Nov 21, 2019

The ballad of Taylor Swift and Kylie Jenner

Photo Illustration: Aaron J. Thornton/Getty; Angela Weiss/Getty; Aïda Amer/Axios

This was the week that Kylie Jenner ratified her billionaire status beyond any doubt, even as fellow 20-something Taylor Swift found herself continuing to battle The Man over rights to her own work.

The big picture: Jenner and her family have always had complete control over her image and her work product. As someone who made over $100 million by the age of 21, Jenner was under no pressure to sell the company that was generating all those profits, which meant that she could wait for a suitably desperate suitor to come along.

  • Swift, by contrast, signed a six-album deal with Big Machine when she was 15 years old. While her father was smart enough to buy some equity in Big Machine as part of that deal, he's no Kris Jenner, and Swift herself didn't have megastar sisters blazing a trail in front of her.
  • The result was that Swift had very little leverage earlier this year when she tried to regain control of her early music. In the end, Big Machine was sold to her arch-enemy Scooter Braun, who bought the label with the assistance of private-equity giant Carlyle Group.

Jenner was a trailblazer in her category, more or less inventing the concept of an asset-light, direct-to-consumer company making products sold primarily to her millions of Instagram followers.

  • While her older sisters largely monetized their celebrity the old-fashioned way — being paid by brands to endorse or model products — Jenner realized that she could make much more money by creating her own brand and owning it 100%.
  • Swift is more old-fashioned (and, arguably, talented). She was fighting Spotify, for instance, insisting on the primacy of album sales — long after almost all other artists had embraced streaming.

The capitalists on the other side of these deals also differ greatly.

  • Coty, the French cosmetics giant, has made a very public bet on Jenner's future. Its interests are aligned with hers, and Jenner continues to hold all the cards. After all, if she gets bored or annoyed with the direction of Kylie Cosmetics, she can stop publicizing it and move on to the next thing. Coty can't move on: It's already $600 million in the hole and needs Kylie Cosmetics to continue to grow if it's going to reap a return on its investment.
  • Carlyle made a bet on Swift's past, rather than her future — and did so by teaming up with her music industry enemy. That move ended up drawing the ire of Elizabeth Warren and also irked Swift so much that she now states that she wants to re-record all those old albums, thereby depriving Braun and Carlyle of much future income.

The bottom line: If you want to buy someone's entire life's work, it's best to do it with their consent.

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Kylie Jenner to sell 51% of Kylie Cosmetics to Coty for $600 million

Kylie Jenner at the 2019 Grammy Awards. Photo: Valerie Macon/AFP via Getty Images

Kylie Jenner announced Monday that she is selling 51% of Kylie Cosmetics for $600 million to Coty Inc., the company that owns CoverGirl and Clairol, per the Wall Street Journal.

Why it matters: Coty valued Kylie Cosmetics at $1.2 billion and is wagering that the celebrity’s personal brand and social media influence can revive its struggling beauty business.

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Taylor Swift crashes 2020 race with private equity broadside

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Progressive Democrats are using Taylor Swift as political leverage against the private equity industry after Swift publicly noted that The Carlyle Group had helped finance a deal whereby Swift lost control of her old master recordings.

Driving the news: Sen. Elizabeth Warren tweeted: "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."

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Saks Fifth Avenue owner in limbo after ISS recommendation

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Institutional Shareholder Services recommended that Hudson's Bay Co. shareholders vote against a C$1.9 billion, or C$10.30 per share, takeover offer led by company chairman Richard Baker.

Why it matters: Hudson's Bay was already drowning in limbo, and this might pull away its life preservers. ISS argues that there's no legitimate reason for shareholders to accept Baker's bid, which also includes Rhone Capital and WeWork Industrial Trust, over an C$11 per share offer from Catalyst Capital Group.

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