Perry, 31, has just finished a song about "karma" and her new record will be "pretty much" about her never-ending feud with the "Bad Blood" hitmaker, reported Ace Showbiz.
"Katy has so many ideas - she just finished a song about karma and how trying to smear someone's name can bite you...," a source told Star magazine.
"Pretty much the entire album is going to be aimed at Taylor, and it will be so obvious who the songs are about. Katy is kind of starting a musical WWIII."
The magazine noted, "Taylor infamously made an enemy of Katy with her song 'Bad Blood', and now that friends and fans alike are turning on Taylor in the wake of her drama with Kanye West, the 'Rise' singer is more than happy to capitalize on the pop star's damaged image.