Hello, I was under the weather the last week or so, so I’m happy to feel a little bit better! Last month, I spoke with Todd Burns and his Music Journalism Insider newsletter about Penny Fractions and a bit of my thinking around how I approach this project (the interview is only online for two weeks, so don’t sleep on it!). It was a fun interview so certainly do check that out. Otherwise, my usual spiel: if you enjoy this newsletter, please recommend and forward it to a friend or perhaps support it on Patreon. Now let’s get into the messy business world tangles of Taylor Swift and the Carlyle Group.
On a mid-summer Sunday morning, Scooter Braun, through his company Ithaca Holdings, bought Big Machine Label Group, the record label best known for Taylor Swift. By the evening, Taylor Swift penned a Tumblr response and set off months of delicious top-tier music industry gossip. This newsletter isn’t really interested in Braun vs. Swift pettiness but rather in the company mentioned in the press release announcing the acquisition’s third graph: The Carlyle Group. The private equity firm’s seen the spotlight a number of times but its entry into the music business is what intrigues me today. Now before diving into the Carlyle Group I want to say a little about Taylor Swift.
Who is Taylor Swift?
A couple of years ago I wrote a piece for Slate with two wonderfully absurd headlines: Taylor Swift is a Labor Radical / The Radicalism of Taylor Swift. I detailed the history of Swift’s role in acting as a voice for artists that are rarely at the table: Apple Music’s refusal to pay artists during the initial months of its launch; criticizing the low streaming rates offered by Spotify; her choice of going with Universal Music Group forced the hand of the label to provide back the money it got from invested early in Spotify in the late 00s. I received some pushback, which intimated that Swift’s deal was purely for positive press and didn’t represent any great labor action. Similar to an argument I made against the Billie Eilish narrative that posits that streaming can work for all artists, there is a strong point to note that Swift’s position in the industry is a similar beacon. (Why try to change the system if Taylor Swift is doing all of the work?) I want to raise this self-criticism because I do think that Swift’s public struggle against the Carlyle Group, not Scooter Braun, does reflect a real issue within American labor and the music industry. That leads us to the following question…
What is the Carlyle Group?
The Carlyle Group is a private equity firm that was founded in 1987 and, given its namesake, its founder held the first meeting at the Carlyle Hotel in New York City. Throughout the 90s the company found success through taking in investments from Saudi Arabia and putting money into various companies that worked with American military contractors. The company’s backstory and connections to the Saudi royal family have oddly received a late 2010s update when Hasan Minhaj talked about the company’s connection to military involvement in the Yemen civil war after it invested $500 million in Supreme. This was nearly fifteen years after the documentarian Michael Moore in his film Fahrenheit 9/11 exposed the company’s rather deep ties to the Bush family, including employing former president George H. W. Bush. Now, none of this is at all related to music but I want to ground us on where the money to buy Taylor Swift’s catalog came from.
By the early 2000s, the Carlyle Group was starting to find new ventures outside of companies that mostly profited in the theater of war. In 2006, the firm, along with a cluster of other private equity firms (including the Blackstone Group, which recently bought SESAC, the Society of European Stage Authors and Composers, and helped guide Sony’s purchase of CBS Records back in the late 1980s) bought Nielsen, the media analytics company. This allowed Nielsen to continue hovering up other advertising and media-centered companies over the last decade. However, the Carlyle Group’s first real venture into music came only a few years ago.
In September 2013, it was reported that Beats 1 received an investment of $501 million from the Carlyle Group, which valued the company at $1 billion. The firm also put $15 million into Beats Music, which at that point was an outgrowth of the previously bought MOG. Less than a year later, when Apple bought Beats Music for over $3 billion, it reportedly netted the Carlyle Group nearly one billion dollars from their investment. Lotta money.
Perhaps it shouldn't have been too surprising that the company helped back Ithaca Holdings through the purchase of Big Machine Label Group, especially for the tune of "only" $300 million, (compared to the company’s other investments). Yet, as the Financial Times reported, even employees at the Carlyle Group were a bit surprised by the intense fan blowback caused by Taylor Swift’s fans after seeing their favorite singer lose her back catalog. Perhaps these employees weren’t around when the company was being accused of profiting off the September 11th attacks. That social media hot water scolds a little bit hotter than being accused of helping one of the largest attacks on United States soil in recent memory! Either way, the Carlyle Group did hit some tripwire, since the Financial Times reporting brought up the issue that Taylor Swift doesn’t even have control over her music due to the way the music industry is set up at the complete disadvantage of artists, which is where I’d like to close.
The media frame of Taylor Swift vs. Scooter Braun or Taylor Swift vs. Scott Borchetta, the founder of Big Machine, presents this as a battle between two evenly matched forces. But that’s not quite right. MarketWatch wrote a story framing this business matter as Taylor Swift vs. the Carlyle Group but filled it with reductive bullshit, like:
“There’s not much competition here. Swift has 85.1 million Twitter followers, dwarfing the Carlyle Group’s roughly 31,700. She has 122 million Instagram followers, compared with the private-equity firm’s 1,476.” or “Among the largest private-equity firms, Carlyle has the second-highest share of women in senior roles making buyout investments (11.5%) — second only to TPG’s 14% — and the highest number of women in that position, 15, according to a recent Bloomberg analysis. Swift, of course, has long championed representation of women through her ever-evolving “squad” of female friends and allies.
A more apt comparison came from New York House representative Alexandria Ocasio-Cortez, who in a tweet compared Taylor Swift to retail workers who’ve seen their industry destroyed by private equity firms over the last couple of decades. What’s happened to Taylor Swift isn’t a petty squabble between her and Scooter Braun but a preview of the increasingly financialized state of the music industry in the 2020s. Where artists who’ve already signed away much of their labor in poorly constructed record deals are seeing the fruits of their work absorbed up by finance. The previous decade offered hints of this through the rise of Spotify, which was entirely built and sustained through debt as described in the book Spotify Teardown; SESAC and Harry Fox’s attempt to tank the Music Modernization Act due to their owners Blackstone; and Tencent’s recent buying into Universal Music, which further interlocks a growing number of streaming platforms with major record labels. This isn’t even getting into the rise of private equity-backed companies amassing up song rights, which is an increasing obsession at Music Business Worldwide for a good reason.
The destruction of the recording industry into a nearly purely digital venture over the last ten years might not make catalogs as all-important as some would believe, but when musicians are seeing further consolidation of labels and publishers, then the ability to own one’s masters and thus the long term method of making money becomes even more precious. Taylor Swift’s status as a labor radical is fine to dismiss but her career path continues to be a canary of larger industry-wide shifts. Thus, if your company is suddenly swooped up by a private equity firm, don’t say Taylor didn’t warn you about the trouble!
Last week, I mentioned the newsletter First Floor and misspelled the name of the author Shawn Reynaldo, as Shawn Reynolds. Sorry, Shawn!
One quick Sofar Sounds update I forgot from last week: the company reached an agreement with the New York Department of Labor to pay their “volunteer” workers $460,357.50 for shows dating back to 2016. It’s nice to see a company that skirted by on basic labor law having to pay back some of that money. News broke yesterday that iHeartMedia, which might be on the way to being fully absorbed by Liberty Media Corp., is laying off a number of employees. Hopefully, people can find new work and absolutely shame to the suits callously slashing jobs by citing artificial intelligence.
6 Links 2 Read
I think Cherie Hu’s bigger point here is that the idea that there is a conflict between major labels and streaming services can start being put to bed because there is no “competition” between these highly financialized firms. We all would be better off not forgetting that.
US Streams Topped a Trillion Last Year. But is a Superstar Recession Looming? - Music Business Worldwide
I don’t quite find this narrative of a “Superstar Recession” very compelling but I do appreciate Music Business Worldwide beginning to lean more into providing public Google Doc breakdowns of their math. Maybe I should steal that idea ;) (Check the full Buzzangle report here)
Old Musicians Never Die. They Just Become Holograms. - The New York Times Magazine
The biggest threat in this story is less about the moral handwriting if holograms are ethical or not but rather that this really is the live music industry, from venues to ticket sellers, understanding that as classic rock stars die, there will be no new acts on the same scale to replace them. Economically, it makes sense that millions are being thrown into what is perhaps one of the more loathsome corners of the music industry, but people gotta make money one way or another!
Spotify Formally Enters Podcast Ad Tech - HotPod News
This is “news” but honestly I cannot and still do not think that highly of Spotify’s podcast business. Certainly, expecting it to become meaningful for the company to the degree that it states in its public statements is something that I have a hard time believing.
How Music Copyright Lawsuits Are Scaring Away New Hits - Rolling Stone
Copyright and patent law are a bit outside of my purview and fairly complicated but every story that I read like this suggests that there are always new ways for smaller acts to be eventually screwed, larger acts to fork over more money to needless middlemen (in this case song insurance) and litigious consolidated publishing industry companies to snipe for more money. Seems bad!
Music Streaming App Anghami Is Said to Weigh Sale Among Options - Bloomberg / Deezer Inks Strategic Payments Partnership with Mondia for Saudi Arabia, Egypt and the UAE - Music Business Worldwide
I’m placing these two press releases in the form of news stories here because I’m interested in what’s happening in different global markets. I will be writing about that relatively soon, so consider this a placeholder.