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I.B. BAD SPECIAL EDITION: TAYLOR + THE MACHINE
Exploring the Possible Scenarios for Swift, Borchetta and Big Machine
As befits a superstar of Taylor Swift’s stature, there’s an elevated level of drama surrounding next Monday’s release of her fifth album, 1989, with subplots aplenty. Estimates of the album’s first-week sales are all over the map, with some expecting the total to approach the 1.21m debut of her previous release, 2012’s Red (which went on to sell north of 4m), arguing that the trajectory of the new album’s lead single, the smash "Shake It Off," closely parallels that of Red’s massive "We Are Never Ever Getting Back Together"—each was at 3m+ by release date. But naysayers counter that the new album will inevitably fall well short of its predecessor due to a conspiracy of factors, including a market that has shifted from downloading to streaming during the two years between releases. More specifically, some argue that Swift’s decision to make a Pop record that Country radio has shunned will significantly cut into her core constituency.

Swift owes one more album after this one under her current deal with Scott Borchetta’s Big Machine, and the long-term performance of 1989 will impact the artist’s perceived value when her attorney, Nashville-based Mike Milom, negotiates a new deal. In any case, this album is likely to be 2014’s biggest debut by a country mile. What’s more, Swift has shown herself to be a remarkably savvy businesswoman; she’s a skillful marketer and self-promoter, and she had the foresight while still a teenager to take much of her business in-house. Her father, Scott Swift (below left), an SVP and wealth management advisor at Merrill Lynch, appears to be overseeing much of Taylor’s business, including acting as her de facto manager and agent. While Swift was previously repped both by CAA and WME, most of her touring is now handled by uber-promoter Louie Messina from PACE/AEG. Her publishing has been locked since she became the youngest writer ever signed by Sony/ATV.

The value attached to Swift will have a significant impact on that of Big Machine Label Group, as Borchetta, whose attorney is Joel Katz, prepares to put the company on the block for a reported $200m. (Interestingly, Swift’s father has a stake in Big Machine as one of the early investors brought in by Borchetta to fund the label.) But Swift’s valuation will be far more meaningful for Borchetta if he can re-sign her, because she’s clearly the jewel in Borchetta’s crown. The fact of the matter is that Borchetta must bring Swift with him in order to make his company truly attractive in the eyes of prospective bidders. He has assets that are valuable to Swift in that he owns the rights to her masters, which he could give back to her as a negotiating carrot. He could also offer her a piece of the company—which includes joint venture Republic Nashville and its biggest act, Country-crossover duo Florida Georgia Line—before he sells it.

Further complicating the situation, according to Nashville insiders, is the Music Row establishment’s negative stance toward both Swift and Borchetta because they haven’t followed the standard-issue playbook. These players are spinning the situation negatively in an attempt to preserve the old order, insisting that Country radio is never, ever going to forgive Swift for what they view as a betrayal—but is it really? She was transcending genre distinctions even before Red, and there’s no reason to presume she’s done with fiddles and mandolins forever. If she can get Country radio back, Swift would be that much more valuable, in the sense that the Country audience has traditionally been loyal while Pop fans tend to be fickle.

If Swift opts to not re-up with Big Machine, she could conceivably bring the label function inside her own business, mirroring what she’s done with management and booking, and make a separate label-services deal with a major. It certainly appears that Swift has the leverage in any faceoff should it come to that. Will any of the usual billionaire boys club suspects who have shown interest in music assets, including Burkle (at left), Perelman (below, right), Blavatnik, T.H. Lee Partners or Ashley Tabor, suit up to play a role here, or could we see an attempt by Rapino or Azoff to make Swift part of their growing empires?


But if she does re-sign and Borchetta then sells Big Machine, these longtime partners could wind up working together for the long haul. That would make perfect sense, considering the impressive job Borchetta has done building Big Machine into a force while also creating a nurturing environment for his teenage prodigy, allowing Swift to so maximize her potential that she’s now in a class of her own.

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