this on anything else feels too small, of course. So the seven powers are counter positioning scale economies, switching costs, netware economies, process power branding and cornered resource branding .

is a no brainer. Like if I heard a song and then was told that I was Taylor swift, first of all, she's recognized able after he probably could guess, but if I didn't guess, such as in, uh, what's the song where he was study's ous?

The riano Harris song yeah yes.

SHE of course wrote that and is singing in that, but is not named. I never know that before. IT brings up the value of the song to me and hundred million other people yeah. So she's definite got branding power going on. I suspect the biggest one she's got as scale economies.

Oh, you think scale economies?

Well, I look at IT as the scale of value she's producing in the world because so many people are consuming her music. SHE has the opportunity to take advantage of scale economies and bring stuff in house that no other artist could bring in house. She's not necessarily doing that. But I think the fear that he could do that is one way that he got the deal that he did where SHE actually owns the masters and licenses them to the labels.

right? Like we talking about, the only reason he keeps a label around at all and didn't go do IT herself is probably just convenient at this point.

Yes, they made IT cheaper for her to do that, or as cheap as actually doing this in house, which would require her scale to be able to do in house.

yes. Okay, I can buy that.

I think definitioned SHE also has switching cost because the C. E. O. Spotify, when he was not on spotify, was flying to the, you have to negotiate for her to get back on. Clearly, you can't substitute replacement and have equal value.

which I think also implies corner resource. Does he have network economies with the fans and the swifts .

of fans with each other?

maybe? I mean, to the extent that like stuff like this podcast that we're doing, like the fact that the fans do somewhat there's somewhat youtube content in podcast content about Taylor.

Oh yes, search Taylor wift in a podcast. Yer there's a lot of tailors with .

podcast maybe I don't think it's strong network economies though.

If I were to take away the framework for minute and say where the tailors power comes from, it's the relationship with the fans, which she's built over all these years, and all the tiny little micro interactions that she's built to build the brand that she's built with them. And then IT comes from her process to be creative, which I don't think he has a specific process.

I think he has a way of existing in the world that enables her to continually be creative in different ways. And those things, I think I are play hard to fit into the powers stream work. But those, to me, are the two big reasons that she's able to wheel a pretty big sword in all of this.

The later of those, I think, is exactly process power, right?

It's kind of like packets process power or it's like I can't really explain IT, but IT and a shiva says in the tiny the M P R, tiny desk session, she's like, by the way, this song and I think she's talking about lover, she's like, I felt like cheating to write because I did no work. I woke up in middle night. I went over to my piano, I started voice memo s, and I played the course basically exactly here as you hear IT on the album. And I felt like cheating, because usually song writing takes work and then SHE can call her selves, she's like actually sound writings completely different every time.

And there's no process for IT. Probably everybody listening has a smart phone, has voice memo s if it's an apple phone or some equivalent on android probably can get access to A P M. Oh and yet you cannot write like tell a swift right playbook .

ah so .

much to talk about in playbook and you have a bunch you want to start.

Her productivity has been skyrocketing and her skill and the complexity of her songs has also been increasing. I think if you go look at any rankings, really, stone has a ranking of every single one of Taylor's swift songs. The top ten, twenty thirty, is pretty loaded with recent stuff.

So SHE is sort of like on two different axes on quality and quantity increasing. And so he has this like unbelievable quadratic c effect to the value that her music creates in the world, if you want to present, really stare away. But the impact that her music has, and the amount of emotion she's able to create for people.

which I think is just remarkable, amazing observation. I love the way you that I swift if you're listening.

I'm sorry that I called your music value.

I can't recreate IT because .

so many of these are like under ably loadable foretasting lor that there is one that I want to call out that's worth throwing in. She's able to bend the truth a little bit or tell a specific version of the truth a little bit. That usually ends up to her benefit and often that benefits everyone involved.

Sometimes IT doesn't. But I mean, there's a bunch of different examples of this one being SHE initially said ky didn't call for approval, which we know he did, but just not the full approval. Okay, fine.

He said he woke up to finding out at the same time the rest of the world did that. Her albums were sold according to big machine theyd send her a text the night before. Maybe he didn't see IT.

Of course, her dad was also major shareholder, O D, and show to the meeting, but there is a little bit of like he wanted to telega story there. Another example, SHE was never offered the chance at her masters that SHE had earned them back one at a time. Not totally clear.

Maybe SHE could have put an offer to buy them. This is my worst case scenario. Is that really that the most rama's way to put IT, and I don't think any, these things are necessarily untruthful.

There's a very good chance. All this is the way that SHE perceives these in her heads. So he is speaking the truth that SHE experienced IT but IT is a uh she's very good at finding the version that he can tell the world that has the most possible impact. And as we've said many times, he is a tremendous story teller.

You know what this is? There's like nothing more required than what this is, the reality .

distortion field. She's the Steve jobs of music.

SHE totally is.

I think she's the Michael lotz too. There are so many ways that SHE leverages her self appointed position as the music industry. Y's presented loud person to beat up the centralized power and and benefit the earth totally.

One big one that I have that is going na spiral, hear a little bit and then i'll handed over you afterwards, is the lining of disruptions that happened, like actual loan disruptions, like Christians and ask that LED to where we are today and Taylor's remarkable ability to use them as cattle st for herself and jump on do things. So it's cheaper than ever to record your own music. It's cheaper than ever to produce an mixer own music. You have the opportunity by going viral to get an insane amount of free marketing on places like tiktok, where she's always comittee and forth with fans or spotify players .

or tumbler twitter yeah .

then of course, distribution in addition to marketing is also free since you no logger need to print cds or mail them. And then on top of that, retail stories don't really exist. So there is no retail markup. So this and the rise of social media all at the same time, the fact the vm s incident wouldn't be the V M S incident without twitter like that was a catalist ing event of why everyone was talking about this.

like the tree falling in the forest problem. Can you agreed the microphone?

And there's no twitter did IT happen. yes. So there have been like a compounding set of waves that have all collapsed.

And he has been very effective at making sure to ride where they all pick together. Yeah, right. That was my big.

long one over the year. okay. First one that about the begin in the episode is like the whole teenagers don't listen the country music narrative.

Who wouldn't love country music? It's music and story telling. People love music.

People love stories. It's just that nobody was making country music for teenagers. SHE showed up to make country music for teenagers.

yeah. And you see that all over the tech industry and startups and that a to the reinvent or die. There are two aspects to this.

I have so much respect for her. Reinventing herself literally every single time like that is so hard to do for an artist, for a company. And yet, if you don't do that, you die. I think it's also even harder for women to do that, like women artists specifically, like I think that male artist and bans and the lake can get away with not having to reinvent themselves for longer. Yes, and they don't have the, you know, turning thirty or turning thirty five problem where they no longer sex males.

And this is all stuff, he says in.

So not only is he like best in the world of doing this, like SHE does IT wit the deck stack against her, and a lot of, and in three was solly an acquired theme, or we aspire to be SHE treat her audience like their smart.

yes. And so few .

other people do at the scale that he does. He understands the .

power and the value of her audience. And so SHE spends a remarkable amount of time catering to them and building things for them in are interacting with them, to my original point, on the way that he tells her favorite version of the truth. In some, these situations to create the largest impact. I think the save est people in her audience could be spoken to in a little bit more of the nuances way, right?

When you think of how SHE speaks to two hundred million people versus how, you know traditional media used to speak to two hundred people.

like it's very different. Yes, follow me on this one. The free download and ninety nine killed the C.

D. Sale, which was the cash cow of the industry. I mean, for everyone, artist labels everyone.

So then itunes comes along and individual songs purchases start to save IT, but don't nearly make up for the loss revenue. Streaming takes off like crazy, and then cds really stopped selling. So the primary revenue driver for labels and artists is gone.

Streaming makes some money, but that revenue generated from streams that goes the labels to be divvied up doesn't nearly match what the cds matched in revenue. So there's this big sort of like missing revenue gap. So all the revenue shifts toward performance royalties then.

So we're in the situation where in order to make money is touring at its merch. At this point, since streaming does make a lot of money and sees are dead. So record companies then interestingly, got obsessed with you hear about the concept of the three sixty deal? yes. So they're trying to capture revenue even if they're not helping you create the album and you are over producing revenue on your own, on the there I go, where your label. So we're involved in everything your brand does .

and we're going to help you do everything. yeah. So where does this leave us?

Basically, what IT means is the industry is just gna have to make IT up on volume. But because streaming pays out so much less, we're just onna need a lot more streams. Now is this gonna happen? Here's where there's an interesting argument.

And this, the Donald passman book is so good and bringing up two points in the introduction, and these two points are at the peak in one thousand eight ninety nine, an average C, D buyer spent about forty five dollars per year on cds. Today was streaming, averaging seven dollars a month. That average spent per castle has gone up to eighty four dollars.

You have almost two x in terms of consumer spend. Now lets look at like the number of consumers that are doing this. Well, in the old days when you were done in with your twenties, you basically stopped buying records.

And you stop buying cities. You canna head your musical taste. You heard your collection. You're not really listening to the stuff anymore and you certainly weren't buying IT. You only ever heard IT on the radio, which was free. And today, people of all ages are paying for streaming every month from like you know, four year olds listening to stuff the four year olds listen to, and spotify all the way to like, you know, grandma having a pot fy subway .

pan can confirm children like music.

So there's like a very real time expansion, both in terms of the amount consumers will spend as everyone fully shifts to streaming in the number of people who will behave that way. So it's just sort of about like, okay, well, then how do we divide up those dollars because there should be more dollars than ever flowing in.

Looking you, Daniel ex, should come and talk to you before you talk to Taylor.

Well, of all critics to double pass.

fair enough.

fair enough, right? So my last one that I want to dive into a little bit here are that advances, interestingly, are a clear sign of a power law dynamic where you mention its like books publishing. We talked about how it's like venture.

It's the same thing in all these things, music, books and startups where having the big winners in your portfolio was really what matters. At one point, I had book agent, tell me that amErica basically picks one book a year to all read together. You know, the Michelle obama book or it's whatever it's going to be and you don't know what that's gonna be ahead of time.

And so you kind of don't really care that much about recouping your advances. And the losers, all you care about is making IT so that in your portfolio, you get the book that amErica reads every year and it's just so similar to venture capital. And the way that the payback works is so similar to where, okay, in advance and then you recoup against the royalties or what's preferred stock.

You know the first x amount goes to the capital provider, you know in exchange for the capital of provided and then they participate with some split in whatever outcome is after that. And I don't want to quite get into the nuances of like participating preferred and how it's slightly different, but the fact the matter is these contracts that seem predatory, and i'm not going to argue yet, they're not predatory, but what they're doing is basically making sure that they cover their losses. And there's an interesting human nature thing where if you look around and you're the winner and you realize you're the one subsidizing everyone else, it's really easy to forget that you had an equal chance of fAiling if someone was to underwrite you.

So you're like, why am I paying so much back to the original capital provider? I hate being locked into this deal, but that deal was therefore ally whenever the market clearing Price was in order to take the risk on you as a Young startup, author or artist. And the only place where this falls down, which I think is what I want to do, this episode, instead of value creation, value capture, is in order for this really to be fair, in order for these terms to truly be market Price, you need the labels to not be making a ton of profit if they're very profitable on like a free cash flow basis, like all the way full bottom line.

If they're printing money, then what you can say is jesus is in oakly. There's only three people here. There's not actually a good competition among the people that want to give you money as an advance in order to, you know, do all the stuff that a record label does. These businesses aren't that good of .

businesses.

But like it's an it's an ally. Yeah.

i'd just like the old school VC industry when they were like five firms and of course, they got great deals because they were five firms are now a way more competitive and founders get way Better deals.

And to underscore the parallel, the that is the last year, the earnings of the top one percent of artists in each music category accounted for seventy eight percent of revenue of all music sales. It's parl IT really .

is that looks like d 22。

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is a weird, really great Taylor here. So streaming .

did save the music industry sort of I mean, the more money was made by the music industry in paid streaming subscriptions alone in twenty twenty than the entire industry made across all formats in twenty fifteen. Streaming is a gigantic revenue driver. But to be honest, none of the dollar figures in anything that we've talked about are actually that big.

The music businesses is like just small compared to the software businesses that we cover. And he was like, the way that I want to show that, David, is, would tech runs even cover a three hundred million dollar exit? no.

I mean, if they would, nobody would read that, right, right?

It's like sure there might be a technical article. IT wouldn't be the biggest deal that day, certainly. no. There may be investment amounts into companies larger than that. And here we hinted the whole thing on this gigging tic exit of Taylors music catalogue for three hundred million dollars, like it's just not that much money.

We had some S, B, F from F, T, X, on whose Younger than Taylor or and you awesome. That was a great epo de. I love at the end when he was like mario s, what he feels about our current age.

And we live in the age of social media. Nowhere is this more, uh, applicable than the current episode. He's the wealthiest person, I think, under thirty in the world because he works in technology and started a critical currency firm. Well.

he works in bottles, sly regulated finance using technology tailor .

for everything we have just discussed over a long period of time, is worth half a billion dollars. That's a big disconnect. Tive feels like relative to like influence versus economics.

Celebrity does not equal economics. yeah. And so just looking at some other deals.

Bruce springsteen's entire catalogue just sold for five hundred a million dollars. John legend mid career just sold his. There wasn't a number attached to that. Even bob Dylan entire catalogue, more than six hundred songs, around three hundred million dollars. So you're like, okay, well, maybe the music royalties just start worth that much. The entire industry of recorded music is only a fourteen billion dollar industry that is less than one tenth of the video game industry, which is a hundred hundred and seventy billion dollars. Music just is not that big.

And if you look at the music industry as a whole, which includes tours, okay, it's a forty billion dollar industry, still not that big, which even that big number is about one tenth of apple's revenue, right? All the money anyone makes on anything in music every year is about ten percent of what apple makes just in revenue on their products. And my favorite way to tie this all off is the entire music industry. Y's revenue that's including all the concerts and touring in everything is about equivalent to best buy's revenue.

Or if you .

want another cup, american airlines.

Oh, wow, best by actually I feel has done a previous job as you staying alive and relevant. But wow, such a good find. crazy. I hear that that. And I feel like there's more opportunity for Taylor or other artists to do other things that make more money or just .

gotta find a Better way to monetize music. I mean, this is such a meaningful part of all of our lives.

Maybe this is part of the motivation of this amErica and the long pon studio sessions in the alt well short film, like tell he tried, she's been in a bunch of movies as an actress and like that's not like obviously going to be a big thing for her. But like SHE can make own movies, do your own deals with netflix. Maybe that's a way to make a lot more money.

There is a thing to great that's not like all of tailors career. I it's prety worth doing, grading ethic, purchase of big machine. There's another one that's grading sherrod k's purchase of Taylors masters.

And then there's a third one, which is what Price would you pay for those masters today, which I think is sort of a fun one. It's not quite greeting, but big machine selling when they did was a great decision. And big machine shareholder should be excited by that.

I was a the only decision. And b selling, while Taylor was still friendly, I M still amicable relationships or tailor. Absolutely right. move.

I just for fun, I did calculation on if you own three percent of big machine like Scott swith allegedly did at the time of the sale, you would have turned your hutter and twenty k of initial investment into nine million dollars by selling to scooter Brown, which represents seventy five x not, but not bad. Not that.

Now, was that a good decision for itha? Well, they made a pretty quick buck by flipping eighty percent of that three hundred million, also for three hundred million, than to sham rock. They get the principle back quickly, yes, and more. I mean, they own whatever you know, the value of the remaining twenty percent of the assets are. But now if you're sham rock, I don't think I would pay three hundred million dollars.

I feels like pret bad deal.

There has never been a more overvalued asset in the music industry than the masters for Taylor swifts original albums at three hundred million today. Not only is he actively devaluing them, but the whole industry is that complete peak for what people are willing to pay for assets like some people are even calling in a bubble in the music industry, just like they are in public equities or in startups. I think shrock in the disney family are going na be left holding the bag on this investment that theyll never recoup, which is, uh, the great irony of Taylor swift not recouping.

Oh, boy, certainly seems that way. I mean, yeah, things could change for the committed to this project now like even if Taylor and sham where to smooth things over and have good relationships, she's remaking them. She's the new version.

Maybe I there still maybe some deal that can be cut where you're like, I want scare out entirely. Sell me this thing. I'm going to make IT worth thirty million dollars and he might be to buy for a bargain basement Price and stop doing that's what ben Thompson thought before red came out. IT also is that .

that seems like she's artist he creates and he enjoys IT IT seems like she's enjoy doing this.

I think that right?

That seems like a pretty bad .

deal for camera .

c are what do you want to grade Taylor?

Swiss career, unprecedented, unbelievable a plus, like, my god, and the change that she's affecting along with IT. amazing. I mean, that actually kind of reminds me of like elon mosque, where people love to hate on elon musk.

E because oh my god, he's so rich. And look at all this money he's making. He's making all this positive change for the world, at least I believe that and getting rich while doing IT, which you probably should be if you're making the change on the level that he's making.

And like, do I care that Taylor swift is benefiting from all these deals while also advocating for artists? No, I think I can't think he should. So I have no grapes with that. I mean, shocking. The two people who host this acquired podcast about technology and capitalism.

no graves body back money, musically and .

productively, financially, the way that she's affecting change and a plus.

she's genius around the right quick carvels.

I can't recommend strongly enough. The metal documentary.

oh, no. So I gotta .

watch that by Peter Jackson. Get back. IT is like hanging out with ghosts is the best way I can describe.

IT the original footage and is clearly restored because it's like a very high quality footage of john, paul, George and ringo. And your spending, it's like eight hours as many hours cut across three parts. You're just hanging out with them while they are creating an album from nothing and matter of a month.

And IT is especially for those of us who grew up seeing pictures. The beetle is listening to the beetles music, and only ever seeing like a little video here. There are usually poor quality. I think for the first hour of that, I was just spending like being in a state of shock that I was just hanging out in a room informally with the beetles for mine.

I've got a fun one though. We've talked about much over on the L P show. Go check IT out on the L P now, newly public L P feed for everyone. Uh and we are both wearing right now delic.

Yes.

we did a little partnership with them for some acquired year for recent guests and us and are significant others. And the it's just the titles stuff I love IT.

it's great. Yeah totally agree. All right. Well, listers, with that, if you're not on the slack.

you should be. Honestly.

i've met so many awesome people. There is really cool to learn from so many. And if you like talking about the news of the day with an intelligent group of people who are into the stuff here into, you should join an acquired dt F M slash slack.

I will take the episode off from telling you to become an L P. This time to just say, if you've always thought about IT, but don't know what that sort of content is, that content is all public from the back at aloe e. now.

And the new stuff is just available to L P S. For a couple weeks. So go look at the whole back catalog and we will put a link in the show notes or just search acquired lp show in any podcast player.

including spotify.

We've got a job board. It's great you should join that if you're looking for something new or feel free to submit jobs on there. We only pick the ones that David, I think are interesting.

So if you want of you of what we think the interesting jobs are going to acquired data fs lash jobs. And then lastly, if you wanted tweet about this, we would love that. We actually would love even more if you just share one to one with your friends. Because we think that strong connections of the best connections, and you can find us write a long Taylor swift on spotify and and all of your favorite podcast players.

Literally right next to Taylor.

left immediately. Next Taylor is required. With that.

we'll see next time, next time. Easy you, easy you. Wait you. Who got the true.