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Scooter Braun sells Taylor's masters; Taylor responds

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Some 17 months after Scooter Braun’s Ithaca Holdings LLC acquired Big Machine Label Group and all of its recorded music assets, sources tell Variety the veteran manager and entrepreneur has sold the master rights to Taylor Swift’s first six albums. The buyer, an investment fund, is as yet unknown but the deal is believed to be north of $300 million and closed in the last two weeks.

Ithaca purchased the Nashville-based independent record label Big Machine, founded by Scott Borchetta in 2005, in June 2019 for just over $300 million. The acquisition encompassed all aspects of BMLG’s business, including its client roster, distribution deals, publishing and owned artist masters. Swift signed with BMLG at the beginning of her career. Her contract with the label expired in fall 2018, after which she signed a deal for future recordings with Universal Music Group.

Swift is free to re-record  songs from her first five BMLG-issued albums as of this month. While most contemporary recording contracts have provisions prohibiting the artist from recutting material for a period of years, Swift likely had favorable terms in her contract that would make her songs eligible for re-recording at a certain point after the end of each album cycle, not the end of her overall contract.

In Aug. 2019, she declared publicly that it was her intent to do. What does that mean for the assets sold by Braun? Master recordings earn revenue through multiple avenues, including streaming and consumption, sampling, public broadcast, use in television, film and commercials. They’ve also become a hot property on Wall Street as funds like Merck Mercuriadis’ Hipgnosis Songs have snapped up catalogs from the likes of Timbaland and Eurythmics’ Dave Stewart to Jack Antonoff and Jeff Bhasker. Between March 2019 and March 2020, the company spent nearly $700 million to acquire 42 catalogs. As recently as last week, Hipgnosis purchased a 50% stake in Rick James’ catalog — across both publisher and writer’s share — and an additional 50% stake of the his recorded music masters. James’ “Super Freak” is one of the most referenced and sampled riffs in modern music.

Publishing assets are currently running at multiples well over 12, with master rights slightly lower but increasing in value. Says one insider privy to such deals: “In five to 10 years, it might be 20x — the value continues to rise.” While this investor advises against selling IP right now for this very reason, others are eyeing an incoming Biden administration as reason to divest of such property anticipating “a major change” to capital gains taxes come 2021.

What’s the advantage of Swift re-recording her catalog? Snatching income from the buyer by making sure that her new versions, and not the ones previously owned by her former label, are the ones played by fans and used in any number of commercial ventures, such as advertisements, TV shows, movies, games and other uses. The company buying master rights would still need clearance from a song’s publisher in order to license it for commercial sync use going forward.

As for Big Machine, the label remains in the hands of Braun and Borchetta with a current roster that includes Sheryl Crow, Florida Georgia Line, Thomas Rhett, Rascal Flatts and Lady A, the trio formerly known as Lady Antebellum.

Carlyle Group is a minority shareholder in Ithaca, which in recent years has launched Mythos Studios, in partnership with Marvel Founding Chairman David Maisel, acquired Atlas Publishing, and partnered with Jason Owen’s Sandbox Entertainment. Ithaca also has a long-standing investment in and partnership with Aubrey “Drake” Graham and Adel “Future” Nur. In 2019, Ithaca launched Raised in Space, an investment fund led by former BMG President Zach Katz.

The deal is viewed as a big win for Braun, who profited handsomely from his initial investment. Braun was also harshly and publicly criticized by Swift, who labeled him a “bully” and said just under a year ago that Braun was “the definition of toxic male privilege in our industry.”

Speaking of the same of her masters, the Grammy winner contended: “This just happened to me without my approval, consultation or consent. After I was denied the chance to purchase my music outright, my entire catalog was sold to Scooter Braun’s Ithaca Holdings in a deal that I’m told was funded by the Soros family, 23 Capital and that Carlyle Group. Yet, to this day, none of these investors have bothered to contact me or my team directly — to perform their due diligence on their investment. On their investment in me. To ask how I might feel about the new owner of my art, the music I wrote, the videos I created, photos of me, my handwriting, my album designs.” She added: “The fact is that private equity enabled this man to think, according to his own social media post, that he could ‘buy me.’ But I’m obviously not going willingly.”

Speaking to Variety in January, Swift elaborated: “Well, I do sleep well at night knowing that I’m right, and knowing that in 10 years it will have been a good thing that I spoke about artists’ rights to their art, and that we bring up conversations like: Should record deals maybe be for a shorter term, or how are we really helping artists if we’re not giving them the first right of refusal to purchase their work if they want to?”

For his part, Braun has been reluctant to address the clash publicly, but he did tell Variety during an interview last year: “I know this is going to be the most controversial thing I say. I don’t know where we got messed up along the way that we decided being politically correct is more important than having conflict resolution. … People are allowed to grow as human beings. They’re allowed to have conversations. They’re allowed to change their mind. They’re allowed to go from not liking to each other to liking each other, and vice versa. But you don’t find that out just yelling at each other. You find that out by showing each other respect and having a conversation.”

Variety has reached out to reps for Swift and Braun for comment.

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2 minutes ago, ajp said:

Do we know if this unknown “Investment Fund“ is owned or partially owned by Taylor?

Well, this is good question, because I am not sure who would buy them instead knowing she is possibly and potentially re-recording them making originals' worth less profitable, which is probably the reason why he is selling them in the first place.

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11 minutes ago, Ghostface said:

Well, this is good question, because I am not sure who would buy them instead knowing she is possibly and potentially re-recording them making originals' worth less profitable, which is probably the reason why he is selling them in the first place.

Anyone interested in buying the masters would be aware that Taylor wants to re-record her first 6 albums, so I wonder if Taylor is involved in the Investment Fund cause the value of the masters is roughly the same price (a bit lower) than Scooter and his backers paid. um1

 

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11 minutes ago, ajp said:

Anyone interested in buying the masters would be aware that Taylor wants to re-record her first 6 albums, so I wonder if Taylor is involved in the Investment Fund cause the value of the masters is roughly the same price (a bit lower) than Scooter and his backers paid. um1

 

Exactly and even though we can bring up possibility that her new re-recordings wouldn't match popularity of originals ( which is evident anyway ), new re-recordings will be probably scattered around her streaming platforms and original songs would be probably replaced with the new ones in playlists and such, so it will still affect originals' worth which is the reason they are being sold.

But on the other side, one could say that there is no way an investor couldn't profit off of Taylor's catalogue no matter new re-recordings, so it remains to be seen is Taylor ( somehow at least ) or someone else buyer.

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1 hour ago, Ghostface said:

Exactly and even though we can bring up possibility that her new re-recordings wouldn't match popularity of originals ( which is evident anyway ), new re-recordings will be probably scattered around her streaming platforms and original songs would be probably replaced with the new ones in playlists and such, so it will still affect originals' worth which is the reason they are being sold.

But on the other side, one could say that there is no way an investor couldn't profit off of Taylor's catalogue no matter new re-recordings, so it remains to be seen is Taylor ( somehow at least ) or someone else buyer.

Well, we now know the answer oprah14

 

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Well, obviously he would sell them when he knows their worth will be affected by her new re-recordings and just for him not to end up in a situation when that happens, others will experience that unfortunately. Calculators need to calculate after all.

The good thing for these new buyers is that her catalogue can not be diminished in a value to the point when they wouldn't be able to profit, it is just that some here are evidently greedier than the others and would prefer not to collect less once new re-recordings get out. jj5

But the best bit out of this is that she is feeling good while revisiting her older material. Even though I was interested in hearing first two albums reworked especially the most, I am now even more pumped up to hear how she is going to tweak all those songs. bey7

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2 minutes ago, Ghostface said:

Well, obviously he would sell them when he knows their worth will be affected by her new re-recordings and just for him not to end up in a situation when that happens, others will experience that unfortunately. Calculators need to calculate after all.

The good thing for these new buyers is that her catalogue can not be diminished in a value to the point when they wouldn't be able to profit, it is just that some here are evidently greedier than the others and would prefer not to collect less once new re-recordings get out. jj5

But the best bit out of this is that she is feeling good while revisiting her older material. Even though I was interested in hearing first two albums reworked especially the most, I am now even more pumped up to hear how she is going to tweak all those songs. bey7

it's been known for like a year that she was attempting to re-record her music, so this should've been priced into the sale bey7 he probably clocked in a huge loss bey7

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I can tell you that the master recordings were sold to Shamrock Holdings, the investment fund of the Disney family. According to Wikipedia, Shamrock often takes an aggressive strategy, launching hostile takeovers.

Shamrock describes itself on its website: “Shamrock Holdings, Inc. (Shamrock) was founded by the late Roy E. Disney in 1978 and serves as the investment vehicle for certain members of the Roy E. Disney Family. Shamrock’s tenet’s are straightforward – invest and act with integrity, responsibility, and transparency. In addition to investing and providing services to the Disney Family, Shamrock, through a subsidiary, manages several real estate investment programs.”

“We made this investment because we believe in the immense value and opportunity that comes with her work,” Shamrock said in its statement. “We fully respect and support her decision and, while we hoped to formally partner, we also knew this was a possible outcome that we considered.”
 

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