Taylor Swift Follows Prince: The Artist Who Tamed the Corporate Giant

Yes, the highest-selling artist in the land (not named Adele) made Apple bend to her will. But the issue of how artists are compensated by record labels and streaming services is far more complex.

06.25.15 7:51 AM ET

On her smash hit “We Are Never Ever Getting Back Together,” Taylor Swift lashed out against a hipper-than-thou ex (presumably Jake Gyllenhaal) who would, as the fiery anthem goes, pick stupid fights only to hide away and find his piece of mind “With some indie record that’s much cooler than mine.”

What a difference a few years—and a few hot British guys—makes.

Swift’s open letter (“To Apple, Love Taylor”) withholding her catalogue from Apple Music so long as the streaming service continued with its plan to not pay artists for streams incurred during the three-month free trial that will open its business made the 25-year-old the Norma Rae of indie music.

“This is about the new artist or band that has just released their first single and will not be paid for its success,” she wrote. “This is about the young songwriter who just got his or her first cut and thought that the royalties from that would get them out of debt. This is about the producer who works tirelessly to innovate and create, just like the innovators and creators at Apple are pioneering in their field… but will not get paid for a quarter of a year’s worth of plays on his or her songs.”

To avoid being the subject of “Bad Blood II,” Apple shot down the policy, agreeing to pay artists for their work. After Apple’s reversal, Swift, along with many indie labels, were quick to board the project.

But as in most things, The Artist Formerly Known As ‘The Artist Formerly Known As Prince’ got there first.

In 1993, Prince was up for a renegotiation of his contract with Warner Brothers. At that time Prince was a superstar coming off of a string of hit albums. He was also massively in debt, thanks to the cost of maintaining his studio complex, Paisley Park, which not only produced Prince’s albums and films but those of other artists, including portions of Madonna’s Like A Prayer album. The deal that Warner Brothers brokered in theory could have offered Prince a $100 million payout over a series of six albums in return for control of the masters of Prince’s early hits as well as control over when and how often Prince could release new material.

As the deal swiftly went south, and Prince was left without creative control of his work, without the ability to produce the work he wanted at the speed he wanted, and without the advances he was promised in exchange for his losses in the first place, Prince began to rebel against the label. He refused to put any new material on his contracted albums, drawing instead on old unpublished songs from his massive vault of material when the time came to release an album for Warner’s. He wrote SLAVE on his cheek for public appearances and famously refused to use his name on his work, resulting in the period where Prince was identifiable only by a typographic symbol that he refused to identify in words, though it was later dubbed the “Love Symbol.” In retaliation, Warner Brothers released unauthorized Greatest Hits albums and materials from Prince’s masters like The Black Album that The Artist Formerly Known As Prince had intended to never be heard by the public.

Once his contract with Warner Brothers was fulfilled in 1999, he dropped the Love Symbol, returned to the name Prince, and became a forerunner in alternative distribution models, releasing new music through his personal Internet subscription service, (later After shuttering the site, Prince refused to provide his 2010 album 20Ten to digital download providers, declaring, “The Internet’s completely over. I don’t see why I should give my new music to iTunes or anyone else. They won’t pay me an advance for it and then they get angry when they can’t get it.”

On April 18, 2014, it was announced that Prince had re-signed with Warner Brothers—the label he’d been estranged from for 15 years—in exchange for ownership of the masters to all his Warners albums. Prince was, like Billy Joel and The Police before him, taking advantage of the 1976 Copyright Act, which allowed for any artist to regain control over the copyright to their masters following a 35-year term (since the act didn’t go into effect until 1978, Prince could have filed a termination notice in 2013, but instead chose to renegotiate with Warners and avoid a potential legal imbroglio).

In the 20 years since Prince began his battle for control of his work, much in the music industry has changed. Where Prince was fighting for his right as an artist to own the music he created and to control the way that his music was delivered to fans, what Swift and other artists like her are facing is the question of whether artists have a right to be paid at all.

In the annual report filed by the IFPI—the International Federation of the Phonographic Industry, a lobbying organization established in 1933 to protect the interests of the recording industry worldwide—it was noted that last year represented a steady year for recording industry profit, as vast increases in streaming revenue made up for another fall in physical sales. As translated by the IFPI and its corporate affiliates like the Recording Industry Association of America (RIAA), this is a sign that the industry is stabilizing after the years of flagrant theft caused by music piracy. But when you look at how revenues are split, the rise of “freemium” has not benefitted every party equally. In other words, the recording industry generates the same profits, but gets to keep a bigger piece of the pie.

That Apple was so easily cajoled by Taylor Swift should be a sign not only of Swift’s power within the industry, but of how small the difference is for streaming services between paying and not paying artists for even their legally protected piece of the pie.

Some will say that these paltry sums are better than getting paid nothing while fans stream music for free on YouTube, but this configuration of “Spotify vs. nothing” is a fallacy that’s been perpetuated by record labels as a means to protect their profit margins ever since Napster opened the door to file sharing in 1999.

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Labels loan artists money upfront to record their albums, then artists are required to recoup that initial investment as well as cover the cost for marketing, music videos, promotion, legal representation and manager fees—all out of the measly 10 to 20 percent of the royalties that they’re granted from their contracts. Labels demand all this, while at the same time owning the masters of the recordings themselves and retaining the profits gained by licensing those records to corporations or films. This is why some bands find themselves in debt after earning their labels millions, like when TLC filed for bankruptcy in 1995 despite having just sold 15 million copies of their record CrazySexyCool, or more recently, when EMI claimed the band 30 Seconds to Mars owed it $1.4 million even though the group had sold millions of albums and not seen so much as a dime in royalties.

When Metallica filed suit against Napster and artists like Dr. Dre followed, they succeeded in closing doors they didn’t realize were open. Napster was an illegal racket, sharing copyrighted material that it had not licensed to consumers who had not purchased the product, but Napster was non-corporate and at the time of its popularity, it was operating without profit. Lars Ulrich wasn’t wrong to call out Napster’s intellectual property theft, but he was wrong to shift blame for his lack of compensation to fans using the service. As rock star Courtney Love notes in her still relevant, still illuminating article for Salon published a month after Metallica filed suit, Napster did not pose a substantive threat to artists. Instead Napster was a threat to the record company’s ability to monopolize the distribution of recorded music.

When Napster closed shop in 2001, free streaming didn’t stop, but record labels were able to take back control of how that material would be received by consumers. And now with Spotify, Google Play, Apple Music, and Tidal vying for public attention, labels are able to package.

Of the streaming services that are flooding the market, Spotify is by far the largest and the most successful of the streaming services available with 20 million paying members worldwide, and an additional 45 million who stream with advertisements…and Spotify is co-owned by record labels, who hold 20 percent of the company’s stocks.

So when Spotify breaks down its profits for artists, noting that 70 percent goes to the artists themselves, what that actually means is that 70 percent goes to the labels, who parse out the 10 to 20 percent royalty fee they’ve allotted to artists and keep the remainder for themselves. Then of the 30 percent that remains for Spotify corporate’s use, labels are again invited to take their 20 percent cut. Essentially, streaming has offered labels the ability to pay themselves twice while reducing what is owed to artists from pennies on the dollar to fractions of pennies on the dollar.

In this configuration, paying subscribers to Spotify are spending $120 a year on music that gets split equally between every artist in Spotify’s database. So even on a rhetorical level, this devalues the relationship between artists and their fans, as the only way for a fan to tailor their investment is through focused streaming at odds with Spotify’s every-artist-under-the-sun enticement. If paying $20 for a Taylor Swift CD would have at one time sent Swift a royalty payment of $3, then assuming the very top end of Spotify’s payouts (Swift making 20 percent of the label’s $.008 per stream), you would need to stream a Taylor Swift song five times a day every day for a year to ensure that she would receive the same investment. Perhaps that’s why she pulled all her albums off Spotify last November.

At this rate, it’s not too difficult to beat Spotify on ethical grounds. It’s not that Jay Z is lying by saying that Tidal is better for artists. Tidal *is* better for artists. Tidal pays out 75 percent to Spotify’s 70 percent to record holders, and because Tidal has no free tier, each stream is worth more money. If Tidal could improve its user experience at the $9.99 tier—expanding bandwidth to speed up streaming and expanding its library of artists—it would be the best service for artists and fans at that price point without question. But even if Tidal paid five times what Spotify does, that’s still one song a day every day to make up for the investment of one CD. Sure, things are better, but on whose scale?

What’s more, Tidal’s user experience just does not match the ease of other services. Tidal might have Taylor Swift, but it does not yet have a library big enough to compete with Spotify or Google Play, and there have been reports of slow bandwidth. Adding a $20 tier to its subscription service is not inherently exploitative, and it’s possible that in the future Tidal will rise to the occasion and offer services worth a $240-per-year subscription price. But asking consumers to pay double for what is essentially just a different file container is price gouging, plain and simple. If Tidal cared about the quality of music as it claims to in its press releases, then it wouldn’t hold lossless audio hostage at the price of a second full subscription.

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Jay Z dismissed Tidal’s struggle to pass muster with the public as part of a “multimillion dollar smear campaign,” but Death Cab For Cutie’s Ben Gibbard was right to call Tidal’s choice to put its millionaire founders front and center a “disaster.” The artists like Madonna and Rihanna that Tidal chose to highlight are among the few who are capable of negotiating fair deals with their labels, and they can find other sources of income if they need more than the millions they make from their music careers.

You can try to exploit your consumers and play the game like the big leagues, but don’t claim to be fighting for the little guy while you do it.

Even if you don’t want to call Tidal’s attempt to sweet-talk consumers into an overpriced service outright swindling, it still remains that this inability to alter the playing field for compensation creates a fundamental break between Tidal’s stated ethics and its actual real-world potential. Tidal has no power to alter the way that major labels do business, and so it perpetuates the same structure and expects fans to foot the (marginally more ethical) bill.

And it’s in this regard that Prince’s saga becomes relevant again. In the end, even if the battleground has changed, the enemy is still the same. It’s still the record labels who are profiteering from the labor of artists, and for artists, the best route to creative freedom is still to negotiate a better deal.

To take Beyoncé as an example, since firing her father as her manager, Beyoncé has managed herself, therefore retaining the 15 percent of her royalty check that would normally go to a manager or agent. She claims a writer’s credit on nearly every song she has performed since Destiny’s Child’s Survivor album, thereby retaining her publishing rights and a portion of the publishing royalties. Most significantly though, Beyonce launched her own company Parkwood Entertainment as a joint venture with her label, Columbia Records. According to the report on her self-titled smash album in 2013 released by Harvard Business School, Parkwood is a joint venture with Columbia, meaning that Parkwood produces Beyoncé’s albums under her full creative control, Columbia distributes them using its global network of affiliates, and they split both the costs and the revenues equally. It’s a symbiotic relationship, one that mutually benefits each party, and at the moment it’s the kind of deal that is only available to artists of Beyoncé’s (and one presumes Taylor Swift’s) stature.

Beyoncé is on Spotify. And now that he owns his masters, so is Prince. When labels behave as partners and not parasites, everyone stands to benefit from this brave new streaming world. But unfortunately, there’s nothing like a Taylor Swift around to make them.