- What if I told you that Taylor Swift changed music forever? And no, I don't mean by
pioneering her own brand of folksy, yet accessible pop rock. I mean that she actually changed the way that music gets made and the
way that artists are able to monetize the art that they create. It's actually true. When people look back
on this age of music, they're going to think about
the Before Taylor Swift Age and the After Taylor Swift Age. Because, as she found out the hard way, being a rock star comes
with a lot of perks, but there's also a dark side. ♪ Whatever time the deed took place ♪ ♪ Macavity wasn't there ♪ No, not that dark. But some of the most legendary names in music have been
screwed by terrible deals with recording companies. Bad contracts and greedy
labels have left artists like Rick James broke while
companies made hundreds of millions of dollars on their art. And Taylor Swift's most
recent album, "Fearless," Taylor's version, arrived
at #1 on the Billboard 200 and promptly broke a
bunch of industry records. This is nothing new for Swift. She's been a star since
she was a teenager. But it's the way that she
achieved these milestones that's worth talking about. When Taylor lost control
of the music copyrights over her first six
albums, she acted swiftly. Yes, there's gonna be a
lot of puns in this one. She acted swiftly by
re-recording her first album. But why would any musician
rerecord their album in a way that is almost indistinguishable from the first one? Well, we can look to another example. Like Swift, Prince signed
his first music deal as a teenager. He gave Warner Bros. ownership
over his entire back catalog. Prince eventually sued and
changed his name to a symbol to try and stop the company
from profiting on his name and eventually hoarded his
music to prevent corporations from taking control of his work. Similarly, Paul McCartney lost control of the Beatles' catalog in the 1960s and has worked for
decades to get the rights to his original Beatles recordings, and that project is still ongoing. And in this context, Swift's bold decision
to rerecord her albums and reclaim the value of her own music will influence every
artist of her generation and for generations to come. (stately music) Hey, Legal Eagles, it's time to think like a greedy music label executive or I guess an entrepreneurial musician. Lisa "Left Eye" Lopez once
described the music industry as "a cutthroat business
full of greedy individuals who take advantage of young artists." She would know. TLC was one of the biggest acts in music when they were forced
to file for bankruptcy because their original
recording deal got them just 7% on the sale of each album, minus deductions for
touring and promotion. Understanding music law is essential for any musician or songwriter, but it's not like there's
a school of music law. And this is daunting for most people, who usually have no experience in the law or drafting legal contracts when they get started in business. And in the US, the music
industry is governed by the Copyright Act, but it
also operates by tradition, particularly in the music
publishing side of the business. So to understand what is so monumental about what Taylor Swift has
done and is continuing to do, we have to learn a little bit about copyright law
and the music industry. Now, to help understand how this works, let's talk about a hypothetical. Let's say you're a
promising singer-songwriter. You write your own music and
record it in your own studio. But how do you get paid for your music? Well, it should be simple, right? You write a song, record it, release it as a digital download on your website or on a CD or a cassette tape or an LP if you're a dirty hipster, and you get paid when someone buys it. You get 100% of that money. Yay! However, your ability to market
your own songs is limiting. How will people discover you? Where will they buy your stuff? How do you get your songs on the radio? How will you afford to tour? What if you think your music would be good in commercials or movies? Well, this is where labels
and music publishers have traditionally entered the picture. So congrats, the Legal Eagle
Music Label Screaming Eagle wants to sign you for a record deal. I'm gonna give you $100,000 in advance. You'll also assign 50%
of your publishing rights to Screaming Eagle Music
Publishing Co., which I own. Just sign this legally binding contract and you'll be well on
your way to superstardom, and tomorrow, $100,000 will be transferred to your bank account. Sounds pretty good, right? Awesome. Awesome. Awesome. Awes, awes, awesome. But wait! Before you say yes or no, you
need to read the contract, and that's actually not what
happened with Brad Paisley, because Sony refused to
give Brad Paisley data on how many albums he sold
because a contract footnote said he couldn't challenge
royalty payments until 2006. He couldn't legally get the numbers. So the fine print
matters, and in that case, he was probably shortchanged
over $10 million. It all starts with knowing the difference between two different
copyrights that are involved in the creation of music, and side note, there's actually at least
six different copyrights that are involved when you're talking about the creation and
publication of music. Music is particularly complex when it comes to copyright law, so for simplicity's sake, we're just gonna talk
about the two main ones when it comes to creation. There's the musical work copyright and there is the sound
recording copyright. But what rights are these? Under the Copyright
Act 17 USC section 106, the owner of a copyright in a work has certain exclusive rights to that work, including the rights to
reproduce or copy that work, adapt and prepare derivative
works based on the original, distribute copies of it,
perform or display it publicly, perform a sound recording publicly by digital audio transmissions, et cetera. And how long do these
exclusive rights last? Well, since your songs were created on or after January 1st,
1978, they last for 70 years after the death of the individual author. So let's talk about this first right, the music composition right
or the musical work copyright. It protects the underlying
musical arrangement and the accompanying lyrics of a song, whether that composition is fixed in written sheet music,
recorded, or otherwise. And in our hypothetical,
you created a musical work all by yourself, so you own that copyright until you sign the contract assigning it to the Screaming Eagle
Music Publishing Company. And under our proposed agreement, I will let you keep 50% of
the music composition rights. But that takes us to the second copyright: the sound recording copyright, which protects the actual recording of a musical composition. This could be a recording
that's contained in a CD, an MP3 file, a computer hard
drive, or other phonorecords. The Copyright Act needs
to update its language. But the Copyright Act defines phonorecords as material objects
which sound is affixed to "by any method now known
or later developed," and under this proposed contract with Screaming Eagle Records, the label will pay for
all of the musicians and the equipment that you
need to record an album. The official finished sound recordings will be owned by the record company. This is the version of the
song that is publicly released. These are generally
called master recordings, and Screaming Eagle Records
will not need your permission now or in the future to use
these particular records or to sell them. How valuable are the masters? So valuable that everyone
wants a piece of this pie. It's become a popular
practice for producers and song engineers to demand a percentage of the masters for the work of their song. And sometimes this is an
advantageous arrangement for your musicians, but be careful, because it will keep
eating into your split any time that recording
is played somewhere else. So to recap, under our deal, which would not be totally
crazy in the music industry, Screaming Eagle owns your masters, but you get to keep 50%
of the composition rights. So this seems like a pretty
reasonable deal, right? Or is it? Music publishing is not something that's defined by the copyright statute. It's a music industry
tradition and expectation that a music publisher will
manage the composition rights. Music publishers help leverage
your songs to make money and protect your catalog
of songs from infringement. And generally speaking, music publishers have two
significant revenue streams. There are mechanical royalties
and performance royalties. A music publisher can pitch your song to other artists who may record them, or they can get music
plugged into advertisements, video games, movies, and the like. This might be financially lucrative, but it still means that as the musician, you're giving up another
slice of the overall pie. So when will the individual
artist start earning money? Well, first, you've got to ensure that you sell enough albums to
make up the $100,000 advance that you signed when you
signed with the label. That money was an advance,
not a signing bonus. And then you have to repay the music label for any expenses it paid
to help record your album, promote it, and set up your tour. TLC only got about 20 cents per album after the label deducted for
dancers, sound engineers, video production, tour
support, and radio promotion. Left Eye said that the
group made less than 1% of the estimated $175 million in revenue that the group's music generated. So let that be a lesson: only after you pay back the label in full will you start earning
royalties on your music. But once the contract between you and the first music label ends, you might be able to sign a
more lucrative deal elsewhere. However, the original music
label will own the masters of the sound recordings in your albums for as long as it states in the contract, which could be as long as
your life and then some. The label will continue to get revenue for the sale of each
album and digital download that includes any of the
original sound recordings, and that includes royalties or fees from the use of the sound
records in any movies, films, TV shows, or advertisements. And now you know enough
about copyright law and the music industry to
understand what happened with Taylor Swift and Big Machine. Imagine that you signed a deal like this when you were 15 years
old, like Taylor Swift. In 2019, Swift was named
Artist of the Decade for the six albums she made
between the ages of 15 and 24, mostly while she was signed to
the record label Big Machine. And not surprisingly, this
soon erupted to bad blood. But the trouble began when Scooter Braun, who works with the Kardashian
clan and Justin Bieber, purchased the music label Big Machine. Braun and Swift had
publicly feuded in the past, and once the sale went through, that meant that Swift's
masters were owned by Braun. Big Machine was estimated to be worth at least $300 million with
Swift's catalog valued at about $140 million at the
time, so she was responsible for almost half of the company's value. But this was not a love story. ♪ Baby, just say ♪ - No! God! No, God, please, no. - When her contract was up, Swift opted not to
resign with the company, but Big Machine was not exactly thrilled with her decision to
sign with another label. So she says that they
retaliated against her by refusing to allow her
to perform her songs on TV and blocking her from using her recordings in a Netflix documentary about her life. Although the label denied this, "The New York Times" got an
email showing an executive from Big Machine telling
Swift's representatives that the company will, quote, "not agree to issue licenses
for existing records or waivers of its recording restrictions in connection with the
Netflix documentary." Yes, Taylor brought the receipts. The lesson: don't second-guess a madwoman. ♪ Baby, now we got bad blood, hey ♪ (sighs) Oh, boy. (laughs) Now, Swift tried to buy her
masters from Big Machine, but Braun refused to sell
them to her at any price. Braun wanted Swift to sign an NDA muzzling her right to talk about him as a condition of negotiating. Swift said no deal. But this is a dilemma
faced by many artists who try to buy back their copyrights. In the late 1960s, Paul
McCartney lost his stake in Northern Songs, the publishing company that he'd set up with John Lennon. McCartney also lost control over the master recordings
for the Beatles. And when McCartney worked with
Michael Jackson in the 1980s, he told Jackson that it was important to own the rights to his own music. Jackson apparently jokingly
responded by saying, "One day, I'll own all of your music." And, mission accomplished! Jackson responded to this advice by buying up the McCartney
copyrights for himself in a backstabby joint
venture with Sony ATV that cost him $47 million. - For those of us who
like living dangerously, this one's for you. - McCartney, of course,
got nothing from the deal. It also, shocker, apparently, ruined the McCartney-Jackson friendship. Now, the value of the
Beatles' catalog soared. In 2016, Sony ATV bought the Jackson share of the Beatles' songs for
a whopping $750 million. But after years of litigation
over whether British or American copyright
law applied to the sale, McCartney finally got the
chance to get his rights back using the termination
provisions of the Copyright Act, which generally gives
an artist an opportunity to terminate transfers 35 years
after the date of transfer. But what did this mean for Taylor Swift? Well, it meant that she decided
to be proactive right now to avoid ever being in
a McCartney situation, which brings us to why
she rerecorded her albums. 17 months after Scooter
Braun purchased Big Machine, he sold the master tapes of Swift's albums to a private investment fund. The purchase price was a
minimum of $300 million, which could escalate to $450 million if certain benchmarks were met. The investment funds have
been scooping up music rights left and right because
their value is so high. For example, in 2020, a firm purchased a 50% stake
in Rick James's catalog, including both publishing
and recorded masters. The song "Super Freak" is still one of the most sampled riffs in music and is still probably worth
tens of millions of dollars, if not more. But when James died in 2003, he left an estate worth just $250,000. The investment firm that
purchased the Swift masters includes the George Soros family, 23 Capital, and the Carlyle Group. According to Swift, they have
not reached out to her at all, which is a strange business decision, since Swift is making them money. Swift wrote, "Scott Borchetta told my team that they'll allow me to use my music only if I do these things: if I agree not to rerecord copycat
versions of my songs next year, which is something I'm
both legally allowed to do and looking forward to,
and also told my team that I need to stop talking
about him and Scooter Braun." Braun's response to Swift's
specific allegations was basically-
♪ You need to calm down ♪ He posted about kindness on
Instagram and had the gall to assert that Taylor
communicating with her fans, quote, "greatly affects the safety of our employees and their families." So Swift just responded by
re-recording her original albums, because remember, there's two different
copyrights at work here. There is the composition license, the sheet music, the melodies, the lyrics, and then there is the copyright in the sound recording itself. She didn't own the copyright
in the sound recording. Big Machine and eventually
the private equity firms did. But she did own the composition license, so she just took the
compositions and rerecorded them. Effectively, Swift owned the
abstract version of the songs, and she had the funds available to work in a studio to
rerecord it herself. She could hire the engineers
and the other musicians to help out on the album,
and she could just make one that sounded identical
to the original album. You might ask, how does this re-recording
impact the original masters that are now owned by
a private equity firm? Well, it dilutes their values. Fans are buying the new
version of the album. In fact, it went to #1
on the Billboard charts. It also means that fans will
stream the new versions, reducing the number of plays
that the original version gets on streaming services. And any company that wants to
license Taylor Swift's albums can now work directly with
Swift, which cuts off income to the firm that owns
the original masters. And you might think that
the two different versions of the sound recordings might
compete with each other, driving the price down, but in reality, people generally wanna work
with the original artist because that artist is going
to continue making new art that they might want to
license in the future. It's generally better for a movie, game, or TV show to
license the new version because they would have
a good relationship with Taylor Swift, who has an
entire career in front of her. So Taylor Swift made extremely
important business decisions that will not only impact her,
but other artists as well. The private firm that
owns the original albums also probably missed an opportunity. If they had reached out to
smooth things over with Swift, the value of the original
masters would be intact. Instead, her fans are
buying the new album, which sounds identical to the original. Swift plans to rerecord her
other five albums as well, and if Big Machine is bitter, I guess that they can just shake it off. - [Interviewer] What advice would you give to anyone who wants to become a singer? - Get a good lawyer. - If only I knew some music producer who could listen to the
originally recorded masters and compare them to the Taylor
Swift recorded versions. Man, that would be a really
interesting thing to learn. Especially if I knew the most preeminent music
producer on YouTube. Man, that would be great. Rick, as the preeminent
music educator on YouTube, would you mind listening
to the original version of Taylor Swift's
"Fearless" and compare it to the new version to see
if there's any differences? - I will. So here's the original one that was recorded and put out in 2008. (upbeat pop music) Okay, if I just listen to the beginning. Let's check the new one. (upbeat pop music) Way better snare sound. It sounds fuller. This actually isn't fair, 'cause I had listened to the
two of them back to back, and the new one is far superior. Taylor's voice sounds better. The recording's better. They did a really great version of it, and the snare drum is much
better in the new one. - That's incredible, that you can hear that much of a difference between the two versions. - They're pretty identical, tempo-wise. They must've actually overlaid them so that they got the tempo right on. But, you know, they probably
have a lot of the same... I haven't looked, but I would imagine maybe they have some of the
same players playing on them. But sonically, the new one is far better, and I think her voice sounds better on it. - So over time, you think that she's become a better singer in- - Absolutely, no question about it. - Interesting. Well, I hope that this particular video
doesn't get a copyright claim, but if it does, then I will dispute it, just like we did on your
channel when we went through and disputed all of the copyright claims that you got on your videos,
because this video is fair use. - There you go. - So there you have it. To a layperson, the two
songs sound pretty similar, but to the trained ear, you might even say that the new versions that are engineered by
Taylor Swift herself sound even better than the originals. Her voice has matured. The technology has gotten better. So if that's the case, why would you even listen
to the original masters? Why not just always listen
to the Taylor Swift version? But the question is, what
is Taylor going to do with all of that extra money? Well, she'll probably
spend it on a great meal, but we know that Taylor
likes to do things herself, so her best bet is today's
sponsor, Hello Fresh. Now, I am also a do-it-yourself
person, and I have to say, I was initially pretty
skeptical about Hello Fresh. I'm a pretty good cook, so I
didn't think I needed the help. But I actually loved it. Even for an experienced cook like me, Hello Fresh delivers new ingredients and recipes that I'd never try on my own. Everything I've gotten from Hello Fresh was insanely delicious, easy
to cook, and really healthy. For example, I recently made
yogurt-marinated chicken with garlic sauce, pork
tenderloin with cherry sauce, and meatloaf a la mom, and every single one
of those was fantastic and not something that I
would've made on my own. So if you feel like you've
been cooking the same thing every day in quarantine, Hello
Fresh is a great solution. And of course, everything was
delivered straight to my door, so I didn't have to do any shopping. And what's really great is, the produce actually gets
to you faster than it would if you bought stuff from a grocery store, so it arrives at peak
freshness and flavor. And it's also super easy to save time. Hello Fresh cuts out
meal planning and prep so the recipes only take
20 to 30 minutes to cook, literally less time to cook than it would normally
take to do the shopping. And it's also incredibly sustainable. Since the ingredients are pre-portioned, there's less prep and less wasted food. The package is almost entirely made from recyclable or
already recycled content, and Hello Fresh's carbon
footprint is actually 25% lower than that of meals made
from store-bought groceries. So if you'd like to try Hello Fresh, and I really recommend
that you give it a try, you can go to HelloFresh.com
and use the code LEGALEAGLE14 to get 14 free meals. Yes, you can actually get 14
free meals, plus free shipping. Or you can just click on the link below. So again, for 14 free meals, go to HelloFresh.com and
use the code LEGALEAGLE14, or just click on the link
that's onscreen right now. Plus, clicking on this link
really helps out this channel. And while you're at it, click
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or I'll see you in court.
