Taylor Swift (Acquired’s Version)

Summary Notes


In the season premiere of "Acquired," hosts Ben Gilbert and David Rosenthal delve into the business and influence of pop icon Taylor Swift. They explore how Swift's strategic moves, from reclaiming her masters through re-recording albums to her groundbreaking deal with Universal Music Group, have reshaped power dynamics in the music industry. As an artist who has consistently reinvented herself, Swift's journey from country starlet to global pop sensation is marked by her direct connection with fans, savvy negotiations, and leveraging disruptions like streaming to her advantage. Despite the music industry's relatively small economic scale, Swift's career stands as a testament to her creative genius and business acumen, earning her a place among the most influential artists of her generation.

Summary Notes

Introduction to Acquired Season Ten

  • Ben Gilbert and David Rosenthal introduce the season premiere of Acquired.
  • Ben is the co-founder and managing director of Pioneer Square Labs and PSL Ventures.
  • David is an angel investor based in San Francisco.
  • Both are hosts of the Acquired podcast.

"Welcome to season ten, episode one. 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 angel investor, based in San Francisco."

The quotes introduce the hosts and the theme of their podcast, which revolves around technology companies and their backgrounds.

Taylor Swift's Career and Influence

  • Taylor Swift's achievements include winning Album of the Year Grammy thrice and being the highest-paid celebrity in 2019.
  • She has used her influence to reshape the power dynamics in the music industry and advocate for artists and women.
  • Swift's fan base is highly passionate.

"She is Billboard'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 Beyonce."

The quote summarizes Taylor Swift's accomplishments, highlighting her significant impact on the music industry and her role as an advocate.

Personal Preferences and Album Discussion

  • Ben and David share their favorite Taylor Swift albums.
  • David's favorite album is "Fearless," while Ben's favorite was "1989," which has now shifted to "Evermore" or "Folklore."
  • They discuss the impact of Taylor Swift's music on their personal tastes.

"I think yours used to be 1989, and now it's reputation." "Fearless. An uncommon pick, my friend." "Mine was 1989. And I am an ever or a folklore fan now."

These quotes show a conversation about personal music preferences, indicating the hosts' admiration for Taylor Swift's work and its influence on them.

Sponsorship and Business Focus

  • Pilot is a sponsor and provides accounting, tax, and bookkeeping services.
  • Pilot is now the largest startup-focused accounting firm in the US.
  • The company is backed by prominent investors like Sequoia, Index, Stripe, and Jeff Bezos.

"Our next sponsor for this episode is one of our favorite companies and longtime acquired partner pilot for startups and growth companies of all kinds." "Which is wild because when we started working with them way back when, they were just a startup themselves, and now they're a billion-dollar plus company backed by Sequoia, index, Stripe and even Jeff Bezos himself."

The quotes emphasize the growth and success of Pilot, the podcast's sponsor, and its relevance to startups and growing companies.

Acquired Community and Additional Content

  • The Acquired community has over 11,000 members on Slack.
  • The hosts also have a second show called the LP Show, which covers venture capital topics.
  • They remind listeners that the show is for informational and entertainment purposes only.

"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 Slack." "And without further ado, David, take us in. And listeners, as always, the show is not investment advice."

These quotes invite new listeners to join the Acquired community and provide a disclaimer about the nature of the show's content.

Taylor Swift's Biography and Background

  • There is no official biography of Taylor Swift, but Michael Francis Taylor's well-researched book "Taylor Swift: The Brightest Star" is a significant source.
  • Taylor Swift was born on December 13, 1989, in West Reading, Pennsylvania.
  • Her father, Scott Kingsley Swift, was a stockbroker, and her mother, Andrea Gardner Swift, had a background in marketing.
  • Taylor Swift's grandmother, Marjorie, was an opera singer, which influenced Taylor's musical inclination.

"There is no official big book biography out there about Tswift, but there is actually quite a good book out there." "On December 13, 1989, lucky 13 at the Reading Hospital in West Redding, Pennsylvania, not far from where both of us were born and spent our childhood years."

These quotes provide context on the sources of information about Taylor Swift's life and her family background, which contributed to her musical career.

Taylor Swift's Early Musical Ambitions

  • Taylor Swift showed interest in singing from a young age, performing for strangers on the beach.
  • She was inspired by country music artists like Leanne Rhimes and Shania Twain.
  • Swift started performing at local venues and karaoke nights, where she was persistent in pursuing opportunities.

"I was kind of like an annoying fly around that place. I just would not leave him alone."

The quote reflects Taylor Swift's determination and ambition in her early years, demonstrating her drive to succeed in music.

The Nashville Connection and Country Music's Epicenter

  • Nashville is the epicenter of country music due to the historical influence of the National Life and Accident Insurance Company's radio station and the Grand Ole Opry.
  • Taylor Swift convinced her parents to take her to Nashville to pursue a music career, which led to a development deal with RCA.
  • However, she walked away from RCA due to creative differences and a desire to write her own music.

"I began absolutely nonstop tormenting my parents, begging them on a daily basis to move there." "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."

These quotes highlight Taylor Swift's persistence and vision for her career, leading her to make the bold decision to walk away from RCA.

Taylor Swift's Songwriting Talent

  • Sony ATV signed Taylor Swift as their youngest songwriter ever, recognizing her natural gift for lyrics and melodies.
  • She collaborated with established songwriter Liz Rose on several hit songs.
  • Taylor Swift's songwriting skills were evident even at a young age, as she could write about relationships without having been in one.

"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."

The quote from the CEO of Sony ATV Nashville acknowledges Taylor Swift's exceptional songwriting talent, which became a defining aspect of her career.

The Formation of Big Machine Records and Scott Borchetta's Role

  • Scott Borchetta approached Taylor Swift after a performance, offering her a record deal with his new indie label, Big Machine Records.
  • Taylor Swift's father invested in Big Machine, helping to finance the label's start.
  • Toby Keith also invested in Big Machine, which had a distribution deal with Universal.

"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."

Taylor Swift's quote reflects her belief in finding the right partnership with a label that understood her vision, leading to her signing with Big Machine Records.

Music Licensing and Copyrights

  • There are two copyrights for music: the sound recording (master) and the musical composition (publishing).
  • Traditionally, record labels own the masters, while songwriters hold the publishing rights through music publishers.
  • The split of royalties and control over music usage can vary greatly depending on negotiations and ownership.

"So there are a few really great sources on this if you're interested in learning more."

The quote indicates the complexity of music licensing and the importance of understanding the industry for artists and professionals.

Economic Structure of Music Industry

  • The music industry's economic structure requires a balance between investment and returns due to high failure rates.
  • Startups and artists both require economic models that can handle losses and still profit from successful ventures.
  • The traditional music industry required significant investment before knowing if an artist would attract an audience.

"When 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."

This quote explains the need for a financial model in venture capital and the music industry that allows for a few successes to offset many failures. It highlights the risk inherent in investing in startups and new musical talent.

Taylor Swift's Early Career and Use of Social Media

  • Taylor Swift's career was bolstered by her use of social media to connect directly with fans.
  • She maintained creative control over her music and chose to work with producers who aligned with her vision.
  • Swift's direct engagement with fans on platforms like Myspace and Tumblr significantly contributed to her early success.

"Thanks to Myspace, she has 20 million interactions. Whoa."

This quote emphasizes the impact of Taylor Swift's early adoption of social media, which facilitated a large number of interactions with fans and helped establish her popularity.

Taylor Swift's Fan Relationship and Traditional Music Industry Tactics

  • Swift understood the power of her fanbase and expressed gratitude towards her supporters in her album liner notes.
  • She combined traditional industry tactics, such as touring as an opening act, with innovative direct fan engagement.
  • Swift's ability to navigate both traditional and new methods of artist promotion contributed to her rapid rise in the music industry.

"I want to meet you. I want you to come up to me, say hi to me in public. I will thank you myself."

Taylor Swift's desire to personally connect with fans is a testament to her understanding of the importance of fan relationships in her success. This quote reflects her commitment to fan engagement as a key element of her brand.

Swift's Album Success and Shift in Songwriting

  • Swift's albums achieved remarkable success on the Billboard charts, with her second album, "Fearless," becoming the number one album in the world.
  • Her songwriting evolved from general love and breakup songs to more autobiographical content, marking a shift in her musical narrative.

"It ends up in total on the Billboard top 200, it spends 275 weeks on the charts."

This quote underscores the extraordinary chart performance of Swift's album, indicating its long-lasting popularity and the strong connection it made with listeners.

Swift's Influence on the Music Industry and Public Incidents

  • Swift's actions and public incidents, such as the Kanye West interruption at the VMAs, had significant ripple effects on her career and the music industry.
  • These events influenced her music, public perception, and industry dynamics, with Swift using these experiences to further her influence and enact change.

"That was a catalyst moment that would change the economics of the music industry."

The quote captures the idea that a single, high-profile incident involving Taylor Swift had far-reaching consequences for her career and the broader music industry, highlighting the interconnectedness of personal experiences and professional impact.

Streaming Economics and Taylor Swift's Stance

  • Taylor Swift has been vocal about the economics of streaming services and their impact on artists' compensation.
  • She believes that artists should be fairly compensated for their work and has taken action against platforms she believes undervalue music.

"It's my opinion that music should not be free."

Swift's stance on music streaming is clear in this quote. She argues that music, as valuable art, should not be freely accessible without compensation to the creators.

Swift's Dispute and Reconciliation with Spotify and Apple Music

  • Swift had a public dispute with Spotify over their free tier, leading to her pulling her catalog from the service.
  • She also challenged Apple Music's initial decision not to pay artists during the free trial period, resulting in a policy change by Apple.
  • Swift's actions demonstrate her influence in the industry and her commitment to artist rights and fair compensation.

"I find it to be shocking, disappointing, and completely unlike this historically progressive and generous company."

This quote reflects Swift's disappointment with Apple Music's initial policy, showing her willingness to publicly challenge industry giants on behalf of artists' rights. Her successful push for change underscores her influence and commitment to fair compensation for artists.

Taylor Swift's Revenue Streams

  • Taylor Swift's income is not solely from streaming and digital album sales.
  • Significant earnings come from endorsements, merchandise, touring, and other avenues.
  • The 1989 tour grossed $250 million, setting a record for the highest-grossing U.S. tour at the time.
  • The Reputation tour later broke this record with $266 million in the U.S. and $345 million worldwide.
  • Despite high gross earnings, touring is not high margin due to costs like venue, crew, and additional musicians.

"The 1989 tour grosses $250,000,000. So that's a quarter billion dollars from the tour."

This quote highlights the massive revenue potential from touring, particularly for high-profile artists like Taylor Swift.

"The Reputation tour, which grossed $266,000,000 in the US and 345 worldwide."

The significance of this quote lies in the fact that Taylor Swift's tours can outdo even her own past records, indicating her growing popularity and earning potential.

Taylor Swift's Album Reputation and Its Inspiration

  • Reputation is a darker album, inspired by a series of events, and marked a departure from the style of 1989.
  • The album was not nominated for a Grammy, initially considered a weaker album, but later gained appreciation as being ahead of its time.
  • The album includes notable songs like "Ready for It," "I Did Something Bad," and "Look What You Made Me Do."

"Reputation has some just, like, amazing songs."

The quote reflects a reassessment of the album's quality and significance after its initial reception.

"Reputation was inspired by a series of events and is a very different album than its predecessor of 1989."

This quote is crucial as it sets the stage for understanding the personal and emotional context that shaped the album's creative direction.

The Life of Pablo and Its Impact on Taylor Swift

  • Kanye West's album, The Life of Pablo, included the song "Famous," which contained a controversial lyric about Taylor Swift.
  • The release of "Famous" and its music video, which included a likeness of Taylor Swift, reignited a public dispute between Kanye West and Taylor Swift.
  • The controversy over the song and the subsequent release of a recorded phone call by Kim Kardashian led to a shift in public opinion against Taylor Swift.
  • The backlash and emotional distress influenced Taylor Swift's creative process and public image.

"On Valentine's Day, February 14, 2016, Kanye west releases the life of Pablo."

This quote introduces the album that played a significant role in the events leading up to Taylor Swift's album Reputation.

"Kanye west releases the life of Pablo... it has the song famous. Famous, which has the famous line in it."

The quote underscores the specific song and lyric that contributed to the controversy and its impact on Taylor Swift's career.

Taylor Swift's Record Deal and Masters Ownership

  • Taylor Swift's initial record deal with Big Machine Records was for six albums.
  • After the deal's completion, Swift had the option to renegotiate or sign with a different label.
  • Swift's masters from her time with Big Machine were a significant point of negotiation.
  • She ultimately signed with Republic Records, a sublabel of Universal Music Group, for future albums.
  • The deal with Republic Records allowed Swift to own her future master recordings while licensing them to the label for a limited time.

"Taylor's was six. That's about market from what I could tell."

This quote reflects on the standard length of record deals in the music industry and sets the stage for discussing the end of Swift's contract with Big Machine.

"Taylor does all of Taylor's own stuff, but she doesn't have any issue with big machine per se."

The quote indicates that while Swift was ready to move on from Big Machine, there was no inherent conflict with the label itself, highlighting the business nature of her decision.

Taylor Swift's Re-Recording of Old Albums

  • Taylor Swift announced plans to re-record her old albums after her masters were sold to Ithaca Holdings, managed by Scooter Braun.
  • The re-recordings, labeled "Taylor's Version," aimed to regain control over her music and provide fans with an alternative to the original recordings.
  • The move was unprecedented, requiring significant effort and resources, but demonstrated Swift's dedication to her art and ownership rights.

"Just a thought. You should go in and rerecord all the songs that you don't own the masters on exactly how you did them."

This quote from Kelly Clarkson's tweet suggests the idea of re-recording old songs, which Taylor Swift later implemented.

"Taylor goes on Good Morning America and announces that she's going to do this."

The quote confirms Taylor Swift's public commitment to re-recording her albums, highlighting her determination to regain control of her music.

Business Dynamics and Public Opinion

  • The sale of Taylor Swift's masters led to a public dispute and changed the business dynamics for Big Machine Records.
  • Swift's decision to re-record her albums had significant implications for the value of her original masters.
  • The controversy unfolded in the public eye, with Swift leveraging her fan base and songwriting rights to influence the situation.

"Taylor comes out with a post about this and says, this is my worst nightmare."

This quote captures Swift's emotional response to the sale of her masters and sets the tone for her subsequent actions in the music industry.

"Taylor even says that she knew that once she went somewhere else, it was obvious that big machine was going to get sold."

The quote shows Swift's awareness of the potential business moves following her departure from Big Machine, indicating her understanding of the industry's workings.

Label-Artist Relationship and Streaming Impact

  • Labels and artists share a complex relationship that extends beyond a mere supplier dynamic.
  • Labels' shift to streaming could have hurt artists financially due to lower earnings compared to physical album sales.
  • Warner Music's deal offered artists 25% of Spotify's stock appreciation as an advance against future album earnings.
  • Sony's deal was more favorable to artists, offering a non-recoupable share of $250 million from Spotify's stock windfall.
  • Taylor Swift negotiated a potentially better deal with UMG, speculated to be non-recoupable like Sony's but with a larger percentage.

"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."

This quote highlights Warner Music's approach to sharing Spotify's stock appreciation with artists, which required future earnings to pay back the advance.

"So Sony was kinder. They said that the money that they gave to artists was non recoupable, totaling $250,000,000 of a total windfall."

Sony's approach is noted for being more artist-friendly, offering a substantial non-recoupable sum to artists from Spotify's stock appreciation.

"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."

Taylor Swift's negotiation prowess led to a potentially better deal with UMG, which may have set a new precedent in artist-label agreements regarding streaming revenue.

Taylor Swift's Leverage and Influence

  • Taylor Swift used her leverage to negotiate favorable terms with UMG, affecting their existing contracts.
  • Her influence extends beyond her own contracts, impacting other artists and the industry at large.
  • Swift's strategic moves, such as the "Taylor's Versions" initiative, have been significant in the streaming era.
  • She has a substantial following on social media, which amplifies her influence.

"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."

This quote illustrates Swift's ability to dictate terms with UMG, demonstrating her significant bargaining power.

"And pledge this asset that has nothing to do with me."

Swift's influence is so strong that she can demand changes in business practices that benefit her and potentially other artists.

"So Taylor Swift has an astonishing 200 million followers on Instagram, which makes her the 14th most followed in the world."

Swift's social media presence is a testament to her widespread influence, which she leverages in her business dealings and music distribution strategies.

Music Industry Dynamics and Taylor Swift's Financial Impact

  • The music industry has undergone significant changes with the rise of streaming, affecting artist revenues.
  • Taylor Swift's financial success is notable, with a substantial increase in her net worth due to music sales and touring.
  • Despite her success, the overall music industry remains relatively small compared to other sectors.
  • Swift's ability to adapt and innovate in the music industry sets her apart from her peers.

"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 550,000,000, up from 365 less than a year before."

This quote highlights the financial success Taylor Swift has experienced within a year, emphasizing her economic impact in the music industry.

"Taylor is 31st of all time in highest pure music sales."

Despite being relatively new to the industry compared to legacy artists, Swift's sales rank her highly among all-time music artists, indicating her commercial success.

"The reputation tour is the 19th highest grossing tour of all time, including ones that run for multiple years."

Swift's touring success contributes significantly to her financial impact, with her tours grossing substantial amounts and outperforming longer-running tours.

Interconnectedness of the Music Industry

  • The music industry is marked by interconnected relationships and historical ties.
  • Universal Music Group's (UMG) past association with Matsushita Electric and its current ownership structure reflect this interconnectedness.
  • The industry's web includes various stakeholders, such as Vivendi, Tencent, and high-profile investors like Bill Ackman.

"So Universal Music Group is now a totally separate entity, but at one point was part of MCA Universal, which Michael Ovitz sold to Matsushta."

This quote reveals UMG's historical connection to Matsushita Electric, illustrating the long-standing relationships within the music industry.

"Do you know who owns 20% of UMG that we have done an acquired episode on and is a big part of acquired lore?"

The ownership stake of Tencent in UMG underscores the cross-industry and global ties within the music business.

"Crazy how interconnected this web is."

The music industry's complexity is highlighted by the various connections and ownership stakes among different entities and individuals.

Taylor Swift's Business Strategy and Seven Powers Framework

  • Taylor Swift's business acumen can be analyzed using Hamilton Helmer's Seven Powers framework.
  • Her branding power is significant, with her name alone adding value to songs.
  • Swift has scale economies due to her massive audience and potential for in-house production.
  • She also exhibits switching costs, as evidenced by Spotify's CEO personally negotiating her return to the platform.

"So you're Taylor. That's the analysis."

Taylor Swift's business strategy is examined through the lens of the Seven Powers framework, treating her career and assets as a business entity.

"Branding is a no brainer."

Swift's strong brand recognition is a crucial element of her business power, influencing her success and negotiations.

"I suspect the biggest one she's got is scale economies."

The scale of Swift's audience and music consumption allows her to leverage economies of scale in her business dealings and potentially bring operations in-house.

Taylor Swift's Creative Process and Impact on the Music Industry

  • Swift's productivity and the quality of her music have both been increasing, amplifying her impact.
  • Her ability to adapt and tell compelling narratives has been advantageous for her career.
  • Swift's use of disruptions in the music industry, such as cheaper recording technology and social media, has catalyzed her success.
  • She has effectively utilized changes in distribution and marketing to enhance her presence and influence.

"Her productivity has been skyrocketing, and her skill and the complexity of her songs has also been increasing."

Taylor Swift's growing productivity and skill in songwriting have significantly contributed to her influence and success in the music industry.

"She's able to bend the truth a little bit or tell a specific version of the truth a little bit."

Swift's storytelling ability extends to how she presents her narrative to the public, often to her benefit and sometimes to the benefit of the industry at large.

"The free download in 99 killed the CD sale, which was the cash cow of the industry."

The shift from physical CDs to streaming is discussed, with Swift navigating and capitalizing on these industry disruptions to further her career and financial success.

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