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 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.
(Excerpt) Read more in: Variety