ATOT - Route #001 - of Taylor Swift and contracts

A Train of Thought - Route #001 - of Taylor Swift and contracts . . .

Important concept: contravention of law, whether that law be just or unjust, is completely different from morally scuzzy or douchy behaviour.

This is an interesting case study but also an important one. I have never signed a recording contract so I have zero knowledge of the situation(s) and contents but from a content perspective at least, I imagine it's similar in nature to other contracts of this type. Like gambling, the house, in this case a record label, has the advantage. But unlike the house, there is a big reason for this: the person/group/organization offering a contract in this context is taking on the bulk of the risk, that is, should the artist/group not end up providing the return on investment that is desired-envisioned-promised, it's the record label that would have the largest loss, up to and including bankruptcy. In many cases, the artist can move on to another label or independently release should this occur.

Think of it this way: you tackle a project with a partner for a set monetary return. You end up doing 75% of the work but the return is split evenly between both parties. This is why many contracts spell out who does what, what the return is, what the restrictions are and what the consequences of breach are.

I'm sure the reasons behind holding ownership of an artist's work for a period of time are legion however two big ones stand out:

1) A record label would want to recoup their expenses as well as earn a profit; this is the entire point of starting a business, charities and non-profit included. The master recordings are the product in question. They could also be called capital goods since the public only consumes a product derived from these recordings and not the recordings themselves. These recordings allow either party to generate a revenue stream until the consuming public is no longer giving up more money that what it is costing the other parties to provide the music to them. Further, in the case of a record label, the recordings themselves become an asset, particularly when seeking financing or sale of the business.

[SIDEBAR: what good is a charity/non-profit that only breaks even? This means that the organization can never expand beyond its initial seed capital which in many cases is slim to virtually none. Anything in a marketplace that strives only to at least break even, or less, would be considered a hobby not a business.]

2) A artist could utilize a label's resources to create a career:

  • then jump ship the minute a contract is expired
  • allow other companies to record their music
  • re-record their own music potentially reducing the value of the previous material

and so on . . .

Holding the masters for a period of time is in effect protection of an investment.

Here's the rub: generally speaking, and from what I can find specifically about the Swift case, this will all be spelled out in a contract that needs to be willingly and un-coercively signed (meaning agreed to in a legal sense) by both parties. By signing the contract, both parties agreed to abide by its contents for the mutually agreed upon time frame, full stop, no more, no less. It appears at this point that Ms. Swift did indeed freely sign the contract(s).

"But she had no choice, it's very difficult for a young artist to get in the business!"

I'm sure that's true but it changes nothing. Don't sign the contract and try to find another way.

"Easy for you to say, but there are no other ways!"

Well if that is indeed the case, perhaps Ms. Swift could pass along her experience in the form of using some of her estimated $360M net worth, amassed despite "Easy for you to say, but there are no other ways!", to create a label for up and comers that gives them more control over their material, seeking a more win-win scenario. (I don't have enough interest in the specifics of this case so I haven't looked: if Ms. Swift already does this then kudos!)

Summary: unless more details come to light in this case that negates what is already published, IMHO Ms. Swift is acting inappropriately and should not be granted her request. Instead, she should be waiting until all applicable signed agreements expire at which point she can do as she pleases. Her actions in this case send a terrible message: contracts can be chucked away should conditions or situations change during the time frame. Aside from a marketplace gambler, what entrepreneur/capital risker in their right mind would ever offer a contract again? Given the amount of business and exchange conducted under contract, this could effectively destroy an economy, I hyperbole you not.