To Taylor, you’re not a martyr.
Yesterday Taylor Swift published an op-ed saying how Apple Music is ripping off artists — and Apple listened. But there’s more to the story.
Head first, fearless.
Taylor grew up on a Christmas tree farm — a folksy fact we all know. But what most people don’t know is that she came from a family of moderate wealth. Her parents bought her a convertible Lexus in high school.
Along with that Lexus, her father also bought a 3% stake of the then nascent and aptly named Big Machine Records at $120,000 back in 2005 — the label she’s been signed with since her debut.
There is nothing inherently wrong with coming from wealth or having a Lexus. However, what is wrong is Taylor’s repeated dismissal of emerging platforms that may benefit new artists when she’s a clear benefactor of the current system in place.
I love your handshake, meeting my father.
Founded in 2005, the year Taylor was signed, Big Machine Records distributes its tunes from artists like Taylor, Tim McGraw, and Rascal Flatts through Universal Music Group — the second largest music publishing company in the world.
Along with Sony Music Entertainment and Warner Music Group, these ‘Big Three’ labels control 70% of the global music market and roughly 80% of the United States music market.
3 companies control 70% of the global music market.
These three corporations are the result of an increasing trend since since the late 80s for major labels to merge — starting at 6 from 1988–1999, going down to 5 from 1999–2004, to 4 from 2004–2008, and now down to the remaining 3.
I’ve got a blank space, baby.
So where does Taylor Swift fit into all of this corporate control? She is a product of this system.
After signing with Big Machine, she released her eponymous freshman album. It spawned a whopping five certified platinum singles. The record itself is certified five-times platinum.
Between her singles and the album itself, well over 5,000,000 people fell in love with Taylor Swift — propelling her into a career as a musician and celebrity and giving a solid return on her family’s 3% stake in the label.
Let’s take a look at the players behind this success and Taylor’s ability to distribute her songs so widely. It starts with Big Machine’s relationship with Universal Music Group — and just like Taylor’s ex-boyfriends, its a relationship with a lot of history.
Big Machine was founded by Scott Borchetta who slogged long enough in the industry to become, according to Bloomberg Business, an ‘involved manager’ at Universal’s MCA Records, ‘choosing singles and dispensing advice.’
Eventually, he decided to start his own label. Around the same time, he saw then-undiscovered Taylor perform and approached her and her family with a record deal in 2005.
Later that same year, Big Machine released Taylor’s first recording, ‘Tim McGraw’ — one of the five platinum singles mentioned earlier.
I’m not a princess, this ain’t a fairy tale.
Behind the catchiness of a song is mass distribution and exposure — making people aware of an artist. And the holy grail of exposure is still radio.
The trouble is that getting your song onto the radio is not easy and requires a relationship (contract) with a major label — and all three labels work hard to keep it this way.
Only a handful of companies, most prominently iHeartMedia Inc. (formerly Clear Channel), own all the radio stations in the United States — and their playlists are dictated by the majors. That’s why truly independent songs don’t get any airplay.
The majors are gatekeepers — picking and choosing which songs and artists will be heard and which won’t.
In fact, radio is such a core component to an artist’s success that the notoriously independent duo Macklemore and Ryan Lewis were forced to negotiate a landmark deal with Warner Bros. Record’s radio promotion department to have any hope of airplay — and, in turn, mainstream success.
‘In this new scenario, we would maintain our independence without having to sign a label contract, while simultaneously benefiting from the one service major labels still have a monopoly on: radio promotion.’ — Ben Haggerty (Macklemore)
This statement comes from the same person who rejected L.A. Reid’s offer to sign Macklemore and Ryan Lewis for a sophomore album as a means to advance their career. The fiercely independent duo was forced to play ball with the majors at risk of hitting a glass ceiling.
In fact, Haggerty regards the decision to go with Warner for radio promotion as the make-or-break moment for the duo’s mainstream career.
‘Basically, if you sign this deal there is a potential that you will turn into a super star. Your life will change drastically. And once that happens, there is no going back. If we don’t go this direction, there is a ceiling to your career. You can continue to play the same rooms you’ve been playing and have a strong run as an underground rapper. But taking it to the next level will not be attainable. I see positives and negatives to both sides, and will support you either way. What do you want to do?’ — Haggerty, quoting his manager Zach
This bears repeating. Without radio promotion, Macklemore and Ryan Lewis had no hope at a mainstream career.
The same duo that was able to shoot The Heist to number one on iTunes with 78,000 copies sold during its first week of release without any major label support was unable to go mainstream because of the labels’ monopoly on radio promotion and distribution.
No airplay. No mainstream recognition. No enduring mark on popular culture. All if they refused to work with any one of the three major labels.
Their independent success gave them the leverage to negotiate favorable terms and maintain their independence while still getting on the radio. And Thrift Shop is now certified seven-times platinum solely because of this deal.
What’s surprising is how unusual this kind of deal is. Thrift Shop was the first song without major label support to top the Billboard Hot 100 since 1994. Unsigned artists don’t get on the radio, period.
Mackelmore’s radio promotion deal with Warner was revolutionary.
The promotion and distribution necessary to make a single, album, and artist successful depends on a relationship with either Sony Music Entertainment, Universal Music Group, or Warner Music Group.
Big Machine was able to leverage their relationship with Universal executives to negotiate radio airplay and, in turn, mainstream success for Taylor Swift.
She is a product of the labels and is inadvertently championing for a system of gatekeepers that have been controlling what and who we are able to listen to for over 25 years.
What will, in her words, the ‘new artist or band that has just released their first single’ do to find a foothold in this tightly controlled system without the privilege of label access?
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Romeo, save me.
The music industry has been going through incredible changes since 2000. The sale of recorded music has plummeted, and digital distribution is more important than ever. Apple Inc. is now the world’s largest music retailer.
Streaming is the next frontier in music, with contenders like Spotify, Jay-Z’s Tidal, and soon Apple Music fiercely fighting over the space. The major labels have reason to be concerned about their relevance in an industry with increasingly fewer barriers of entry.
Taylor herself is vocally concerned about how artists will get paid in this brave new world, pleading with Apple not to ‘ask [artists] to provide you with our music for no compensation’ during the free three-month trial period of their streaming service — a plea heard by Eddy Cue of which seemingly resulted in a reversal of Apple’s decision.
But let’s quickly examine how artists are compensated for digital music sales.
Currently, on every $9.99 traditional digital album sale, the artist roughly nets 94 cents — less than 10%. The record label (presumably one of the major three) takes the lion’s share at roughly $5.35 — a whopping 53%. And Apple gets the remaining $3.70 — their standard 30% cut. [Source: Investing Answers]
In a streaming model, these figures are even further diminished — and the artist receives even less per stream. One viral infographic estimates the necessity of 5.5 million Spotify streams per month to produce a minimum wage income for an artist.
In these label-driven scenarios, the true winners are the major labels and Apple with the artist barely receiving any compensation for their music.
However, Apple’s fee is arguably reasonable. They provide the platform and the users with credit cards on file, and they take a 30% cut no matter if you’re Rihanna or a garage band. Labels take over half.
Compare the label-driven numbers to Macklemore’s independently released The Heist with no label involvement. At $9.99 on iTunes, Apple takes roughly $3 — and the remaining $6.99 — a huge 70% cut — is deposited straight into Macklemore LLC’s bank account on a regular payout schedule.
At 78,000 copies sold in their first week, Macklemore drove around $545,220 in revenue without any label to share it with. A signed artist would have to move 580,000 copies of their album for that same amount of revenue for themselves — resulting in $3 million in revenue for their label.
There is clearly a better scenario for the artist here — and it is the one that doesn’t involve major labels. It’s a much simpler scenario for Apple as well — one that doesn’t involve label negotiation and contracts.
Also, consider the consumer. In the truly independent model, 70% of your money goes directly to the artist which presumably will result in further music for you to enjoy versus less than 10% of your money spent on a major label release.
But the dilemma described earlier makes it incredibly hard to drive any sort of meaningful revenue at all without the promotion and exposure a label can offer thanks in large part to their monopoly on radio. No label, no audience.
You’ll come back each time you leave.
Apple Music is part of the emergence of music discovery platforms than enable a new artist with no label affiliations to upload their independently created songs at no cost to an engaged user base ready to discover something new.
This organic discovery through streaming does not result in any meaningful revenue in and of itself for the artist. Instead, it acts as a new, more democratic radio — offering a means of discovery and connecting new artists with fans directly. Those new fans have their credit cards on file with Apple and are able to buy an album they like with one-click.
It is a part of the relationship building process that leads to album, concert, and merch sales — a process that for too long has fallen into the hands of the majors. Instead of having to earn the approval of one of the three labels to be cast upon billboards and played on the radio, platforms like Apple Music empowers artists to viably take promotion upon themselves.
This is the future of music, and Apple has been building it for the past 14 years.
Three companies dictate what and who the world hears. One company is bringing us a little bit closer to a future where those three companies are no longer needed — where artists are truly empowered and compensated fairly.
