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You're looking very good in that scarf, sir. Ah, as are you, Fencer. Had to bust out the red scarf. Welcome to season 10, episode 1, the season premiere of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert, and I am the co-founder and managing director of Seattle-based Pioneer Square Labs and our venture fund, PSL Ventures. And I'm David Rosenthal, and I am an angel investor, based in San Francisco. And we are your hosts. She is Bill Bord's woman of the decade. She was the first woman to ever win the coveted album of the year Grammy twice. And now, she's won it a third time. She was the highest paid celebrity in the world in 2019, more than Kanye, LeBron James, Roger Federer, or even Beyoncé. Her fanbase is so passionate, and she's accumulated so much power, that she 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 women everywhere. You knew her when she was 15, 22, and now she's accomplished all of this at the still unbelievably young age of 32. That was good. I like that. I like that. You probably know her all too well. She's maniacal. Oh, come on. Okay, okay. You could even say she's fearless, a mad woman, or David, or that she'll never go out of style. Today, we are telling the story of the business of Taylor Swift. I have a fun little thing I wanted to do. I thought we should guess each other's favorite T-Swift album. Ooh, let's see. I think yours used to be 1989, and now it's reputation. Ooh, oh, man, 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, 1989 is my number two. My number one is fearless. Fearless, an uncommon pick, my friend. I know. I love it. I just love it. So good. And the song, fearless, so good. All right, what's mine? I think yours is 1989. Mine was 1989, and I am an ever- or a folklore fan now. Oh, oh, and folklore over ever more. You can't put Boni Ver on an album with Taylor Swift and expect me not to just immediately like the whole album the best. All right, listeners, we've got a killer story to tell you today. But first, we want to introduce you to our brand new presenting sponsor, Vanta, the leader in automated security compliance. Vanta brings a fascinating approach to the whole compliance process. Sock2, HIPAA, GDPR, and more. We have a guest with us today to tell us more about the company, the CEO and co-founder, Christina Casiopo. We are insanely excited to be working with you in all of Vanta. I've been following your work across everything you've done in your career for a decade. So this is pretty special for us. Thank you so much for having me. It's wonderful to be on a quiet. I've been listening for probably four or five years at this point. Well, to kick us off here in episode one, Vanta today provides the best solution in the market to get Sock2 certified and stay that way. I know there's actually a fascinating history to Sock2 and why it exists. Can you share that with listeners? For sure. So it started in... or they're the handful of different versions of Sock2 before we know what it is now, different acronyms. But it started probably 10, 15 years ago with something called Sock1, actually, with the accountants. And that was just a financial auditing standard. Just trying to look at, do companies have the correct financial controls in place to rules around how they handle financial matters in their company? And then what gets audited, generally. Accountants were doing that. I think it was a good business around that same time. Right. Businesses just started to digitize, come online, more in our parlance software started eating more and more of the world. And so I think the accountant saw this tremendous opportunity for sort of market expansion. And so they started something called Sock2, which sort of like Java, JavaScript. These things aren't really that related. But what it is at a high level is just assurance that the business takes care of customer data well. And we just have seen this be more and more important as software has eaten the world. As we've seen more data breaches of big companies and sort of everyone is more aware of how much data there is about all of us on the internet. And so for the last five years, really the last two years has just really taken off as there's more B2B SaaS. Large companies are buying software from smaller companies, but want assurances around data security. And so again, kind of snowballed. Interesting things, this isn't a law. It's run by a professional association, the American Institute of CPAs. They make the standard they updated every few years. They train their members who are CPAs and how to administer it. It's kind of this fascinating and I don't know, path-dependent thing or your accountants that are looking at financial data. And then over time, you know, again, saw an opportunity to leverage their skills in a different area. And you know, here we are in 2021, 2022. Looking at Sock2. Our thanks to Vanta, the leader in automated data security and compliance software. If you are looking to join Vanta's 2000 plus customers and get compliance certified in weeks instead of months, you can click the link in the show notes or go to Vanta.com slash acquired for that 10% discount. We also want to tell you listeners that if you are new to the acquired community, you should make it official. Join the over 11,000 smart people at acquired.fm slash Slack. Most of you know this, but we also have a second show called the LP show where we cover nerdier, deeper topics on how to raise venture capital, things like that. Recently, what's going on with the very cool startup italic, which brings manufacturers directly to consumers. You can get access to that by searching acquired LP show in the podcast player of your choice. And without further ado, 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 own a few music securitization deals out there. I don't know if we would recommend we at the end of the episode, we'll decide if we recommend buying into music master securitization deals or not. Amazingly, this is what's like shocking to me. There is no official like big book biography out there about T-Swap. But there is actually quite a good book out there. It's unofficial, of course, but it's really well researched by a man named Michael Francis Taylor, who is a Brit and is called Taylor Swift, the brightest star. And it was formed the backbone of a lot of the research here in story. So big thank you to Michael for writing it. Okay, on December 13th, 1989, Lucky 13 at the Reading Hospital in West Reading, Pennsylvania, not far from where both of us were born and spent our childhood years. The wonderful Southeast Pennsylvania Delaware region. A baby girl, one Taylor Allison Swift, is born, the parents Scott Kingsley Swift and Andrea Gardner Swift, may name Finley. So her dad's got is a stockbroker for Merrill Lynch. That's sort of all I ever heard on M2. Based on what I could find out, he comes from like a long line of wealthy sort of Philadelphia, you know, area family. If you've seen kind of like the Philadelphia story, like he was born on the main line in Brinmar, like his great-grandfather, so Taylor's great-great-grandfather was a guy named Charles Baldi, who was an Italian immigrant, came to Philadelphia in 1877. You know, we gotta go back to the 1800s, because it's quiet. We can't just start it in 1989, of course. And he opens a coal yard in the Philadelphia area, supplying the railroads and becomes like one of the biggest, oh wow, coal magnets for railroads in the Philadelphia area. So he makes a fortune, he invested in newspapers, he invested in banks, he likes like stocks of banks, he buys a ton of Philadelphia area real estate. Let's just say the family has a lot of properties, speaking of her mom. She also comes from quite an interesting family. Before having Taylor, Andrea had worked in marketing for various financial services firms and then decided to stay home to be a mom to Taylor and her little brother Austin. But Andrea's childhood was pretty unique and her mom, Marjorie, had quite a different path. Marjorie was an opera singer, is that right? And more. So Andrea's dad, Robert Taylor's grandfather, was the CEO of an engineering company that did a lot of work in the South and particularly in the Caribbean. And so when Andrea was growing up, they lived like all over the country and spent a lot of time in Cuba before the revolution and then in Puerto Rico. And her mom, Marjorie, had a college degree in music, which was pretty rare at that time. Yeah, I think she was born in like the 20s, I want to say. And while they're living in the Caribbean in Cuba in Puerto Rico, she and I believe Andrea was already born at this point in time. She decides that she wants to like become a professional singer. She gets her own TV show that she hosts and she's selling out clubs, performing shows. She sang opera. She wasn't just an opera singer. She also sang pop tunes as well. And sort of like Taylor to come, not just a country singer, also sang the pop tunes. Anyway, Marjorie and I believe also Robert eventually end up moving in with the family, the Swift family, in redding. And live with Taylor and obviously have a big influence on her. So by age three, Taylor clearly has gotten the musical gene from Marjorie. She's into singing. The family also has a beach house naturally at the Jersey Shore at Stone Harbor. And supposedly Taylor would just like go up to strangers on the beach and start singing to them. She has this 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 Tal to Tal on the beach saying, Hi, I'm Taylor. I'm going to sing. I just can't wait to be king for you now. When she is six, a few years later, her parents by her first album, which is Leanne Rhymes. Remember Leanne Rhymes? Oh, no way. So through Leanne of course, Taylor gets into country music and how perfect is this? What is country music? The defining characteristic of country music is storytelling. So perfect for Taylor. And she pretty quickly discovers Chenaya Twain, who in addition to being awesome and a great country artist, wrote all of her own songs. So she decides, why can't Taylor do this as well? So she starts going to local venues, coffee shops, bars, do an open mic nights, karaoke. And it turns out that one of her regular karaoke 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 in town like Charlie Daniels or George Jones and the likes. And if you won karaoke night, you'd get to open up for these acts. So Taylor just starts hanging around. She has a great quote. She says, I was kind of like an annoying fly around that place. I just would not leave him alone. I will dishear. 10, 12, 13. Yeah, 10. An enormous amount of parental support for a 10 year old to be a fly hanging around someplace. You know? It's interesting. I was thinking a lot about this and people talk about Taylor was in many ways sort of born standing on third base and had all this privilege and 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 she was absolutely the one that was driving like, I'm going to do this. I'm going to go be Shenaiatoi and Leigh Amrimes. I mean, it shows up her entire career that she has a chip on her shoulder. That no level of accomplishment is ever enough. And she needs to set her sights on the next thing. I get the sense she's the type of person who has trouble celebrating wins before immediately focusing on whatever's next. And that you cannot manufacture. Okay. So she's singing at the road houses. She starts getting on the national anthem circuit locally. She sings the national anthem for the Reading Phillies, the local minor league baseball team. So it begins. So Taylor one night is watching the VH1 behind the music on Faith Hill and the story goes. And she is watching this and realizes that, oh, Nashville is where Faith Hill was signed and discovered in all these artists. All these country artists, they're all based out of Nashville. So she says, I got it into my head that there was this magical land called Nashville where dreams come true. And that's where I needed to go. I began absolutely nonstop tormenting my parents, begging them on a daily basis to move there. So of course I read this and I'm like, huh, I wonder why Nashville is the epicenter of country music. How many makes sense it's in the South? It's popular in the South. But why Nashville over Memphis or someplace else? On every other episode that we talk about on this show when we're talking about tech businesses, this is the part where 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 bluegrass like all that Nashville is the epicenter. So it turns out that the reason for this is that there was an insurance company based in Nashville. This is why you can't make this. What? There was an insurance company based in Nashville in the 20s called the National Life and Accident Insurance Company. And their slogan was, we shield millions. And they decided that as a marketing stunt, they were going to go buy a local radio station in Nashville and change the call sign of the radio station to WSM and have it be like we shield millions radio. So they do this. And what are the things they start to do with the radio station is they do live barn dancing that they broadcast on the radio station on Saturday nights. I know people are like, this is where you going with this. It becomes so popular, they're like, oh, we got to build a venue for this. And let's make it a show. And let's like really go all on. As if we're getting tons of customer acquisition through this. So they build what becomes the grand old hoppery. For this show, this insurance company. And that then becomes like the venue for sort of early country style music and like Johnny Cash, Dali Parton, Hank Williams, like they all come up in Nashville. And so that's why music city Nashville is the place to be. Wow. I love how random. I mean, it's not that it's random. It's complexity theory. It's 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 amount is like it serves as enough of a catalyst to bring together. Surely a movement that was already happening, but to happen there. Yep. Okay, back to Taylor. She finally wears down her parents who say, well, we're not going to move there. But like maybe on a school break. Yeah, why don't you record a demo and we'll go down to Nashville. We'll drive around and we'll take it to some labels and we'll see what happens. So in March 2001, Andrea takes Taylor down to Nashville. She comes back to Pennsylvania empty handed, no record deal. Surprise, surprise, just walking into offices on her own didn't get her deal. But she's undeterred. This is Taylor Swift we're talking about. And the next year in 2002, she gets the chance to sing America the Beautiful at the US Open in New York. Slight twist on the national anthem. You know, she's she's branching out from her single song. So amazingly, like the strategy, it works. It works in the audience in attendance at the open is a talent agent in New York named Dan Demertro. And he hears her saying he's part of Britney Spears's management team. And he's like, huh, that girl's got talent. So he gets in touch with the open organizers. He calls her out. He gets in touch with her family and signs her as a client. And so Taylor's like, okay, great. I got an agent now. They then go back down to Nashville, back down to music row, Dan walks her in to all the studios. This is like the big three record labels second office that's in Nashville, right? They have Nashville specific offices for country. And some of them it's, you know, it's very much like the movie industry. Like some of them it's, you know, capital records, Nashville or, you know, whatever. And some of them they have other labels. Oh, if you go look up universal music group, you can see that there's a thousand labels within. And you know, you know, UMG. And I think for a lot of these big label groups, they'll even have competing, you know, wholly owned labels. So there might be two or three or four RCA labels in Nashville or in New York or in Hollywood. Yeah. So this time once again, Taylor does not get a record deal. But RCA offers her a development deal, which, you know, it's not the record deal. So basically is like, hey, we're going to invest resources in you and make a record that we're then going to release and we'll get it on radio and see how you do. 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 a venture firm, you know, like we'll participate in the round. We're not going to lead it though. And I assume there's, it's like limited investment, but kind of limited upside. And it's more about making sure you have relationships with the right people and we can keep an eye on you should you start to really shine exactly. And I assume that there's also a rofer on an actual deal in there. But as folks may know, Taylor does not end up signing with RCA. So I'll have to see how that plays out. On the back of this though, this is the ammunition she needs with her family to be like, bomb dad can we move to Nashville. So she's about to start high school in the fall. They do, you know, I mean, God bless them. Her parents, they're like, okay, let's move to Nashville, which they do. That is so crazy. It's probably like 0.1% 0.01% of our audience out there is able to relate to that. Like the parents moving for the kids aspirations and career at this young of an age. It's extremely common to move for mom or dad got a new job or 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 it happens. It's like the stuff of Olympians and future Taylor Swift's, you know, she's so freaking smart. I think she kind of realizes to this both through her agent and now being in this world with this development deal. There are a lot of people out there trying to make it like if you want to make it, you really got to stand out and you got to have something great that makes you you. And for her, what's the natural thing? She would say all the time that she didn't think she had the best voice, but she was an amazing songwriter. So she doubles down on songwriting that she has this great quote. When I first started writing songs, I was pretty lonely. I was about 12 and at school in Pennsylvania. I wasn't popular and I didn't have many friends and never knew where to sit lunch, but songwriting 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 13, but not in relationships. It is so true. She's got these love songs, you know, as a middle schooler that she's written. And it's so clear both from her observing the world, but also like her watching TV and understanding common storylines from TV shows and movies about people falling in love that she sort of writes country music inspired by the feelings that she thinks those people are having. And she's really freaking good at it. So word starts to get around Nashville that there's this girl who has a development deal and you know, show some promise as an artist, but she's a really freaking good songwriter. So in May of 2014 Taylor still a freshman in high school and is 14 years old. Sony ATV, which is one of the big publishing labels, signs her to a songwriting contract. As their youngest songwriter ever that they have ever signed. So again, not a record deal, but she has a deal as a songwriter. And it could be songs for her could be songs for other people like that Sony doesn't care. They just want to publish her as a songwriter. So the CEO of Sony ATV Nashville says this is a quote from the time she 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 write such lyrics and melodies. She was born with it. That gift. Wow. Amazing. So Sony pairs her up like she's still 14 the pair her up with a really established songwriter in the Nashville circuit woman named Liz Rose. He'd written for Tim McGraw and others. They of course end up becoming super close collaborators, but some songs that Taylor and Liz end up collaborating on that you might know. Tim McGraw to your jobs on my guitar picture to burn fearless white horse you belong with me. And then it's going to come up later, but their final collaboration. Do you know what it is? No, I have no idea. All too well. Really? Yeah. Wow. It brings her back. Current number one for Taylor Swift. Oh my gosh. Longest number one song in history. This is one of the most boneheaded like business move of any type. Like I'm going back to like the Netflix blockbuster blockbuster had it in the bag and should not have lost a Netflix and due to shareholder agitation and executive reshuffling was forced to make an unforester. Yes, forced to make an unforester. This is just a fully unforester. RCA. Tells daily they see what's going on and they're like, you know, we do like you're singing. We think you're talented singer. We're just not feeling your songwriting. No way. Yes. Yes. So they tell her they want to keep her in development for at least another year. They're not going to give her a record deal. But what they want to do with her in development, they want to have, you know, enough of this performing your own. Singer songwriter stuff will feed you some good music and you can sing that we will feed you. Oh my god. I mean, it's just it's this classic like underestimating 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 the, you know, kids pop stuff. It's not kids pop, but that's sort of thing. And so like, I mean, it's almost this Taylor quote of the Taylor lyric of when you are young, they assume you know nothing. Literally, I'm going to quote on this from her. 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 our C.A. does this, she tells them. She tells them to go F off. She walks out on her deal. So they're just stringing her along. Yeah, it's not like she walked out on a record deal, which I don't even know if she could have if she'd signed it. She walks out on the development deal. But that's what she's talking about. Like, this is crazy. Everybody's dream in Nashville 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 they don't believe in what I want to do. So I'm walking out. So in brightest star, Michael writes to understand RCA's decision as generous as possible to them here is to better understand the shifting music landscape of the time. It was not exactly a golden age for country music. Teenagers were no longer buying into it insignificant numbers and the music coming out of Nashville 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, I've shoot 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 anything but country, don't like country. Yes, there was a lot of alternative rock hip hop had was sort of graduating out of what hip hop had been in the 80s and 90s and becoming more pop, but it was still like heavy alt rock. Yep. And so RCA is kind of like look, we've got a 14 15 year old who we do think has talent as a performer or a country music label she wants to write her own music. Obviously that's going to be aimed at teenagers, but teenagers don't listen to country. We need to change this up here. So this is such a acquired theme that we see all the time. Like, is it that there was something inherently wrong with country music or to its nature that made it not appeal to teenagers or etc. No, of course not. It's 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. It's often the same with movies to it's it's a form of like self identification and community building that just so happens to sound like this. I think that's right. Well, what this makes me think of is like the auto industry and Tesla, right? Like before Tesla, it wasn't like cool to be a at least in Silicon Valley to be like a car person anymore like everybody drove a Prius because like, oh, I don't care about cars. But was 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. Yeah. So T Swift decides in her own inimitable fashion that she's going to 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 Nashville, which is like a legendary venue and was where Garth Brooks was discovered. She invites all the label execs in town to come see her perform. She's the Michael Ovets of the teen country music industry in Nashville, right? She's like holding an auction for her herself rather than trying out. So one of the execs who shows up at it was I think apparently well attended is a man named Scott Bortjetta. Scott is an executive at you know, one of Universal's sub labels in Nashville. And he's planning to leave Universal and start his own label. So he finds Taylor after the show and he pitches her and says, Hey, like I want to sign you and I want to sign you to a real record deal. I want to make an album with you. I'm about to leave Universal though and start my own indie label and I want you to take a risk on me. And I really believe in you. I believe that you can write your own songs. You can make country music for teenagers like I think this is really going to work. And Taylor doesn't agree right away. It takes a little bit of time of Scott pitching her and her family to do this. But they decide to do a tailor as this quote, you can tell when someone just really gets you the best part of getting a record deal wasn't just that it was a record deal. It was the right deal for me. I'm 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's new label big machines very first client. So both of them taking a chance on each other. And I don't know if it was in conjunction with doing this record deal or a little bit before a little bit after. But there's another transaction that happens between the Swift family and big machine. Scott Bortetta needed some financing to get this off the ground like it costs money to make an album to distribute an album. So where does it get the money? Well, one place he gets it from a minority investor is tailors dad. A Swift family invests $120,000 in big machine for a 3% stake in the label. Three ish. It's been reported in a few different 3% 4% but somewhere in that ballpark somewhere in there call it 2 to 4%. The majority of the outside capital though comes from I don't think this has been talked about that much is blew my mind when I figured it out. I think I already told you who it comes from comes from Toby Keith the like big country singer who apparently is like a huge business mogul in Nashville and in the business of country. There's a big 4% article from a couple years ago talking about how he's worth like half a billion dollars he's been a super super savvy business person outside of his musical career. So to be invest the majority of the money to get it going and big machine does a distribution deal with universal with his former major label for distribution. And they're up and running. Yep, because history has been so antagonistic between big machine and Taylor based on what would end up happening which we will definitely get to 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 would 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, do you think this is a good area to do a little sidebar on how music licensing works. Absolutely. Like what does it 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 copyrights, this is true across trademarks, patents, 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 the verge and switched on pop which will link to in the show notes. Yeah, switched on pop so good. The other is a book from the legendary music attorney Don Passman on the music business which is on its 10th edition. That's how 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 it 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's work. So that's the first copyright. It feels like the old school venture capital industry to me like when you know back in the 80s, 90s, 70s when the investors would take the majority of the company for putting up the money to do it. Yes. And ultimately everything's a 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 essentially only like three labels when you get down to it and there are a lot of people who want to be stars. So the second one is the musical composition copyright or the publishing right. And now these are like the written lyrics and the melody and they're traditionally held by the songwriters themselves through their music publishers. The way you can kind of think about this sort of the idea and the execution, the musical composition copyrights, it's 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 master. So back now to the musical composition copyright. I mentioned these can be held by songwriters, but usually through a music publisher. The publishers tend to deal with these composition copyrights the same way that the music labels deal with the masters. Historically, these publishers would take 50% of the royalties that come through the composition copyright. But today they actually take a lot less. So for bigger songwriters, it might just be that the songwriter pays the publisher a fixed fee to do some back office stuff. So for all intents and purposes, you can think about it like the songwriter themselves owns their own musical composition copyrights, the publishing rights. And they can make the decision on whether or not they want to license that for specific purposes. And a quick aside on publishers, even though they don't have a lot of relative power today to like the labels or big stars, they used to be insanely powerful in the era before recorded music when the publishing rights were the major rights. So right, the sheet music was like it exactly. And since the singers didn't used to be the same as the songwriters and that meant that the artists and the recording labels were like totally at the mercy of these publishers who own the sheet 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. And some other use cases require both. So there's 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 it might be sort of hanging your head, what about co-writers? Well songwriting credits interestingly enough can be split any which way and are privately negotiated by the songwriters 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 song together that each have to sign off for that use case. And the money can flow in totally unique ways too. So it could be 50 50 it could be 90 10 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 5% royalty or something. So like for Liz Rose and you know with all too well and Tim McGraw and the like 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 50% of the songwriting economics and the writers would keep 50% 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 own the master your royalty stream again independently negotiated but you only end up with like 10% 15% maybe if you're a really big artist you can get like 20 22% 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 advance the cost yeah yeah yeah it's like an up front. It's like book publishing exactly and so if a record label signs a deal with you and they give you $500,000 well it doesn't matter if your CDs are flying off the shelves or your you know Spotify streams are happening for the first 500,000. $500,000 that should be paid out to you the record labels are going to keep that and you only get to participate in your 10 15% whatever it is after you've recouped the advance it's like a VC preference stack. It is literally exactly what it is and I want to talk about that later it's so Byzantine and it's so from just like a different era right the way it cost a lot of money to make an album. And it cost it even more boatload of money to get it on radio and get distribution and get fans to do customer acquisition for it and more important than that and this is I think what represents what's sort of like often perceived as a predatory deal. Most of these startups most of these artists are going to fail and the record labels or the book publishers or the VCs 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. When 90 plus percent I don't know if the failure rate is in the music industry but when you know 90 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 make up for all of the losers that you bet on. Right just like in a VC fun but this is what you know now I think it's completely changed yes yes all that's true in the old world where you got to invest all this money before you know if somebody has an audience. Alright so back to T-Swift so she and big machine they start making the debut album while they're making it Taylor puts up a Myspace page so all the teenagers are doing at the time. Well you're that going direct to her fans imagine that going direct to her fans even though she's not on the radio even though nobody spending any money here. She also chooses you know for the production again like Scott and big machine they've got real money they've got Toby Keith behind them they've got universal like they've access to a lot of resources. Taylor's like no I want the guy who did my demo to be my producer candy Nathan Chapman who she has a great vibe with and most importantly she's like no I want to control this like I want to control what this sounds like I wrote these songs together with Liz with a lot of them but like I'm the song like I am in control here. So in June of 2006 they release the first single from the forthcoming album it's Tim McGraw thanks to Myspace she has 20 million interactions. Whoa crazy then on October 24th the album is finally released and Taylor writes in the liner 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 album anyone who can sing along to my songs when I played 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 for that I love you I love God for putting you in my life and then. Little P.S. to all the boys who thought they were cool and break my heart guess what here are 14 songs written about you. Did she say that literally right that's so funny she knows where 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 she did for the next 14 years after that and cultivating community on tumblr is crazy she has 27,000 interactions with fans on tumblr over the years. Wow that is her personally liking or re blogging or commenting like she gets you 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 going to do they're going to go by the album especially in 2006 where I was frequently buying CDs it cracks the top 200 in November 2006 and then slow build over this you know social media. I don't even know what you call it that Taylor is building and contextualize this this is before Instagram has launched. Yes and I think it may be even still before tumblr right around the time some some blur starting so well over a year later in January 2008 after 60 63 straight weeks in the top 200 it becomes the number one album in the world. Wow it ends up in total on the billboard top 200 it spends 275 weeks on the charts like what other artist and album could do that especially from a 16 year old. She was 15 when it came out yeah wild totally well so Taylor she's so smart she's building this whole direct relationship with her fans social media innovating pioneering in so many ways. She 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 tour you do press. You're probably not on your first album going to go do a headliner tour yourself you're going to go be the opening act for other tours so first she starts opening for hoodie in the blowfish is the first big act that she opens for which is awesome. Then rascal flats rascal flats is going to come back into big machine later perfect then George straight Brad Paisley and then finally. Tim McGraw and Faith Hill so literally the first single Tim McGraw she ends the opening act phase of her career opening for Tim McGraw and Faith Hill. There is this unbelievable quote from Brad Paisley at the time about why he wanted Taylor 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 to have written that record at 16 it's crazy how good it is I figured I figured I'd hear it and think well it's good for 16 but it's just flat out good for any age she is operating at a level I will never reach already in the groundbreaking way that she has taken a new audience and said I'm a country singer and they love it. Wow that's amazing strong words. So fast forward to November 2008 the country is in the financial crisis Lehman brothers is gone under it's doom and gloom video for great recession blah blah blah all that stuff Airbnb and Uber are starting Taylor drops the second album my favorite album fearless oh my gosh there are so many bangers on this album fearless 15 love story hasty white horse and you belong with me those are just the first six tracks in order on this album whoa I thought you were naming all the hits no those are just the first six tracks now they are probably the best six tracks on the album but yeah is a hell of an album so unlike the debut self titled album which takes a year of like this slow burn social media campaign to hit number one it debuts at number one on the billboard hot 200 chart where it stays for 11 weeks the longest since Santana's supernatural in 1999 the longest in the top 10 by a country artist ever and she becomes the youngest artist to have what would go on to become the best selling album of the year and the only female country artist ever to have the best selling album of the year there's another couple things about this album that I think are worth pointing out because she's more of an adult now and having real world experiences she is starting to shift her songwriting from being like love songs and break up songs about things that she 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 folklore folklore and and ever more when she starts to shift and start writing songs about fictional characters and historical characters and other people again she had this sort of like autobiographical thing of here's what I've been going through the last couple years in my life for the next decade of her career and this is really where that kind of starts that's such a good point because the original the first album and you know all those quotes about how amazing she was as a songwriter yeah we're about her powers of observation and imagination and being able to write other people's stories from our perspective but you're right yeah then there's this like a long or long from our perspective here in January 2022 middle period of writing about her own experiences and then she 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 foreshadow because what does she do with that like she does 1989 later and it's like you know what screw it full on pop so back to fearless she wins the album of the year the Grammy for album of the year making her the youngest artist ever to win album of the year so then she goes back out on tour not as the opening act this time of course but as the headliner her first real tour that's around the fearless tour playing big arena is like stable center Madison Square Garden most of these places like course through her online direct connection with fans they know when tickets are available they're covered they sell out in like a minute the tour grosses over $63 million she plays in front of over a million fans and then right in the middle of all this on September 13th 2009 in New York City Radio City Music Hall yes I didn't realize this happened on a 13th too of course it did of course it happened on a 13th it's Taylor Swift Taylor 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 there is best overall video still to come in the night but somebody either is unaware about that or doesn't care some drunk rapper thought this was the big prize I think we all know what happens next it's funny to like talk about the con you Taylor moment on acquired but this actually becomes like such a huge part of the business story of Taylor's career it's funny it inspires so much of her next decade plus it's a seminal point in everything that she does from there and everything that she does from there inspires a lot of change in the music business and so this point it's almost like that meme where like you tip over a small little thing and then a huge impact happens years later like little domino thing totally but you know drunk Kanye getting up and I'm a let you finish blah blah blah like that was a catalyst moment that would change the economics of the music industry it would change so much well and not to credit Kanye with that that would piss Taylor off enough to eventually change the economics of the music industry well Kanye with credit Kanye with that this was such a butterfly laughing its wings moment in so many ways there's the specific to there's the Taylor's music and Kanye's music which forever change probably for the better creatively yeah I mean Kanye's my dark twisted fantasy beautiful dark twisted fantasy phenomenal tortured album I mean like one of the all time there's an amazing podcast yes to set season two yes the dissect season on that album it's like one of the best 20 hours you can spend going and listening if you like music to how that album came to be an almost feel sacrilegious speaking so fondly of Kanye on the Taylor Swift episode but the torture that he put himself through after being an idiot or what did Obama column what a jackass jackass yeah like the president and it says calls you a jackass for that and like he goes into hiding and emerges you know creatively from that wounded state with that amazing album so I think there's three levels of butterfly wing flapping here yes one is musically creatively for Taylor and Kanye to is the business of the industry which we're going to get into on the rest of the episode here I think you could maybe argue there's also an element of like even bigger than that the Obama thing I didn't put two and two together until just this morning is this the Kanye Trump relationship yeah dude no way okay how's this go Obama in I think it was like either CNN or CNBC or something like he's setting up for an interview and in the pre show setup with the cameras rolling somebody's talking about the you know the incident at the VMAs and of course Obama has two teenage daughters who love Taylor Swift as he says something like you know she seems like a perfectly nice young lady and you know Kanye he's a jackass and everybody laughs right well Kanye is like a dude from Chicago there's like a real connection there in the past and he feels so betrayed by Obama 2020 rolls 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 you know Kanye runs up on stage says that Taylor hears booing from everyone booing Kanye kind of thinks they're booing her so she's kind of standing there half 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 poise they are like what do you think of Kanye West and she's like I mean I don't I don't really know the guy and they're like were you a fan and she goes I mean yeah he's Kanye and you can just see the like the disappointment draining from her face of like Kanye West for as big as Taylor Swift is now she wasn't Taylor Swift yet but Kanye West was already Kanye West and so to be a person to have Kanye say that about you on stage it's obvious how that is so debilitating and then the deepest irony of all is that what Kanye was upset about is that he felt that Beyonce had one of the greatest videos of all time for single ladies which she did which everybody agreed on because she won video of the year later in the night also that video is like a that that 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 I live in this is like the financial crisis you can't understate the impact of this moment no and basically all future Taylor Swift conflict stem from this to like we'll get into the scooter stuff and that of course comes from the fact that scooter brawn was Kanye's manager there's Kanye deciding to dredge up history again which again we'll 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 it 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 follower accounts on you know Twitter is just starting to come up at this point in time this is probably right around the same time as the famous race to a million followers right on Twitter yep yep so after this the following year speak now comes out Taylor's third album and once again I didn't really realize until the research why is it called speak now what is what is it about Taylor wrote all of the songs on speak now she wanted to prove you can't say anything about me that I like oh I get the song writing critics but really Liz is writing everything or somebody else is writing everything like no right it's to basically strip herself down and show that there's all 100% me so if you like this you like me yep there's no caveating there's no possible way to say but she blah blah blah and I think people liked it because all 17 of the tracks 14 on the main album and three bonus tracks all chart on the billboard hot 100 of them on the album with that 1.11 of the tracks concurrently on the top 100 wow so it becomes the only album in history to have 17 hot 100 hits four of which were in the top 10 that crazy 17% of the most popular songs in America are from your new album and represent 100% of your new album now speaking of song writing right after speak now comes out Taylor starts a new relationship I hope was to have no Taylor relationship conversation on this episode but I think it's kind of impossible I know I know I didn't want to but we got to do this one well covered by the media unfortunately doesn't last very long there's a big blow up at the end of it she turns 21 during this and the other party in the relationship famously does not come to her 21st birthday yep it's bad so she starts writing a song about it and this song she would write for over a year and this is the one that she brings back Liz Rose for even after having just done speak now of approving the world I do everything myself this one was so there was so much in this song that she wanted to say that she felt like she needed some help from her old collaborator of course we're talking about all too well Jake Jell and Hall this song it's a freaking masterpiece like it's a masterpiece a lot of this stuff in this story is like win win win for everyone especially Taylor I think that kind of keeps being the punchline the the addendum is except for Jake Jell and all 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 re-releasing albums from this point in time now it's like why are we touching this up again it's just very unfortunate timing for him well but this song is incredible I will say I also did the peloton Taylor Swift Taylor's version ride and on the 30 minute ride 10 minutes of it is the 10 minute version of all too well as a bold peloton choice no no no it's not 10 minutes 10 minutes and 13 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 has come out in 2012 of course we're talking about red yeah so they make the album Taylor and and big machine usual she uses Nathan Chapman again as her producer 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 just had this like great sounds more of what they want they make the whole album and Taylor's 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 nope I'm going to redo it is that how it ended up with a 22 track album that could be maybe that's why there's so many tracks so this is the one she brings in Max Martin and shell back the famous Swedish producers who had worked with Britney Spears and Backstreet Boys and they just done maroon five moves like Jagger and she's like we're we're going full pop with a lot of this and we're going to have a whole new a whole new sound that's right red was super pop even before we hit 1989 right but it's got this schizophrenic vibe right like there's some country on it still but then there's Max Martin and shell back on it too so I think it's great the other thing I didn't realize about red until now album title is red and if you look at the cover you know it's Taylor sort of looking down photo of her face yeah is a reference I think there's like a double Easter egg in this oh Taylor's the whole stick is double triple quadruple Easter eggs nested in the album are and the inside booklet of the album and all the other crazy stuff you can research so I can think of two Easter eggs one is the obvious one is its referencing Joni Mitchell's blue album we got a link to that from the show notes because the thing that you sent me like the album cover is clearly modeled off of blue clearly it's like both shots of their face looking down and you know blue versus red I think the other one it's probably referencing is the Leanne 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 15 to 20 song album every year so you got oh six oh eight 2010 2012 2014 so she's averaging writing and releasing or writing and recording 10 songs a year so we'll just seed plant that for now that was the first decade of her career and we'll come back to it yeah and it would be again another two year break before the next album which is of course 1989 so many pops so many earworms so many like popular videos that come along with it 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 count today of just about to hit 200 million she is indeed for everyone she's 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 vibe and here she's just like blowing the doors off that and being like you like apple pie in America I have Taylor Swift for you yeah and I think everybody in the orbit on team Taylor knew that like this was going to be really big because you red was it was pop but like it was really successful red did not win the Grammy for album the year which I think Taylor still kind of resents and she hadn't won one sense fearless right yeah I don't think so I don't think speak now when red didn't win speak now didn't win and it's funny we're saying didn't win yeah as if it's some kind of loss if the album that you released that your didn't become the the album of the year which I think is how Taylor views it that is totally how Taylor views it in fact that's the opening scene of Miss Americana is when she 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 not only didn't win but wasn't even nominated like that's like who which in retrospect that was a mistake yes but okay let's go to 1989 welcome to New York blank space style shake it off bad blood wildest dreams I mean it's unbelievable she's always pushing the badries like she does two things one which is just so fun and totally in the Taylor cultivating the direct relationship with fans she picks a small number of fans based on their like engagement on social media how engage they are in social media and she does this at her various houses and properties around the country she invites them over for secret listening sessions of the album before it comes out under NDA they can't talk about what's on the album and she bakes them cookies incredible and of course like photographs and you know videos the whole thing and posted on social media like just freaking brilliant right and the lore that comes from those ten people getting to say I was there and eventually post pictures or anything like that she just gets tremendous amplification of anybody feeling like that could happen to them totally so in July what year are we in 2014 right before the album comes out in October she writes an op ed in the Wall Street Journal saying that she completely disagreed with Spotify and the music streaming industry and that she believes that everything about the way streaming is happening is hurting artists she 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 girl I meet is that they realize all their worth and ask for it music is art 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 one in albums price point is I hope they don't underestimate themselves or under value their art what she saying here like her specific beef is with spotifies free tear the ad supported tear just doesn't generate the royalties for people who listen to a stream that you what if you were a paying member and I think there's kind of two levels to Taylor's objection here one is yeah about the money like lots of people are streaming my music for free and I'm not getting paid or I'm getting paid a very very tiny amount for it very very little I think the others she genuinely as she 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 and it's valuable and nobody should get to consume it 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 mean the artists and she views herself she's even referred to herself on camera which is great as the resident loud person of the music industry which I think is such a great and a little bit self facing way to put it where she's looking around she says I believe this we're going to hell a hand basket here and like someone's got to do something it's going to be me again this is the first time that she's like really embracing that role yeah 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 1999 with about 14 15 billion dollars in recorded music revenues so this is shipping CDs basically I mean when you look at this line and we'll link to the RAA is wonderful tableau diagram of this it is like 90 plus percent shipping CDs that was a gold mine for the music industry and then it starts declining and like very clearly Napster happened and then it fell like crazy I'm looking at 2000 and five it was at 12 billion dollars and then just five years later it's at 7 billion dollars in 2009 CD sales fall like crazy music streaming hasn't really kicked in yet and so there's just no money being made in the whole time low for the entire music industry for recorded revenues with like 7 billion dollars in 2014 and 15 so it's like right around this time where streaming hasn't started generating real revenues yet the industry's basically been like flat to declining for the last 70 years it's brutal out there and so what Taylor sort of looking at is like if we continue to put all our eggs in this streaming basket I don't know so why is she saying 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 types of copyrights oh I can't wait let's do it all right so talked earlier about the publishing right and the master right which you could think of as the publishing is kind of like the song writing the master is going to like the recording so now let's talk about the different ways each song could be played and which licenses are actually required for each and what the typical economic breakdown is for each one so while we're on the topic of streaming let's start with that when you stream a song on Spotify the vast majority of the payout goes to the master recording so think the label and when I say vast majority let's call it 80% much smaller portion 12% on average goes to the owner of the publishing right typically the songwriter so that 80% goes to the label which then gets distributed to the artist the singer or the band depending on the royalty rate that they negotiated which as I mentioned tends to be 10 to 20% going to the artist so you think it like 8% now 8 to 10% right exactly at 10% of the 80% so then if they're also the songwriter which Taylor frequently is let's say that they take home the vast majority of the 12% so let's call it 10% so from a Spotify play it's reasonable to assume that a singer songwriter would receive about 18% 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 so say like 80% to the master license holder and then 12% to the yeah I don't totally know where the balance goes I might be like BMI and as Cap or something I'm going to be able to do it is the balance to Spotify or no this is the balance of what ends up getting paid out on a play so it's it's like 92% to license holders and 8% to I don't know who got it. So radio even though you kind of feel like you're doing the same thing when you're listening to song on the radio versus listening to it on Spotify it's actually totally different which is really stupid but the way it is a song played 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 songwriter believe it or not. Interesting but the recording artists actually don't make that much so in the old world if you were a songwriter 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 to but you wanted it for marketing purposes because then people would go buy your CDs which is where the artists would and the record labels would actually make their real money. Interesting and of course Taylor is getting you know both of these but feels rightly so like she should be getting more of each. Right and in any songwriter economics she gets way more the split than in any masters related economics. For example is songs that are played as a part of like movies or commercials these are granted via something called a synchronization license or sync rights. There's a split between both the publishing and the master right for this one I think they're about even or they're 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 used in a commercial it's like a veto right. And so this is a smaller overall revenue stream for the industry but there's sort of a fascinating element to it there where even if you don't participate meaningfully in the economics of something you still have a veto right over it. Interesting. So we have all heard this notion streaming doesn't pay me a tailor's loud about it here I think a lot of people know like well in the music industry you know streaming doesn't make the money but things like touring do. 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 point four cents gets cut up between the label rights organization etc before the artists and so it's reasonable this is a crazy thing but it's a reasonable ballpark to say that a million streams can net about $4,000 for the artist and their label in revenue. And if you have a 10% royalty that means as an artist you make $400 for a million streams. Oh that's so brutal and that is if you are recouped against your advance. Wow otherwise it's zero. Wow. So for a very popular artist you know you could 2x this by having a 20% royalty or if these streams were on Apple Music where it's subscription only and therefore a higher payout for song that could further double it. But even if you have a 20% royalty on Apple Music streams that still you make $1,600 for a million streams as the artist so Taylor is not wrong here like this is no bad yeah and if you compare this to the old world artists used to make like a dollar per CD sold like if you to 10% royalty and a 10 dollar CD there's some retail stuff you pay but like you make a round a dollar. And so you know a million people listening to one song in the old world or more accurately because you were buying CDs 100,000 people buying your album would be like $100,000 for the artist so you're used to people listening to your recorded music netting you real dollars if you're coming from the old music industry right. And the line I wrote in my notes David you can kill me later is an artist is never ever ever going to make a lot of money from streaming like ever grown. I love it. I love it. I love it. Oh man. Alright so Taylor Swift 2017 right before the reputation tour were flashing forward a little bit so like she's Taylor freaking Swift at this point only 2.4 million dollars of her total income from every single day. And so she's like a number one artist at this point. Yeah she's making between 50 to 150 million a year depending on whether she's touring or not. Yeah and for even a better illustration you two that same year made 54 million dollars total and only 600,000 of it came from streaming. Wow. Like ever. Ever. Okay so we were talking about 1980. Taylor drops the album on October 27th 2014. It sells 1.3 million copies of physical and digital in the first week. It's huge on streaming. Taylor had written that op ed in the Wall Street Journal back in July. So before this everybody's kind of on edge like what's going to happen here she drops the album. A week later on November 3rd after having been out for a week. Taylor pulls her entire catalog off of Spotify not just 1989 but all of her albums gone off of Spotify power move. Totally power move. It would take until over two years later in late 2017 when T Swift would come back to Spotify before the reputation release. Actually I think it was just about two years. I think it was three. Oh you're right it was three it was three years. Yeah. Quote from Danielaq when T Swift finally comes back. I should have done a much better job communicating this so I take full ownership of that. I went to Nashville many many times to talk to Taylor's team. Spent more time explaining the model why streaming mattered and the great news is I think she saw how streaming was growing. I think she saw the fans were asking for it. So eventually when the new album being reputation came out she came to Stockholm and spent some time here figuring out a way that made sense to her. Wow. This is the CEO of Spotify. I mean obviously he gets involved here. And by the way when he says her team there's an organization that's pretty big. I don't know if it's 20 employees 15 employees something like that but it's called 13 management and it is. It's her whole team. There are other entities associated with it one for merchandise one for the fan club. Like there's all these like real businesses that are sort of surrounding Taylor Swift 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 what streaming can do for her now. But there's one more thing in this chapter Apple music. Yeah Apple music didn't exist back then it was beats and she was cool with beats because beats was paid. There was no free tier in beats. Yeah. After Apple bought beats and we covered this back on our beats episode way back in the day. This is so fun. When they were gonna launch relaunch it as Apple music in this is June 2015. They announced that everybody's gonna get a three month 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 artists was gonna look just like Spotify's add to the artist weren't gonna get paid during that three months. So Taylor Taylor's like oh no no no no no no. Taylor's coming on this which is unfriaking believable is and quote we don't ask you for free iPhones. Please don't ask us to provide you with our music for no compensation. The two sentences before that in the quote which of course she posts a Twitter and Tumblr on her own social media to her own you know audience. 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 Ben 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 she is taking on her role of industry loud person again. And the best part is that Eddie Q tweets back at her. Oh my god. So this is so great. Literally within 24 hours Apple changes its stance because of Taylor. It doesn't change its stance for freaking anybody. It's Apple. It's the biggest company in the world. Tim sweetie can't get them to change their developer like this is unbelievable less than 24 hours. Eddie Q tweets we hear you at Taylor Swift 13 because of course her Twitter handle is Taylor Swift 13 and indie artists. I don't know where that Andy artist comes from like no this is about Taylor. Yeah. So then later that day in an interview he says when I woke up this morning and I saw Taylor's note that she had written. It really solidified it that we needed to make a change overnight they change it and they say we're going to eat the cost during the three month free trial for. Yep. Custom reason pay artist Taylor Swift versus Apple Taylor Swift wins. That is a it's a rare rare thing. Yeah you might be wondering well how does Taylor make all this money if it's not from streaming and you know obviously digital album sales. She makes a good amount of money from that she makes money from endorsements. Right. Various merch other stuff the 1989 tour grosses 250 million dollars so that's a quarter billion dollars from the tour now that's gross. And it is quite expensive to put a tour on like you got pay for the arena you got you know fireworks crew other musicians like it's this is not high margin revenue but not software. But still 250 million dollars is a lot for one tour for one album it becomes the highest grossing US tour of all time beating the Rolling Stones. Whoa sadly for the 1989 tour but not sadly for Taylor that record would be broken a couple years later by the reputation tour which grossed 266 million dollars. In the US and 345 worldwide yeah that's a lot of money and I have to imagine that's still the highest grossing tour today because who would have performed after that with no covid 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 Ed Sheeran to T Swift bestie with his I think divide tour oh but I think the reputation tour. I'm gonna get this wrong I want to say it had called 50 dates 40 50 dates something like the divide tour went on for years and had like you know I don't know 200 dates or something like that I think she still holds the record for the highest single year grossing tour that is also hard because it's you know how often do you perform you could perform 200 times in a year right yeah it's really hard to normal. 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 price per arena per show yep. 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 1989 it's much darker it's 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 she did some of the same thing. She did some reflecting some changing some grieving some being angry what on earth happened that predated reputation well first I have a confession to make so until like I don't know 24 48 hours ago I was still in the camp that like I mean I know all this context and one that but just like me personally enjoying the music I didn't like reputation I thought it was I you know I was with the majority when it came out that it was a weaker album yeah and as you brought up the opening scene of Miss Americana is reputation not even getting nominated for Grammy right like everybody agreed and then recently it has become very cool much like Kanye's 808's and heartbreak album to say no actually reputation was really great it was just ahead of its time how dare you bring Kanye into this. 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 and real I think it's great I love it I'm now in the camp of it's fantastic yeah it's interesting when some albums are better after years go by I really like endgame yeah also great with Edgierren of course by the way David and I are not music critics there are like four rolling stone podcasts linked in the sources that are like an amazing music columnist discussion of each of these albums if you want to do some like real musical analysis on it but anyway okay what inspired reputation okay so yeah what is it what inspires it on Valentine's day February 14th 2016 Kanye West releases the life of Pablo I don't know that I've actually ever listened to life of Pablo all the way through but I think it's probably a pretty good album but of course it has the song famous famous which has the famous line in it I don't think we need to say it here right I think people know what it is right yeah absolutely not it's a pretty offensive line made more offensive by a music video where Kanye finds a doll that is a doll is it a model but something that looks a lot like Taylor Swift and it's nude in the video it's it's just like so much about this is so offensive and cringe ready 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 suffice to say Kanye and his team deemed it appropriate to release this album with this song to the world and you can't ship an 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 famous producer is in the background in the video he produced I don't know if he produced that song but he out like he was there yes lots of people are involved I guess we should have a little to at least like what it is so there's this like terrible lyric that Kanye after the album comes out says oh Taylor and I actually to talked about this and she approved it until there's like no I didn't and then later on Kim Kardashian releases some snap chats that are like I secretly taped or Kanye secretly taped this conversation and here's you saying that it was okay but she didn't fully say it was okay she didn't approve the worst part of the line anyway it's controversy there's lots of discrepancy over this Taylor's 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 again how could this not send you into some like emotional duress such that you're not releasing your next album 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 and that's got to be her full to that's got to be really her full totally and popular opinion kind of fairly turned against her like she was saying I don't know if she exactly said we never talked but she kind of implied like there was no agreement and what the snap touch so is like you definitely had a conversation you were very thoughtful about how this is going to come across when this gets released you may not have heard that one lyric but like you totally talked so then Taylor sort of has to change her positioning to the public after she's getting sort of lambasted and people are turning on her and say like well I didn't hear that line and that's 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 immense amount of negative feedback and it really she 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 I'm a person of value and why I need to value myself and 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 she was not great at that point yes so yeah 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 daily swift okay well David I know we're about to talk about a very big record deal but first I want you to tell us about one of your favorite companies in the acquired ecosystem oh my goodness are they ever one of my one of our one of all of our favorite companies our second sponsor of this episode and for all of season 10 we would like to thank vouch the insurance of tech and let me just say before David gets fully into this we're going to do some a little bit different this season with vouch I know a lot of you've heard a lot about vouch before but listen on before kind of what's what we're going to do vouch as you may remember from back in season eight I think it was sounds right yeah I was during Berkshire talking about all the insurance that's right yeah was founded to address a huge gap in the startup ecosystem business insurance which is a foundational tool for running a business yet before vouch this was so painful there was not a good option out there for getting this it was just me it was really painful totally every other category you had at least you know something like strike for payments or AWS for cloud like there was a service to take care of this for you not with insurance yeah and I'm sure lots of you are out there and can attest to how you have gotten your business insurance or Dino insurance and anything like that to date it is not a modern experience unless you're with vouch but now thankfully there's vouch vouchers business insurance engineered for the modern tech 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up on the key insurance coverages relevant to startups so stay tuned for that to come this season I've looked ahead and can attest there some really good stuff in there and we are excited for that to come acquired listeners can get an extra 5% off on all your coverages by going to vouch dot us slash acquired or as always by clicking the link in the show notes thank you vouch all right David I think tailors six record deal is up yeah so that's the other thing about reputation man reputation was such a landmark that turning point in the career in huge way but I think this is the thing about Taylor that we're going to talk about in much more in playbook but like every album is a turning point in her career 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've talked about the rights that you license when you give your masters away the way these record deals work is they sign you for a certain number of albums and they're saying look if I'm going to take the risk and front you money for this first album I'm either committing to or getting the option to your next X albums tailors was six that's about market from what I could tell yeah I was going to ask is that normal I think so I think it actually used to be more but it's like eight to 10 but it's come down in recent years so this was her six album in the last one she was under contract with big machine for Taylor does all of Taylor's own stuff but she doesn't have any issue with big machine per say there's no bad blood there who 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 now that this deal is expiring and they note that probably the most important factor in her decision is going to be the master licenses certainly for future albums that she'll make she's not going to take a 10 to 15% cut going forward but they suggest say people in the industry are saying that Taylor is such a big star that depending on how things go with big machine in this negotiation she 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 probably four options here one Taylor actually genuinely could just ditch labels all together 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 full 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 and make music that's a distraction and time away from that there's way more stuff involved in the back office of music than you can fathom 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 your Taylor Swift your CDs are being sold you need to be able to make CDs 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 they're listening for that and making sure there's a lot matching license and if not sending them the invoice for it and this you know is a unbelievable amount of things that if you go through the traditional value chain through the record labels that you kind of get the other big component that I sort of failed to realize until reading again reading Donald passman's 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 or 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're a retailer and these don't matter as much anymore but let's say you're selling CDs like for the indie artists who dealt with you individually they can be the last check that you pay but you better make sure you're writing 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 in the right playlist on Spotify there's all these ways where it's really helpful to be a part of something really big for negotiations maybe this is part of the unsaid point of in this variety article is that like Taylor 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 24 hours right so she could but it's unlikely that she's going to decide to do that just because she's an artist she wants to be an artist option number two that they lay out is she could sign with a different kind of major label ecosystem altogether so she remember big machine her label is part of the universal heritage and ecosystem yeah Taylor could jump to Warner music group or Sony or you know one of the other big groups and she already has the Sony relationship for songwriting that's not unreasonable probably going to come down to like just economics and who's willing to pay the most in that arena three she could leave big machine but stay in the universal ecosystem and sign with you know the parent label itself or one of the other sub labels within universal and option four is she could stay with big machine now ultimately as we all know she chooses option three she does explore staying with big machine she definitely does they even publish what looks like some screenshots 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 10 years Taylor says seven then by staying with us you earn back the rights to all your masters so if you stay with us through this second term then the masters from your first term become yours and there's no way to know what the economics splits were any of the other terms of this agreement we don't even have it substantiated that that screenshot that big machine decided to put out is 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 them again and we don't know what the terms were so she signs with republic records which is another universal sub label and specifically it's universal pop sub label now this makes tons of sense big machine is a country label and independently owned but in the universal ecosystem republic is a pop label like this really is what makes sense and and not only that but Taylor and big machine had been working super closely with republic to get all of Taylor's songs that when they wanted pop radio play to get on pop radio stations republic was the one handling that because obviously big machine didn't have those relationships so when this is all announced like it's very amicable at least that's what's this is presented as Taylor is staying in the universal family she's moving from a country label to a pop of a slots of cents and again we don't know what the tenor 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 going to happen beforehand but here's the reality it's estimated that revenue from Taylor's work was 80% of big machines total revenue now they had other artists they had rascal flats they had other folks both current and past and then they own the masters of in the past but Taylor was so big it was 80% of the revenue of the company while Taylor is still signed with them you know that's like operating revenue and even after Taylor's not signed with them it's still your operating revenue because well the nature of what this asset is it really goes from becoming I think in my view this is all my interpretation that 80% of big machines revenue turns from being operating revenue into being like a cash flow streaming asset revenue like the whole nature of the company changes like you were a label who worked with Taylor Swift and you were 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 you know answer the phones when somebody wants to use it in a commercial and have the relationships with the label but like probably I don't know 80 90% of your operating activities around that you know the Taylor Swift 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 like at the time you would think probably predictable cash flow asset by the way this cash flowing asset that you own is subject to someone else having strong feelings about the cash flow 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 were talking about become evident it now becomes pretty clear that like big machine is now a securitizable asset essentially and probably should be sold scotboard said it could hang on to it and keep their royalties associated from the old t-Swift masters but like there's not that much else going on big machine as a label it's now this cash flow asset the market is hot for securitized IP licensing deals hotter than ever probably he's gonna 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 dynamics would be different much less likely to sell yeah exactly but when she made the decision to leave now it sort of kicks off this sale process so now lots of people are interested they run an auction reportedly Evan Speagle who I didn't realize the data Taylor Swift briefly is interested in buying lots of P.E. shops are buying I think for snap the idea was to like build music into the discover tab that they owned or something interesting well they run a sale process now here's the question is Taylor part of the sale process could Taylor reasonably have just bought either big machine itself or the masters which were the majority the value of big machine I mean either yes she could have outright if she was the highest bidder or she could have lined up financing to become the highest bidder Taylor's current net worth is $550 million so just over half a billion at the time of this according to Forbes at the time Forbes thought it was probably around 360 million the ultimate sale ends up happening for between 300 to 330 million she for sure could have you know it would have been like most of her networks by the hour but she would have 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 she claims that she was never offered the chance to outright buy either big machine or the masters themselves which is of course fascinating because the owners and you can see this on the secretary of state website for the state of Tennessee of big machine records LLC there are only five members in this LLC one of course is the CEO Scott or Chetta another of course is Tobikeeth there are two that we don't know at least David and I couldn't find the research and then of course the fifth is Scott Swift so in order to make a sale it's not that you need Scott's vote and what apparently happened is because there was a non disclosure agreement involved that he didn't want to attend because he of course would want to call Taylor but he did not attend the vote and to decide to sell this or not but it is crazy that the Swift family is one of five shareholders of big machine and when the sale inevitably does happen everybody knows this is going to happen Taylor even says that she knew that once you went somewhere else it was obvious that big machine was going to get sold yes now who did it get sold to as we were saying there's a lot of private equity interest and it does get sold to a private equity backed company by the name of Ithaca holdings specifically it is backed by Carlisle David who's ethical holdings managed by the CEO of ethical holdings is scooter brown and scooter himself very well known famous talent manager in the industry of artists like Justin Bieber and for a time Kanye West and for a time Kanye West and for a time well Kanye West put out famous Kanye West yes you made a point lots of people knew that famous was being worked on and was coming out and like there are people in that video that obviously were there certainly scooter probably knew about it would any of that changed Kanye doing this like I don't know so to cut to the chase Taylor comes out with a post about this and says this is my worst nightmare not only that I wouldn't be given the opportunity to buy my masters but also by scooter bra and what's not totally clear and it doesn't need to be public because people can have private spats is like okay so he managed Kanye during that time there was one thing on Instagram that Justin Bieber posted at one point that had scooter bra on in it that said like what's up Taylor that she screenshot it and used to show in some way scooter had been taunting her what's not totally clear is like why there's beef and why it's her worst nightmare for it to be scooter but she absolutely once she decided that that was true made a gigantic deal about that and I have no value judgment on that but this served as an explosive point for her fan base that thinks just get even more interesting from a business standpoint there's this whole morass of rights issues around what you can and cannot do with music Taylor owns the the not the recording copyrights the masters but the the songwriting copyrights so she's been vetoing all these opportunities to use them in sick licenses it's like oh you want to use in that commercial and that could make a bunch of money for the people that own the masters nope meanwhile all this is playing out on the court of public opinion publicly lots of people are listening to Taylor Swift that's definitely happening on July 13th singer Kelly Clarkson tweets at Taylor just a thought you should go in and re-record all the songs that you don't own the masters on exactly how you did them but put brand new art and some kind of incentive so fans will no longer buy the old versions I'd buy all the new versions just to prove a point this tweet exists we'll link to it it's out there now here's what's really interesting where did Kelly come up with this idea well it turns out that aside from being like a you know the great country artist herself her mother-in-law at the time I think she's since gotten divorced but her mother-in-law at the time was reba McIntyre and reba did this no way reba did this for several reasons with old albums but certainly one of which that reba had told Kelly was that by remaking albums from the earlier part of her career and releasing them later when she had a better record deal she was obviously going to get more of the upside on that it's amazing and in the one hand you're like come on that's so much work who would do that you have to invite back all your collaborators you have to re-record every single track because you can't use any of them your voice has changed you're singing about all these X's do you really want to sing about them anymore for Jake but Taylor is maniacal and on a warpath and she does it couple weeks later in August of 2019 Taylor goes on good morning America and announces that she's going to do this and she doesn't reference the Kelly Clarks in tweet but 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 bend to your point other artist famously prints had threatened to do this before but like this isn't something you do it a weekend this is really it's like making a whole new album like it is a lot of work and the release and the promotion Taylor's time on this earth is short and her time of being a celebrity is shorter unless she manages to constantly keep reinventing herself and for her to dedicate prime years of her career to this project going and spending all the time doing this instead of creating the next album that shows how much she wants this it's completely implausible that Taylor could recreate her old albums and keep making new albums even anything close to the pace that she had been doing right yes David you're referring to this chart that I made last night I made a rolling two year average graph of the number of songs Taylor released to smooth out the curve basically since she used to release albums every other year and it's basically 2006 to 2019 it's right around 10 songs per year that she was releasing and then in 2020 she released 25 and in 2021 she released 46 she managed to release two brand new albums while also doing two re-releases during the pandemic best thing that ever happened to Taylor Swift I guess so lovers the first album on the new label is that right on the republic miss americana comes out in January 2020 it's also really good go watch it if you haven't but then there was a big tour planned for lover lover fest that was gonna take all of 2020 that tour gets canceled and the crazy thing is she announced the re-recording plan even well lover was gonna happen the lover fest tour so she was like oh yeah sure I'll be on tour all year and I'm gonna do this I think this is one of the like really good things that come from the pandemic do you mean like folklore and evermore or do you mean yeah folklore evermore and fearless and red and yeah and the long concessions I'm always torn in trying to decide why is she re-recording is it vindictive and emotional or is it because there's an enormous amount of money at stake if she does and it's both definitely both but it is fascinating that she has this kind of dual motivation here where one of them is I definitely wanted to buy my masters I'm kind of bum that I couldn't get them but oh my god now scooter has them so I must rec and destroy so surprise november 2020 the long pond studio sessions comes out as a film on Disney Plus where they all get together at long pond studio in person for the first time and play the songs live the out there together right around the same time in 2020 irony of ironies Ithaca and scooter and big machine sells the asset of the masters of the first six albums just tailors big machine the operating company all the other masters of other artists they have everything that stays with ethical 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 80% of the revenue in that so that they're still left with some 20% chunk of the value so it's nice little markup in a year there's some rascal flat stuff and you know some others I think there might be some timmigral work that they have they don't that anyway the private equity firm that they sell it to is shamrock capital which sounds innocent enough now the minute I saw this I was like oh my god because I used to work in you know media investment banking and one of the things that you know we were talked to one of the PE firms we would talk to would be shamrock capital they did a lot of media deals because they started as the family office of the Disney family so crazy now there's no direct connection anymore like this is more just coincidence but like wow and it's Roy E Disney which is the son of Roy O Disney I think I have that right who was he was the one who was kind of like agitating on the board and the CEO transition if you've read right of a lifetime interestingly enough they did this without talking to Taylor and if I were doing diligence on an asset where someone has announced that they intend to on a warpath devalue the thing that I'm buying especially when I'm buying it at an appreciation to where 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 did 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 she would continue and go through and do this there's a Stratekery article from April of 2021 so only nine months ago where pen Thompson says it's easy to see how this plays out going forward Swift probably doesn't even need to remake another album she's demonstrated her willingness and the capability to make her old records and her fans will do the rest but then she dropped red Ben wrote that when the fearless Taylor's version came out which again wasn't till April 2021 back into December 2020 whenever more comes out because folklore had come out just a few months before and was obviously huge whenever more comes out T Swift has concurrently from these two albums 22 of the top 50 songs on the billboard charts it is remarkable too as you go and listen how good the re recordings are they're both faithful to the originals and all the ways you'd want them to be oh no that that's just ever more and and folklore oh this doesn't include red and that does not include fearless well well I do want to make that point but it's not related they're both faithful and better because she's matured so much as a singer so April 2021 fearless Taylor's version comes out debuts at number one as did folklore as did ever look 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's never been a more up as it goes to the right at least in her industry we got to talk about what she calls it tailors version it's brilliant it's so brilliant because what else is he gonna call it like 2021 version or you know remake remaster if you want to identify with Taylor this is the version for you dear fan base I've been cultivating for 16 years if you love me you'll listen to my version and then in November of this year on November 12th Taylor sends me a birthday present thank you Taylor is a really really nice birthday present I didn't notice at the time because I had a one month old but releases red tailors version the fearless tailors version was so good it's my favorite album I loved it I mean this has the 10 minute version of all too well the 10 minute version the video associated with that the other music video that came out that's directed by Blake Lively the Saturday night live performance yes you know Jake Jill and Hall may have been a trick to her 10 years ago but like come on give the guy a break I mean he just picked he had bad timing if that was bad timing indeed there is a couple of points before we round out the story here that are worth making about her deal with UMG and one of them will be straightforward and one of them will be a fun deep dive into Spotify history so here's the straightforward one Taylor negotiated maybe the best most artist favorable record contract of all time the way that her deal with UMG works is she actually maintains the ownership of her future master recording rights and she licenses them to the label I own this the minute we press the album and you can use them but that is not an unlimited period of time UMG only has the license up to 10 years at which point she will regain full control so they could go make UMG's version of folklore and ever went actually they couldn't she owns the songwriting credits that's right yes so Taylor has cut this just unfreaking believable deal and Taylor's quick to point out well actually the bigger part of the negotiation for me was this 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 2008 if you lived in the UK you could use Spotify I think maybe Germany if you lived in the US you couldn't so it's this young emerging things got about two million users in the UK you know brush metal is in vogue yes kind of looks like dark iTunes well Spotify really really needs the labels to play ball and what are they going to do go sound clouds route and list a bunch of indie music on there like Daniels has a specific vision for mainstream music listening happening in a streaming way and so the three big labels and some indie labels collectively together get offered the opportunity to buy spotify shares at an extremely favorable price and so whatever the basis is it's like trivially low and they own 18% of the company huge about me there as big as a VC or bigger than any VC on the cap table and so they're you know incentivized to play ball for the foreseeable future and make this asset go up they from what I can tell made a balance sheet investment so it comes out of the shareholders coffers and fast forward to today universal music group is estimated to own about three and a half percent wow so that today is worth about 1.5 billion dollars at the current market cap which is basically all a capital gains since it was super super low basis super early investment so UMG unlike the others never sold its share so that's been great for the spotify stock because it's appreciated the last few years since their IPO so what did the other two big labels do well Warner move first and they gave some of the money to artists they gave 25% when they sold they gave 25% of the proceeds yes of the sale proceeds of spotify stock you might think why are they giving any which is kind of a reasonable to think 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 a industry that isn't exactly renowned for generosity right you might say well why are we transferring value from our shareholders to our suppliers effectively well artists aren't just 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 artists as a stakeholder group were sort of hurt by the labels deciding to collude really and do this because all three of them did it so interestingly enough Warner does this they only give 25% of the appreciation but they do it as a credit that will be recouped against earnings from albums so they sell it and they say this is great you can have this as basically an additional advance and you can pay us back for it so that's kind of shitty so Sony was kinder they said that the money that they gave to artists was non-recoopable totaling 250 million dollars of a total windfall for for all of the artists this is about a third of their stake so it's more than than what Warner did and it's non-recoopable in Taylor's negotiation as a sticking point in her contract with UMG she forced their hand to do the best deal of any of the labels by far it's not public but people think it's at least the same thing that Warner did 25% but non-recoopable and given the size of UMG's stake from the holding that would mean something like 700 million dollars would get distributed to artists with zero need to pay it back that's leverage 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 pledge this asset that is nothing to do with me yes now of course she's going to make some money but I think other people actually will be much larger recipients of the 750 million when it ultimately does 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 Taylor came around on streaming and streaming has actually been good to Taylor and Taylor has been good to streaming what is the biggest part of that now this was not in the works when Taylor did come back to Spotify but has been huge for her the Taylor versions right imagine a world where streaming was not the primary paradigm through which customers consume music even the brilliant calling them Taylor version she'd still have to go convince people who already owned fearless and red to go rebide the CDs now it's very easy to swap it out in your playlist or if you're just like if you're not a playlister you just searching you're like oh good the newest one Taylor's version that sounds right I've noticed I don't I can't imagine this is just for me but if you ask your favorite virtual assistant to play red or fearless or all too well are they playing Taylor's versions of course they're playing Taylor's versions whoa it was yet another factor that enabled Taylor to really do this remake strategy in a big way so Taylor Swift has an astonishing 200 million followers on Instagram which makes her the 14th most followed in the world but there are four people from a single family that are ahead of her who are they Kardashians yes there's stardom and then there's ludicrous stardom and it is amazing that there are so many places in this story where it's Taylor and her crew versus Kanye and his and it's great as I was just looking through who has the most influence on Instagram that just did like total reach that the Kardashian generous west I know they're not together anymore but that team Kanye has is nuts yeah wow I mentioned to you that Matsusha Electric came up again oh yes in the research and 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 MCA universal which Michael Ovid sold to Matsusha I didn't realize that they were still together at that point in time I thought they had already been split out yeah totally crazy so the fast forwarding all the way to today UMG's owners are of course it's probably traded but the Vendee still owns 10 percent of it Vincent Belore I don't I'm not familiar with that owns 18 percent perishing square holdings owns 10 percent as the famous Bill Ackman's recent don't call it a SPAC activity do you know who owns 20 percent of UMG that we have done an acquired episode on and is a big part of acquired lore 10 cent 10 cent yes which may have come as part of a swap with 10 cent music in that IPO I think something like that crazy how interconnected this web is we don't yet have total earnings numbers for 2021 for Taylor but as I mentioned earlier her net worth estimated by Forbes in August of 2021 was 550 million up from 365 less than a year before so I think it's fair to say she had a pretty good 2021 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 like just like literally consumption of paid consumption of the music now this does include streaming it's been accounted for in here so you can sort of compare errors here Taylor is 31st of all time in highest pure music sales now you might say like 31 that's like that's a great it's impressive it feels a little low but I do think the way that the streams are counted is disadvantaged relative to the way that they used to count album sales because they equate 1500 streams to one album which is a little bit like okay so you're sort of like saying that it's 150 listens per album which might be a little bit generous if like did I ever listen to my CDs 150 times yeah okay she's the only artist in the top 50 who started her career after the year 2000 and she started in 2006 everybody else in the top 50 started at least one if not multiple decades before Taylor now you look at other artists who started in the 2000s decade the only others there are three others in the top 100 tailors 31 the next is a Dell at 66 so this is like comparing LeBron mid career to Jordan if you're like trying to compare Taylor Swift now to the Beatles Beatles and number one now switching over to the touring side the reputation tour is the 19th highest grossing 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 it has less dates than every higher ranks tour above it and most of them it has significantly less dates the other thing I looked at here which was pretty hard and fluffy as you can look at various publications have estimates on highest starting you know lists of high starting artists for the year and they all have different methodologies and almost undeniably by any measure uh 2016 2019 2020 and probably 2021 she will be the highest starting artist totally amazing okay that's my trivia now I tweeted the other day that the first episode of season 10 has a direct connection to standard oil and I bet nobody can get it so I bet a lot of listeners at this point know exactly what the connection is but this is the most amazing part and we gave no hints we've told almost no one about this almost no one but one person who guessed it outright immediately and nailed it direct reply nailed it no inside knowledge no awareness of what was happening is Christina from Vanta amazing that is how good she is Christina Cassiopo 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 2013 of course Taylor bought the property known as the holiday house in Rhode Island that was previously owned by Rebecca Harkness and Bill Harkness one of the direct descendants of the Rockefellers in her order of standard oil fortune air to the standard oil name there's a lot of fun stuff out there about Rebecca and she was eccentric she funded lots of stuff in the arts particularly dance the stories in the song about stealing the dog dying a key lime green definitely did not steal a dog may have died a cat killing green but there was some poetic license taking on David I'm moving us on all right let's miss great all right seven powers so as long time listeners know we are adapting using Hamilton Helmer's seven powers framework which is an analysis of what enables a business to achieve persistent differential returns in other words how can it be more profitable than their 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 UMG as a business but like the business of being Taylor Swift and having all the assets she does and all the control that she does over what she controls and not over what she doesn't control so you're Taylor that that's the analysis I think that's the only scale that we can really analyze this on anything else feels too small of course so the seven powers are a counterpositioning scale economies switching costs network economies process power branding and cornered resource branding is a no brainer like if I heard a song and then was told that it was Taylor Swift first of all she's recognizable enough where he probably could guess but if I didn't guess such as in what's the song where she was pseudonymous the Rihanna Calvin Harris song yep yes she of course wrote that and is singing in that but is not named I never knew that before it brings up the value of the song to me and a hundred million other people yep so she's definitely got branding power going on I suspect the biggest one she's got is 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 she could do that is one way that she got the deal that she did where she actually owns the masters and licenses them to the labels right like we were talking about the only reason she keeps a label around it all and didn't go do it herself is probably just convenience 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 yeah okay I can buy that I think definitely she also has switching costs because the CEO of Spotify when she was not on Spotify was flying to the US to negotiate for her to get back on clearly you can't substitute a replacement and have equal value which I think also implies cornered resource does she have network economies with the fans and the swiftees the 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 so much there's so much YouTube content and podcast content about Taylor oh yes search Taylor Swift in a podcast player there's a lot of Taylor Swift podcasts yeah maybe I don't think it's strong network economies though if I were to take away the framework for a minute and say where does Taylor's 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 she has a specific process I think she has a way of existing in the world that enables her to continually be creative in different ways and those things I think are probably hard to fit into the power framework but those to me are the two big reasons that she's able to wield a pretty big sword and all of this the latter of those I think is exactly process power right it's kind of like packy's process power where it's like I can't really explain it but it and I she even says in the tiny the NPR tiny desk session she's like by the way this song and I think she's talking about lover she's like it felt like cheating to write because I did no work I woke up in the middle of the night I went over to my piano I started voice memos and I played the chorus basically exactly here as you hear it on the album and it felt like cheating because usually songwriting takes work and then she kind of caught herself she's like actually songwriting is completely different every time and there's no process for it probably everybody listening has a smartphone has voice memos if it's an apple phone or some equivalent on Android probably can get access to a piano and yet you cannot write like Taylor Swift all right playbook so much talk about and playbook I believe 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 Swift songs the top 1020 30 is pretty loaded with recent stuff so she's sort of like on two different axes on quality and quantity increasing and so she has this like unbelievable quadratic effect to the value that her music creates in the world if you want to phrase it in a really sterile way 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 phrase that I think that's Swiftie Taylor 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 undeniably lotable for Taylor there's 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 it benefits everyone involved sometimes it doesn't but I mean there's a bunch of different examples of this one being she's initially said Kanye didn't call for approval which we know he did but just not the full approval okay fine she said she woke up to finding out at the same time the rest of the world did that her albums were sold according to big machine they'd sent her a text the night before maybe she didn't see it of course her dad was also a major shareholder okay didn't show up to the meeting but there's a little bit of like she wanted to tell a clean story there another example she was never offered the chance at her masters that she had to earn them back one at a time not totally clear maybe she could have put in an offer to buy them this is my worst case scenario is it really or is that the most dramatic way to put it and I don't think any of these things are necessarily untruthful there's a very good chance all this is the way that she perceives these in her head so she is speaking the truth that she experiences it but it is a she's very good at finding the version that she can tell the world that has the most possible impact and as we've said many times she is a tremendous storyteller you know what this is what there's like nothing more acquired than what this is the reality distortion field oh she's the Steve Jobs of music absolutely she totally is I think she's the Michael Ovitz too there's so many ways that she leverages her self-appointed position as the music industry's resident loud person to beat up the centralized power and benefit the artist totally one big one that I have that is gonna spiral here a little bit and then I'll hand it over to you afterwards is the litany of disruptions that happened like actual low end disruptions like Christians in Ask that led to where we are today and Taylor's remarkable ability to use them as catalyst for herself and jump on new things so it's cheaper than ever to record your own music it's cheaper than ever to produce and mix your 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 commenting back and forth with fans or Spotify playlist or Tumblr Twitter yeah then of course distribution in addition to marketing is also free since you no longer need to print CDs or mail them and then on top of that retail stores don't really exist so there's no retail markup so this and the rise of social media all at the same time the fact that the VMA's incident wouldn't be the VMA's incident without Twitter like that was a catalyzing event of why everyone was talking about this it's like the tree falling in the farest problem Kanye grabs 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 she has been very effective at making sure to ride where they all peek together yeah right so that was my big long one over to you okay first one that we talked about in the beginning of the episode is like the whole teenagers don't listen to country music narrative who wouldn't love country music it's music and storytelling people love music people love stories it's just that nobody was making country music for teenagers she showed up she made country music for teenagers yeah and you see that all over the tech industry and startups and etc to the reinvent or die there 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 artists and bands and the like can get away with not having to reinvent themselves for longer yes and they don't have the you know turning 30 or turning 35 problem where they're no longer sex symbols and this is all stuff she says in Miss Americana yeah so not only is she like best in the world at doing this like she does it with the deck stacked against her in a lot of ways and then three which is totally an acquired theme or we aspire to be she treats her audience like they're smart yes and so few other people do at the scale that she does she understands the power and the value of her audience and she spends a remarkable amount of time catering to them and building things for them interacting with them to my original point on the way that she tells her favorite version of the truth in some of these situations to create the largest impact I think the savviest people in her audience could be spoken to in a little bit more of a nuanced way right when you think of how she speaks to 200 million people versus how you know traditional media used to speak to 200 million people like it's very different yes follow me on this one the free download in 99 killed the CD sale which was the cash cow of the industry I mean for everyone artists labels everyone so then iTunes comes along an individual song purchases start to save it but don't nearly make up for the last revenue streaming takes off like crazy and then CDs really stop selling so the primary revenue driver for labels and artists is gone streaming makes some money but that revenue generated from streams that goes to the labels to be divvyed 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 this situation where in order to make money it's touring at its merch at this point since streaming doesn't make a lot of money and sees are dead so record companies then interestingly got obsessed with did you hear about the concept of the 360 deal yes so they're trying to capture revenue even if they're not helping you create the album and you're over producing revenue on your own on their side they're like oh were you're label so you know we're we're involved in everything your brand does and we're gonna help you do everything blah yeah sure so where does this leave us basically what it means is the industry is just gonna have to make it up on volume but because streaming pays out so much less we're just gonna need a lot more streams now is this gonna happen here's where there's an interesting argument and this the the Donald passman book is so good and bringing up two points in the introduction and these two points are at the peak in 1999 an average CD buyer spent about forty five dollars per year on CDs today with streaming averaging seven dollars a month that average spent per customer has gone up to eighty four dollars so you have almost a two X in terms of consumer spend now let's look at like the number of consumers that are doing this well in the old days when you were done with your twenties you basically stopped buying records and you stopped buying CDs you kind of had your musical taste you had your collection you weren't really listening to the new 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 that four-year-olds listen to on Spotify all the way to like you know grandma having a Spotify subscription can confirm children like music so there's like very real tam expansion both in terms of the amount consumers will spend as everyone fully shifts to streaming and the number of people who will behave that way so it's just sort of about like okay well then how do we divvy up those dollars because there should be more dollars than ever flowing in looking you Daniel actually to come and talk to you before you talk to Taylor well all all credit goes to Donald passman fair enough fair enough all 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 mentioned it's like book publishing we talked about how it's like venture it's the same thing in all these things music books and startups we're having the big winners in your portfolio is really what matters at one point I had a book agent tell me that America basically picks one book a year to all read together you know it's the Michelle Obama book or it's whatever it's going to be and you don't know what that's going to be ahead of time and so you kind of don't really care that much about recouping your advances on 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 an advance and then you recoup against the royalties well what's preferred stock you know the first X amount goes to the capital provider you know in exchange for the capital they've 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 that they're not predatory but what they're doing is basically making sure that they cover their losses and there's this 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 this original capital provider I hate being locked into this deal but that deal was theoretically whatever 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 could say is Jesus isn't oligopoly there's only three people here so 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 oligopoly it's an oligopoly yeah it's just like the old school VC industry when they were like five firms and the course they got great deals because there are five firms and now it's way more competitive and founders get way better deals and to underscore the power law the status that last year the earnings of the top one percent of artists in each music category accounted for 78 percent of revenue of all music sales it's parallel it really is it looks like 80 20 to me yes well before we get into grading we want to think the official grading sponsor of season 10 soft bank soft bank created the Latin America fund with a simple thesis the region was overflowing with innovative founders and great opportunities but chronically short on one essential ingredient which is capital as we're talking about as soft bank Latin fund leader shoe and Paulo who we've had on previous episodes explain one of the big lessons learned along the way to investing eight billion dollars in over 70 companies is technology and Latin isn't really about disruption it's about inclusion and that's because the vast majority of the population is so underserved in almost every category of consumption from banking to transportation to e-commerce there's just so many businesses that are underserved by modern software solutions so this means there's so much to build for so many people for so many businesses there's just a ton of opportunity there and the soft banks folks shared with us one portfolio company to highlight on this episode and we'll pick a different one on every episode which we're excited to do this one is pizmo a cloud native all in one platform that helps banks and fintechs launch products for cards and payments like digital banking digital wallets marketplaces and it allows them to take charge of their core data and use it intelligently the company was founded in 2016 by four experienced tech entrepreneurs and pizmos platform handles more than four billion ap i calls monthly making one of the biggest financial cloud platforms in the world so this is just one example of how soft bank is partnering with great founders and the capital and expertise that they need to help build the future in latin america now we love these guys we think they're super smart and we love what they're doing to learn more you can click the link in the show notes or go to latin america fund dot com literally the best thank you guys there really are okay so grading it's kind of weird really grading tailor 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 2020 then the entire industry made across all formats in 2015 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 here is like the way that i want to show that david is would tech crunch even cover a three hundred million dollar exit no i mean if they would nobody would read it right right it's like sure there might be a tech crunch 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 hide the whole thing on this gigantic exit of tailors music catalog for three hundred million dollars like it's just not that much money we had say i'm sbf from f t x on who's younger than tailor and you know awesome that was a great episode i love it the end when he was like mario asked him what he feels about our current age and we live in the age of social media nowhere is this more 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 cryptocurrency firm well he works in modestly regulated finance using technology yeah tailor for everything we've just discussed over a long period of time is worth half a billion dollars that's a big disconnect it feels like relative to like influence versus economics celebrity does not equal economics yeah and so just looking at some other deals Bruce springsteens entire catalog just sold for five hundred million dollars john legend mid career just sold his there wasn't a number attached to that even bob dillens entire catalog of more than six hundred songs was around three hundred million dollars so you're like okay well maybe the music royalties just aren't 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 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 apples 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 industries revenue that's including all the concerts and touring and everything is about equivalent to best buys revenue or if you want another comp american airlines oh wow best buy actually I feel like has done a pretty good job as a place you know staying alive and relevant but yes oh wow that's such a good point crazy I hear that and I feel like there's more opportunity for Taylor and other artists to do other things and make more money or just kind of find a better way to monetize music I mean it is such a meaningful part of all of our lives maybe this is part of the motivation of miss americana and the long pond studio sessions in the all too well short film of like Taylor's tried she's been in a bunch of movies as an actress and like yeah that's not like obviously going to be a big thing for her but like she can make her own movies do her own deals with Netflix maybe that's a way to make a lot more money there's a thing to grade that's not like all of Taylor's career so I it's probably worth doing grading ithaca's purchase of big machine there's another one that's grading share rocks purchase of Taylor's 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 grading but big machine selling when they did was a great decision and big machine shareholders should be excited by that it was a the only decision and be selling while Taylor was still friendly amazing still amicable relationships with Taylor yeah absolutely right move by the way just for fun I did a calculation on if you own three percent of big machine like Scott Swift allegedly did at the time of the sale you would have turned your 120k of initial investment into nine million dollars by selling to scooter brawn which represents a 75 x not bad not bad not bad now was that a good decision for ithaca well they made a pretty quick buck by flipping 80% of that 300 million also for 300 million then to shamrock they got their principle back quickly yes and more I mean they own whatever you know the value of the remaining 20% of the assets are but now if you're shamrock I don't think I would pay 300 million dollars I feel like pretty bad deal there has never been a more overvalued asset in the music industry than the masters for Taylor Swift's original albums at 300 million today not only is she actively devaluing them but the whole industry is at complete peak for what people are willing to pay for assets like some people are even calling it a bubble in the music industry just like they are in public equities or in startups I think shamrock and the Disney family are going to be left holding the bag on this investment that they'll never recoup which is the great irony of Taylor Swift not recouping right oh boy it certainly seems that way I mean yeah things could change but if I do how Taylor's committed to this project now like even if Taylor and shamrock were to smooth things over and have good relationships again she's remaking she's gonna want the new versions maybe I did there's still maybe some deal that can be cut where you're like I want Scooter out entirely sell me this thing or I'm gonna make it worth you know 30 million dollars to you and she might be able to buy them for a bargain basement price and stop doing this but that's what Ben Thompson thought before red came out it also it's sad I know it seems like she's an artist she creates and she enjoys it it seems like she's enjoying doing this I think that's right yeah seems like pretty bad deal for shamrock all right what do you want to grade hmm Taylor Swift's career unprecedented unbelievable a plus like my god and the change that she's affecting along with it amazing I mean it actually kind of reminds me of like Elon Musk where people love to hate on Elon Musk 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 well also advocating for artists no I think I kind of think she should so I have no gripes with that I mean shocking the two people who host this acquired podcast about technology and capitalism no gripes with somebody making money yeah musically we have anti gripes with it productively financially and the way that she's affecting change it's just a plus yeah she's a genius no other way around it all right quick carve out I can't recommend strongly enough the Beatles documentary oh nice oh 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 it's clearly restored because it's like very high quality footage of John Paul George and Ringo and you're spending it's like eight hours it's many hours cut across three parts you're just hanging out with them while they are creating an album from nothing in a matter of a month and it is especially for those of us who grew up seeing pictures of the Beatles listening to the Beatles music and only ever seeing like a little video here or there and usually poor quality I think for the first hour of it I was just spending like being in a state of shock that I was just hanging out in a room informally with the Beatles for mine I've got a fun one that we've talked about much over on the LP show go check it out on the LP now newly public LP feed for everyone and we are both wearing right now italic yes we did a little partnership with them for some acquired gear for recent guests and us and our significant others and it's just a tight quality stuff I love it it's great yeah totally agree all right well listeners with that if you're not in the slack you should be honestly I've met so many awesome people there and it's really cool to learn from so many of you and if you like talking about the news of the day with an intelligent group of people who are into the stuff you're into you should join at acquired.fm slash slack I will take the episode off from telling you to become an LP 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 catalog now and the new stuff is just available to LPs for a couple weeks so go look at the whole back catalog and we'll 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 and I think are interesting so if you want to view of what we think the interesting jobs are go to acquired.fm slash jobs and then lastly if you want to tweet about this we would love that we actually would love it even more if you just share one to one with your friends because we think that strong connections are the best connections and you can find us right along Taylor Swift on Spotify and in all of your favorite podcast players literally right next to Taylor Swift immediately next to Taylor is acquired with that our thanks to Vanta vouch and the soft bank Latin America fund we will see you next time we'll see you next time