Key Changes: Nothing New

The Key Changes newsletter expands upon the ideas in “Key Changes: The Ten Times Technology Transformed the Music Industry” by Howie Singer and Bill Rosenblatt and published by Oxford University Press

In 2022, Taylor Swift received an honorary doctorate of fine arts from NYU. ?Given her impact on the music business, perhaps she deserved an MBA as well. She re-recorded her original albums and managed to make those versions more popular than their predecessors and single-handedly prompted one of the most powerful technology companies in the world to reverse a policy on music streaming royalties ??Social media has dubbed her “the best CEO in music.” Yet, to borrow one of her song titles, this is “Nothing New.” Throughout the history of recorded music, every new distribution format that achieves dominance brings along both constraints and opportunities.? Artists then adjust their creative and business practices to push the boundaries and to achieve success.? In fact, there is a through line that demonstrates this concept that reaches back in time from Taylor Swift to the very first recording artist to push such boundaries: Enrico Caruso.

The Italian operatic tenor, like other successful musical acts of the early 20th century, performed live on stage. The most popular artists steered clear of making recordings for the new-fangled talking machines given their perception as novelties offering poor sound quality. Fred Gaisberg, an executive of the Victor Talking Machine Company, was sent to Europe by his company to convince top performers to give this new-fangled invention a shot.?

After hearing Caruso at La Scala, Gaisberg was determined to record the tenor.? In exchange, Caruso requested (or according to some accounts demanded) ￡100 as payment for a two-hour session.? That sum is equivalent to $17,000 today. The ten performances preserved for posterity that day ultimately earned more than $600,000 in today’s currency, an enormous return on investment.

Caruso’s emotional renditions were a part of that success, but there were other factors too. Those early recording devices were severely limited in the types of sounds they could accurately reproduce. Lower frequency brass did well; higher pitched strings did not.? Soprano voices were most popular with audiences, but Caruso’s tenor was better suited for the new recording medium. Performers needed to sing loudly right into the gramophone’s horn and Caruso consistently delivered quality performances in less than ideal conditions – like Gaisberg’s hotel room.

The recordings helped to establish Caruso as the biggest musical star in the world and convinced other high-profile artists to try out the fledgling technology. ?Not surprisingly, other music companies, noting Caruso’s success, were soon bidding to add him to their rosters.? That interest gave Caruso the leverage to become the first artist to negotiate more favorable contractual terms -- both financially and artistically.? The Victor Company agreed to make guaranteed annual payments to Caruso recouped against royalty payments at higher rates than less successful artists. Also, Caruso obtained full artistic control of his releases: if he didn’t approve of a recording, it would never see the light of day.

Taylor Swift’s success has similarly provided her with the wherewithal to pursue changes that not only improved her own circumstances but also benefited artists across the industry. In 2015, Apple Music was offering a three-month free trial to new users; a tried-and true technique to entice people to sign up and fuel the growth of subscribers. But Apple’s decision not to pay royalties to artists during those trials led Swift to publish an open letter titled “To Apple, Love Taylor” announcing that she would withhold her upcoming album 1989 from Apple Music to object to this policy on behalf of all artists.? Apple responded swiftly (how else?) and just one day later reversed their position and agreed to pay artists for the use of their music during these trials.

Swift’s influence proved even more potent when it came to the control and exploitation of her own catalog. At 15 years of age, she signed her original record deal with Big Machine Records, a Nashville-based independent label distributed by Universal Music.? When it was time to sign a new contract, Taylor selected Universal’s Republic Records and, not surprisingly, given her enormous success, the terms of that agreement were far more favorable.? Not only were her royalty rates much higher, but, more importantly, she retained ownership to the “master recordings” of all the albums created under the new deal. Big Machine had sold the ownership rights to Swift’s first six albums to Scooter Braun’s Ithaca Holdings.? Swift had hoped to purchase the rights herself and she was quite vocal in declaring her objections to Braun’s control of these recordings.

But Swift did more than simply voice her discontent.? In 2019, she announced plans to re-record each of her first six albums.? The revenues earned by the new versions, whether through sales or streams, would flow to Taylor under the more favorable terms of her Republic contract rather than into Braun’s pocket.? She appended the words “Taylor’s Version” to the name of each re-released track so that her army of Swifties could distinguish them from the originals and choose her preferred version. ?And she used various platforms to encourage her millions of fans to make that choice including awards shows, social media, and, of course, those sold-out concert appearances around the world where she announced the release dates for Taylor’s Versions.

The streaming services supported Swift’s objectives as well. When users searched for a specific Swift song, the services surfaced Taylor’s versions rather than the originals.? When fans requested a “Taylor Swift playlist,” the platforms populated it with the re-recorded versions.? These actions have had a significant impact.? For example, the song “Innocent” was released in 2010 as part of Swift’s Speak Now album. Fourteen years later, it has been streamed 53 million times on Spotify. ?In just 18 months since the release of “Innocent (Taylor’s Version),” it has already registered more plays than the original. Not only do the plays of Taylor’s versions earn her higher royalties, but they undermine the long-term value of the original releases controlled by Braun.

The “virtuous cycle” of recordings driving audiences to attend artists’ live performances that, in turn, increase fans’ interest in acquiring or listening to more recordings is nothing new.? Once again, it dates back to Caruso himself. The popularity of his recordings generated worldwide demand for his live performances and enabled him to make his first trip to the United States to appear at the New York City’s Metropolitan Opera leading to more than eight hundred such engagements over his career.

There is one more parallel between Caruso and Swift that does not directly relate to their music and that is the public’s intense interest in learning every detail of their personal lives. For Taylor that means everything from the houses she owns to the clothes she wears to her romantic relationships are fodder for millions of followers on social media.? She even managed to raise the already sky-high profile of the National Football League whenever she attended Kansas City Chiefs games to root for her boyfriend Travis Kelce.

There was no such thing as social media in the early twentieth century, but there were tabloids that covered everything about Caruso from shaving his mustache to accusations of sexual misconduct at the Central Park Zoo to attempted blackmail by an organized crime gang.? The public’s fascination with Caruso at the height of his fame is yet another example of how he established the roadmap for numerous aspects of the music industry. And understanding that history provides the context to analyze Taylor Swift’s role today.