Elizabeth Warren
Sen. Elizabeth Warren (Gage Skidmore)

Warren Defends Swift

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“Unfortunately, @TaylorSwift13 is one of many whose work has been threatened by a private equity firm. They’re gobbling up more and more of our economy, costing jobs and crushing entire industries. It’s time to rein in private equity firms—and I’ve got a plan for that.”

I don’t think Elizabeth Warren is fully-informed here. This is not an LBO, but an investment. Then again, the Carlyle Group benefits from the carried interest rule and…

Private equity is gobbling up Hollywood. Especially in the talent agent sphere. The big three? TPG is the majority owner of CAA. UTA sold shares to Investcorp and PSP. As for WME…Silver Lake wants to cash out, the talent agency carries debt of $4.6 billion, and not only are market conditions unfavorable, it appears they’ve turned for good, WME had to pull its IPO with no cash-out on the horizon.

The Carlyle Group put up the money for Scooter Braun to buy Big Machine.

Now I haven’t understood why the low-level agents haven’t left these agencies. They’re not going to get the spoils, they’re just working for the man. They could start all over tomorrow, with the talent, which is also not benefiting, and get a greater piece of the pie to boot. Funny how entertainment is an entrepreneurial business and these agents are not entrepreneurs.

Sure, some agencies sold out to the big three for the cash payment. But this is exactly what happened with Live Nation. They took the check and…most disappeared, the company didn’t fit with their ethos, they’re renegades, they can’t work for the man. Interesting that all these agents can. And managers too. Come on, if you’re any good, you don’t want to work for the consortium, you want to take all the bucks for yourself. But if you sell out, you’ve got not only a payday but a guaranteed income. Funny how managers play it differently from the acts they manage, who live and die on their hits, their reps, their credibility. There’s no guaranteed income for the entertainers themselves.

Or the writers.

That’s the story in Hollywood this year. The writers firing their agents. They believe there’s a conflict of interest, with the agencies getting packaging fees, with the agencies getting into production, and it’s hard not to sympathize with their cause.

In other words, agencies are the new studios. Come on, do you even know who runs the studios? But you know who Ari Emanuel is.


Same deal with the record companies. This is not the era of Tommy Mottola, of flash and dash. Nor the era of Mo and Joe, the artists’ “friends.” (Well, at least until Prince wrote the word “slave” on his cheek.) Turned out you had to be aligned with the major to play in last century’s music business. Because of distribution. Because otherwise you couldn’t get paid, even if you had a hit. And promotion. On both radio and TV. The labels had the relationships. As for now? It looked like a free-for-all, with the flattening of distribution and the lack of importance of radio and TV, however the labels have an ongoing relationship with the streaming services and…

It’s a big money game. You’ve got to have big money to play. And the Carlyle Group had it and Scooter Braun wanted it, a deal was made.

The Carlyle Group doesn’t care about music, not at all. Oh, all bankers want to hang with the celebrities, but they like private jet travel and the other perks of money more than that.

But it’s Taylor Swift who brought this all to the forefront, to the national stage.

That’s the power of a musician. Because of their rabid fans.

To tell you the truth, I don’t care about Taylor Swift, she lost me when she went pop, when she stopped working with Liz Rose.

But I am interested in business.

I am interested in politics.

The story of now is how the viewers/readers of Fox and other right-wing outlets get a completely different view of the news from those on the left. Roger Stone got convicted and it was the twenty-fifth article on foxnews.com, today I didn’t even find it on the home page. The story doesn’t square with the narrative. As for the impeachment hearings, did you know they’re a travesty and the Republicans are wiping the floor with the Democrats? The story on the left is David Holmes heard the conversation. But that’s not even a story on the right. But somehow, Taylor Swift has cut through all this. And made music, a sideshow, into the main show, as in today’s politics.


So has private equity screwed the little guy and lined the pockets of fat cats? Absolutely! Private equity has put workers on the street, as it got paid and companies went out of business, all the while being taxed at capital gains rates. Not that the average person can understand this. But the average person is aware they’re losing the rat race, that the rich are getting richer and the poor are getting poorer, opportunity is fading.

As for the music business…

What is Scooter’s plan here?

One thing is for certain, Carlyle is not in it for the long term, it’s about getting out, private equity doesn’t get in unless there’s an exit strategy. And when the exit occurs, does the money flow down to those who built the company, who did the hard work, in this case the artists? Of course not! They’re just cogs in the wheel! The acts make the records and the companies own them, and roll them up and sell them to the highest bidder, oftentimes a mark…can you say Guy Hands?

Taylor Swift played her cards wrong. But Scooter Braun has gotten in bed with the devil. Trying to emulate his hero/guru David Geffen on his way to billions. But at this late date, despite Geffen’s constant denigrations, who is bigger, he or the Eagles?

It’s no contest.

It’s art we revere, it’s art that changes society, it’s art that makes the world go ’round.

So now Elizabeth Warren weighs in (along with AOC), and it appears she’s on the side of the artists and the people and if you’re sophisticated and you play it out, there have always been banks, shouldn’t entities be able to get loans, take on investments? Once again, this is different from leveraged buyouts. Then again, these loans/investments come with strings. At first it’s just cash, then the investor ends up owning the majority and you’re working for him/her. Suddenly, the biggest power in entertainment is private equity, is that what we want? Of course not! It’s about enriching the few at the cost of the many, who built the asset with their talent.

So now the rank and file have heard of the Carlyle Group, even if they don’t understand it. And one thing’s for sure, money wants no notoriety, it wants no investigation, white collar crime is rampant, or if not illegal, the behavior looks sleazy and untoward under the spotlight.


So is this the end of the line for entertainment? Consolidation and ownership by the banks?

Hopefully not. Anybody can make a record. Anybody can distribute a record. Music was the canary in the coal mine for digital disruption. Maybe it’s the canary in the coal mine for disintermediation of the deep pockets. Then again, few can resist a check, especially in the creative fields, where most people are struggling.

But now we’ve got Elizabeth Warren on our side.

Huh?

Like I said, I never expected music to hit the big top, the story of our age, politics.

But there it is.


Responses from Bob’s readers. Please note, these comments are not edited for grammar or content and do not necessarily reflect the views of CelebrityAccess or its staff.

Dear Bob,

The private equity industry has evolved from being a helpful catalyst of change in the late 70s to being parasitic today. They don’t build the economy, they harvest it by converting decades of capital investment and brand building into cash. Not every PE firm does this, but the biggest ones do it aggressively. They often do it so aggressively that the target company fails. Jobs are almost always an early casualty. Communities suffer.  So I think Warren is right about the issue.

Warren cites Taylor Swift for the same reason you do: her story cuts through the noise.

To appreciate Swift’s position, it helps to think about the ways it is similar to the current debate over privacy. Some privacy activists argue that personal data is an asset that each user should own.  Others (like me) believe personal data is a human right, not an asset, and no one should be able to monetize it, including the person from whom it is taken.

Swift appears to be arguing that she should have some say in what happens to her copyrights.  She views that as a human right.
Music copyrights are different from personal data because artists monetize them as part of recording and publishing deals, but it is not crazy for Swift to ask for a conversation about whether there ought to be limits.

Private equity firms will try to convert the copyrights into cash right away, by borrowing against them, and there is some chance of insolvency. Under what circumstances should artists have a say? Should they have any right to purchase?

Roger McNamee

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From: Tom Ross
Re: Warren Defends Swift

Great article and you are absolutely correct on most of your premises!  Bankers and funds are more and more controlling the business of the arts when we know it’s all for future income streams.  And why would mid-level executives work for the man when there is no upward mobility in the fruits of their hard work and time invested in developing new artists.  The current business models are bent too heavily to the top of the food chain and like our country, the worker bees will get stung!  Thank for bringing these issues into the open.  Cheers, TR

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