UMG-Taylor Swift Deal Means Higher Payouts For Others

Instagram photo with Lucian Grainge, Chairman/CEO of UMG and Monte Lipman, Founder/CEO of Republic Records

Taylor Swift, the biggest free agent in music, signed a long-term deal with the world’s biggest record company, Vivendi SA’s Universal Music Group, in the process using her clout to try to score some points for other artists signed to the same label.

According to The Wall Street Journal, Swift’s new deal came with a stipulation: Proceeds from any sale of Universal’s stockholdings in Spotify Technology SA are to be distributed to the label’s artists at a better rate than paid out previously by the other two majors.

Detailed terms weren’t disclosed.

This is the first label change for the 28-year-old pop star, who was signed when she was just 15 years old to Nashville-based Big Machine Records, an independent label distributed by Universal that released all six of her studio albums.

The Spotify agreement was a major sticking point for Ms. Swift, who had been courted by major labels and other companies as her deal with Big Machine expired earlier this month, according to a person familiar with the matter. She also considered options such as distributing her own music, this person added.

“I see this is a sign that we are headed toward positive change for creators—a goal I’m never going to stop trying to help achieve, in whatever ways I can,” Ms. Swift wrote in an Instagram post Monday.

Taylor Swift

No. 2 label Sony Music Entertainment sold 50% of its Spotify shares in May and No. 3 Warner Music Group sold its entire stake in August. Universal hasn’t indicated it is nearing any sale of its Spotify shares and as recently as May Vivendi Chief Executive Arnaud de Puyfontaine said the company had no immediate plans to do so.

Universal’s Republic Records, which had been distributing Ms. Swift’s music in the U.S. under her previous deal with Big Machine, will continue to do so in the new contract.

Swift’s older recordings remain under the control of Big Machine, which will continue distributing them via Universal. Any music she records during her new multi-year, multi-album contract with Universal will remain her property, according to Ms. Swift. That is a perk reserved for only the biggest superstars; typical record contracts leave recordings, and the right to exploit them commercially, in the hands of the label.

Behind the commercial success of Swift, Big Machine was elevated to one of the world’s premier independent record labels.

With funding cobbled together from several investors, Music Row veteran Scott Borchetta launched Big Machine in 2005. A 15-year-old Swift was one of the label’s first signees, and she quickly showed the ability to transcend country music and appeal to pop fans.

The partnership of Swift and Borchetta was wildly successful, and she rose the ranks from gifted but unheralded singer-songwriter to worldwide pop-country icon.

According to The Tennessean, she singled Borchetta out in Monday's announcement, thanking him for "believing in me as a 14-year-old and for guiding me through over a decade of work that I will always be proud of."