So, you're a successful artist who recently moved to a new record label, only to turn around and find out that the masters for your first six albums, the last 10 years of your career, have been sold to someone you have no interest being in business with. What do you do?

If you're Taylor Swift, the answer is: You re-record everything.

When Swift left her record label Big Machine Records ("BMR"), BMR retained ownership of all rights in her back catalogue master recordings.  It has been reported that Swift was offered a deal where she would regain the rights to one of her previous albums for every new album she recorded for BMR, but she refused that deal. Not long afterwards, BMR, including the rights to Swift's masters, was sold to talent manager Scooter Braun's Ithaca Holdings LLC. Swift made it clear she was not happy with this turn of events and recently announced her intention to start re-recording her earlier albums starting in 2020.

But how is that even allowed? And what can aspiring artists learn from all this?

Masters vs Compositions

Every song we listen to has two components that are separately protected under the Copyright Act: (1) the musical composition, and (2) the master recording.

The musical composition is the specific combination and arrangement of musical notes and/or lyrics. In other words, the song that is embodied in the recording. This is referred to as a "musical work" which is granted copyright protection under section 5 of the Copyright Act and gives the owner of the musical composition exclusive rights, including the right to record the composition.

When a musical work is recorded, that specific recording (i.e. the "master") also receives protection under the Copyright Act. A master is an embodiment of a performer's performance of the musical work, which receives protection under section 15 of the Copyright Act, and the sound recording itself is protected under section 18 of the Copyright Act.  The owner of copyright in the sound recording holds the sole right (among other rights) to reproduce, publish and make the recording available to the public by telecommunication and to sell physical copies of the recording at first instance.

These separate rights underpin the issues Swift dealt with this summer and why she can re-record her earlier albums.

First, in order to have the right to re-record an old master, Swift would need to get the consent of the party controlling the rights to the underlying musical composition.  Swift has been a writer for many of her songs and is published by music publisher Sony/ATV. While that means that Sony/ATV would technically control the right to permit this new recording of the song, surely it would not want to refuse Swift with a view to maintaining good relations with one of its superstar songwriters.  (Further, in the United States, a compulsory licensing regime exists whereby such a license can not be refused, practically speaking.)  To the extent Swift worked with co-writers on any of her songs, she would have to obtain a license as well from those rights holders to record a new version of the composition.  Again, those co-writers are unlikely to refuse.

As for BMR, its recording agreement with Swift probably included a provision known as a "re-record restriction".  These types of provisions typically restrict the artist from re-recording any song recorded for the label for a period of time equal to the earlier (or sometimes the later) of 2-3 years after the term of the recording agreement expires and 5 years after release of the track in question.  Given the age of the recordings in question and the timing of the end of Swift's relationship with BMR, it appears that most of Swift's back catalogue with BMR is likely soon out of the re-record restriction period and free to be re-recorded by her.

By recording new masters for her earlier songs, Swift will be creating new sound recordings that embody new performances. Swift can then sell and license the new masters and sidestep the rights held by BMR, entitling her to the royalties for both the musical composition and the new masters.

It's all in the deal

You might wonder why an aspiring artist would give up the rights to their masters in the first place.  It all comes down to deciding what to prioritize when the time comes to negotiate the record deal.

In some cases it will be more important for an artist to get more money from the record label up front and to have the label take on a greater share of the cost and risk associated with creating the record, in addition to distributing, marking, selling, promoting and manufacturing the record. This is more often the case with artists early in their career, but experiences like Swift's are cause for artists to consider placing a higher value on creative control and ownership over their works. 

An alternative structure that is becoming more common is for deals to be structured as a licensing arrangement. In these cases the artist will be responsible for producing their own record and the label will be responsible for distribution, advertising and promotion. The label will then hold exclusive rights to the record for a set period of time but ownership remains with the artist. After the negotiated license period, all rights would then revert to the artist.

The structure of the record deal can have a long term impact on an artist's rights, as we learned from Taylor Swift this summer.  If you are looking at entering into a record deal, whether it's your first or your fifth, it is important to understand the implications of the "give and take" in the deal so you can make an informed decision. Speaking with your lawyer can help keep your eyes open and find the right deal for you.