By Sam Ozer-Staton

“Business is business, and it’s a murder most foul,” Bob Dylan croaked on his latest album, 2020’s Rough and Rowdy Ways. Less than a year after the album’s release, Dylan made quite a killing: he sold his entire songwriting catalog to Universal Music Group for a reported $300 million.

Dylan’s deal is just one of many recent blockbuster acquisitions involving the intellectual property of some of music’s biggest stars. In December, Bruce Springsteen sold his entire catalog to Sony Music for an estimated $550 million. In the preceding months, Stevie Nicks, Paul Simon, and Neil Young offloaded all or parts of their catalogs for massive sums.

To understand the business and legal environment in the rapidly-changing music industry, I spoke with two of the people at the forefront of those changes: Neil Jacobson, the former president of Geffen Records and the co-founder of Hallwood Media, and Josh Binder, a partner at Rothenberg Mohr & Binder, a leading music licensing and contract negotiation law firm.

When it comes to an artist’s work on a given song, Jacobson explained, there are two distinct copyrights: the song’s lyrics and melody (known in the industry as “publishing”) and the physical recording itself (known as a “master”).

Take, for example, Bob Marley’s “I Shot the Sheriff.” Marley wrote it in 1972, when he was an exclusive recording artist signed to Island Records, Jacobson told me (with a real-time assist from Marley’s Wikipedia page). “That meant that every time Bob Marley’s voice went on a microphone and onto a piece of tape, that was the property of Bob Marley and Island Records. They have a split. But the songwriting — that’s owned by Bob Marley’s publishing company.” Two years later, when Eric Clapton, who belonged to a different label, recorded his acclaimed cover of the song, Island Records didn’t profit off of the new recording — Marley’s publishing company did.

The distinction between masters and publishing is at the heart of many of the recent acquisitions; Bob Dylan only sold his publishing rights, while Bruce Springsteen sold both his publishing and his masters in two separate deals.

The music industry’s copyright structure is also foundational to the debate over fair compensation for creative work. According to Jacobson, every contract is different, and some can be plainly exploitative. “It’s the music business, so I could show you 750 different examples [of contracts],” Jacobson said. “I’ve seen some horrible predatory contracts. But if you want to use industry standard, this is how it breaks down: typically the artist owns more of the writing and publishing, and the record label owns more of the recording. And that split is typically somewhere between 80/20 and 70/30 for each.”

The debate over ownership was turbocharged in 2019, when Taylor Swift’s feud with music manager Scooter Braun sparked mainstream interest in the minutiae of music industry intellectual property practices. A brief cliffsnotes version for the uninitiated: after Swift left her old record company, Big Machine, Braun acquired the rights to all of Swift’s masters recorded with her since-departed label. “This is my worst case scenario,” Swift wrote in a Tumblr post published the day the acquisition was made public. She went on to call Braun an “incessant, manipulative bully” who would now control her musical legacy “[i]n perpetuity. That means forever.”

Swift’s post also alleged bullying behavior on the part of Kanye West (who was then being managed by Braun) and West’s then-wife, Kim Kardashian. But it ended with something of a broader call for music industry reform: “And hopefully,” Swift wrote, “young artists or kids with musical dreams will read this and learn about how to better protect themselves in a negotiation. You deserve to own the art you make.”

Aside from the interpersonal celebrity drama, the episode sparked a number of questions: why is it that record labels control an artist’s master recordings? Why is it that major stars are still subject to the contracts they signed as unknown artists?

Josh Binder, a music lawyer who represents artists like Kendrick Lamar and Marshmello, said that industry standards are more a function of long-established norms than formal law. “The custom of the business has led us to this point,” he said. “Why is it that producers, if they do a deal with an artist, they have to give up ownership of their creation? Why is it done that way? That’s the way it typically has been done in the past.”

According to Binder, there are plenty of examples of how long-standing customs are failing artists in the modern-day music environment. “If you look at the streaming services, generally about four-fifths of the income goes to the master owner, and one-fifth goes to the writers. Is that fair? Many people would say no. I think there’s a good consensus that writers are underpaid,” he said.

But Binder also pointed out that record companies have a case to make, too. “They say, ‘we’re the ones that invest all this money, and while the publishers pay their writers advances, they’re not spending money to fund videos and fund all this marketing. And because we fund it, we deserve a bigger chunk of it.’”

As evidenced by the reported size of their recent deals, Bruce Springsteen and Bob Dylan are not in the position of young artists fighting to be paid fairly for streams. Their catalog acquisitions speak to broader trends in the business environment, Binder said. A pandemic that has made touring harder. An abundance of SPAC and private equity players looking for assets to buy. A favorable tax regime (in 2006, George W. Bush signed a law allowing musicians to treat catalog sales as capital gains rather than ordinary income).

It’s not so easy for the little guys.

Let us know what you think about the current balance of power between artists, labels, and streamers. Write to us at letters@cafe.com.