Ok, a quick word on the Taylor Swift / Universal Records deal and her move away from Big Machine Records [– whom she’d been with since the she was 14 year old], and why it is big news.
Simply, Taylor had to move from Big Machine records to gain complete control of her work and it was the time to do it. Her big Machine record deal wasn’t terminated, it expired, and she didn’t renew it. There was no ‘dispute’; It was a good business move by Swift.
Big Machine owned the rights to all the master recordings for every single one of her 4 record breaking albums (that’s how it works in artist/record company deals, the company owns the master recording of the albums – not to be confused with ‘song ownership’, that’s different).
So with offers from all the big labels, the final deal she signed with Universal Music unsurprisingly has a huge ‘undisclosed figure’ but with her negotiation clout the new contract gives her control and ownership of her future albums. Only a small number of artists have been able to achieve this with a major label (E.g. Garth Brooks, Motley Crew, Bowie, Aerosmith, Metallica… et al).
The way it traditionally works is that an artist would receive an advance in exchange for signing away the rights to the albums or tracks produced under the contract. There is numerous incarnations of that structure but at the end of the day in 99.9% of traditional deals that is what happens.
The biggest and the most unique, aspect of the new record deal is that she has negotiated a benefit for all Universal Artists. Universal is the largest shareholder in Spotify, if/when Universal sell ANY of its shares in Spotify, Swifts contract provides an obligation on Universal to distribute the profits to all of its artists. No one saw that coming and that was the master stroke.
Some context on the Spotify clause. Universal is the last remaining major label yet to sell its founding shares in the streaming platform. Sony has sold 50% of its shares ($770M) and Warner 100% ($500M).
Sony announced that it would be sharing its stock profits to its artists, and has shared 30%. Warner shared 25% ($125M) of the profits with its roster too,
In response UMA announced that it would be also sharing if they ever sold but never confirmed any details. Taylor Swift confirmed it with a non-recoupable clause, and higher percentage that Sony, and this was was a critical term UMA needed to accepted to shake off all the other major labels, (as well as Apple and Spotify...and private telco companies whom were trying to lure Swift with unique direct partnership deals).
Universals stock in Spotify is worth between $800M-$900m and while the profits on a sale will be shared on a pro-rata basis with the artists, Swift is not in the top 20 streamed artists (remember she pulled her music off the platform). So its a terms negotiated that will benefit other artist before herself.