In this feature:
The backdrop to the Taylor Swift licensing drama
An example of what happens with artists and their work
A Meta Moment: how artists can own their destiny through blockchain technology
It has felt like a long time since the start of the COVID-19 era. A quick flashback to some things that happened in 2019 right before the pandemic:
When Full House flopped: the College Admissions Scandal
R Kelly lost his keys to the ignition
Everyone was taking their horse to the old town road (yes this was 2019)
Swifties and Scooter no longer were besties (debatably the biggest breakup of the year)
Devs, you're welcome. Today’s feature will make you Swifties’ second biggest fan -- second to only Taylor, of course. We’ll go back in time to recount what happened to Taylor and how what transpired will be a relic of the past in the digital economy.
Tea Time with Taylor
In the 2010s, Taylor Swift released several records and time after time she went platinum. She was doing this all with her record label: Big Machine. In 2018, her contract expired and she opted to sign with a new record label: Republic Records. The new deal was more lucrative and it also provided Taylor with an opportunity to own her creations: the master recordings.
The master recordings are a big deal for an artist as they are the official original recording of a song, sound or performance. The implications of owning the original are the royalties associated.
For context the royalties implications for Taylor Swift on record sales alone:
Reputation (2017) sold ~4.5 million album equivalents globally
1989 (2014) sold ~10 million album equivalents globally
Red (2012) sold ~5.2 million album equivalents globally
Speak Now (2010) sold 12.2 million album equivalents globally
When going platinum consistently and having a loyal fanbase, this turned out to be the sticking point, which bubbled into the pop culture frenzy that ensued.
Trouble when you walked in…
The master recording catalog of Taylor’s work was a point of contention for a few years. Without her knowing, her master recordings were bought and sold. This practice is not something that is new - it has increased in frequency over the years. Music rights are a great cash flowing asset for funds, as the royalties payout the more master recordings, videos and artworks are used.
When thinking about one of the most prolific pop stars in recent decades, royalties from the artwork could pile up quickly. This is what made Taylor’s catalog so compelling. The initial purchase from Shamrock Holdings, the initial sale of Taylor’s music, went for around $300 million according to Bloomberg.
Were these transactions illegal? Not necessarily.
The frenzy wasn’t started because of legal issues, but more from the nature of the business relationship with Taylor Swift, the record label and other associated parties that were buying and selling her music.
It was known that she had ambitions of owning her work. There have been reports of friction in the pursuit to realize that ambition, which then became more tense with the buying and selling of her art without her knowledge.
Since, Taylor Swift has re-recorded her old works to be back in control. The most recent album Midnights, which swept the Billboard Top 10 upon release, is all hers as well.
The Artist Complex
When it comes to the business side of art, artists have long experienced similar dealings as Taylor Swift. Each licensing agreement may look or feel different, but the rights to creations are often the toughest sticking point for its creators.
To make it in a creative career today, it’s often a rite of passage to work through a label, an agency, a publisher or other institution to help get mass appeal. There is a give and take: ownership of the creation in return for discoverability.
Devs do something!
Blockchain developers, of all people, could have been the most helpful in mitigating the rights and royalties challenges from the start.
With the use of blockchains, these agreements could have been written, enforced and remained immutable through code. This is done through blockchains that leverage technology called smart contracts, which are programs that are stored within a blockchain and run when certain conditions are met.
An example of a program could be: “when an album is sold, pay Taylor 10% of the sale of that record.”
These agreements are upheld through code and are enforced through standards.
Standards are rules set to enable essential programs to run, like Taylor’s payout. These standards are agreed upon by a committee that helps upkeep the blockchain.
An example of a committee is the Ethereum Foundation. You could think of the Ethereum Foundation as the United States House of Representatives. Each member of the foundation, similar to the House of Representatives, gets to vote on proposals that impact the experience of its constituents. These proposals are called Ethereum Improvement Proposals (EIP). Once the improvement proposals advance, they move onto the Request for Comment stage (ERC). Once approved at this stage, it becomes a standard - similar to a law.
The laws, or standards, that would have helped Taylor here are ERC721 and ERC1155. These are the standards for building non-fungible tokens (NFTs).
A New Royalty Reign
While expensive monkey JPEGs are what people often think of when it comes to NFTs, the code base itself could enforce guaranteed royalty payout. The reason why Bored Ape Yacht Club (BAYC) was so effective is that the creators were able to capitalize on their popularity through code-enforced royalty payouts each time artwork was sold.
As mentioned earlier, once a smart contract is deployed, it’s immutable. If the agreement clearly defines the conditions that need to be met for a program to run, then the creator will always get their royalty in perpetuity.
Creators and athletes are beginning to migrate to the digital economy. These pioneers are high visibility examples of how powerful monetization of your craft or likeness is. The creative pioneers of the digital economy are learning from their past, similar to Taylor’s experience in their own right. In this new economy, disputing ownership and creative rights will be an artifact of the past.
For more resources on NFTs, you can check out:
Non-Fungible Tokens (Investopedia)
NFTs Are Fueling a Boom in Digital Art. Here’s How They Work (YouTube: WSJ)
What Are NFTs? (CNBC International)