The "Gloved One" and the "Invisible Hand"--Michael Jackson and Sony Music Entertainment, Part One

This is going to be a multi-part "series" for I cannot get all of it written down in any reasonable amount of time. It is also sort of a work-in-progress, too, as I do not know everything about Michael's relationship with Sony but I am learning more and more each and every day. It takes time to learn something of this nature and takes even more time to get it right--and getting it right is what matters to me most. The music business has been something that has intrigued me since I was a teen as I watched one of my favorite artists, Prince, fight for "freedom" from Warner Brothers and discuss what he considered the theft of his "masters" (mechanical copyrights/actual tracks that are on the albums you buy). I have also for years had an interest in how businesses operate, including the economics of those businesses. Hopefully this will help me to understand what has and continues to come about from Michael Jackson's relationship with Sony Music that is slated to continue, via his Estate, until 2017, if not until the unforeseeable future.

Michael and Sony became artist-with-company in 1987 when Sony purchased CBS Records whom Michael had been with for many years after leaving Motown. Obviously Michael had tremendous success both artistically and business-wise throughout the 1980s. I will try to start this particular blog with what began to transpire in 1990/1991 with the extension of Michael's contract with Sony after an abbreviated introduction to my stance with Sony. I will then, hopefully soon, continue such discussions all the way up to now concerning the relationship with Michael Jackson's Estate and Sony Music Entertainment, including my take on the new album "Michael" and the issue concerning some of the tracks on the album.

I want to make something clear first right off the top--I am not a "boycotter" of Michael's "new" music. I will not criticize someone who feels they need to boycott the new releases from Sony. I will also not criticize someone who chooses to buy the album or hopes for it to reach #1. If you believe your stance is what is best for Michael, and your emotions are purely from the heart, then I cannot disagree with that stance. I believe the release of "new" music, be it finished, unreleased tracks cut from previous albums due to time constraints or demos of the artist (Michael) at work can help cultivate Michael's genius that has many times been overlooked by the public (and even some fans) who do not understand the depth of Michael's involvement in his own music. However, I will not and cannot support the creation of music in Michael's name and image that is utilizing scant song concepts and fake vocals being passed off as his own, while in turn brainwashing the public into thinking those are his vocals on the finished product--and his vocals only. I believe Michael cared for and cherished his fans more than any other entertainer ever and to think an industry, the very same industry Michael accused of "breaking" artists down and leaving them "broken"--which is what essentially happened to Michael with help of numerous individual extortionists and con-artist corporations including the concert promoter AEG--is now passing the torch of manipulation onto his fans. Someone has to be blunt about what is happening and has happened in the past. I am willing to break it down and tell it like it is--I want to do it for Michael.

I am not going to sit here and pretend to tell you I know exactly where every penny of "new" album sales will go. I will not attempt to tell you how buying or not buying the album will hurt or help Michael or his children. I will not even sit here and tell you that Sony "murdered" Michael though many believe they had motive for such because of his ownership in the Sony/ATV catalog. What is factual, however, is Sony had a direct hand in "murdering" Michael's career and I think too many people are overlooking this fact and shifting blame or lying to themselves so they can justify buying Michael's posthumous music free of guilt because in their own hearts there is a feeling that there is at least something wrong with the situation we are facing today, be it with his "new" album, his unexpected death, his enormous debt and/or all the tribulations he faced since the 1990s.

I see fans shifting blame of any issues related to this new album off Sony and onto Michael's family for sabotaging the album or claiming Michael only had issues with Tommy Mottola who served as Chairman and CEO of Sony Music Entertainment from 1988-early 2003. Both of these notions are false. The family has not brainwashed the masses, including those who could not even name most, if any of Michael's family members, nor did Michael say his only problem was with Tommy Mottola (see the videos below). His problem was not just with Sony (think back to Brett Ratner's interview with Michael and the discussion about "sharks in the industry" http://www.youtube.com/watch?v=UvKwAXSVRU8). His problem was with the entire music industry and how they essentially use artists as modern-day slaves, cheating them out of profit and product which in-turn affects them in the latter years of their lives. Michael attempted to prevent this from happening to himself when he bought the ATV catalog in 1985 for $47.5 million. It should have provided to him a steady and dependable income for the rest of his life. The catalog was also important to him because it contains a part of our history including some of the world's most treasured art in the form of song (the Beatles are the highest selling artists of all-time, making this catalog all the more valuable financially and artistically). But, instead this catalog became a burden of fear and paranoia that may have in-fact led to his death, if not certainly his financial decline and despondence. All of this was exacerbated by Sony. Sony took advantage of a situation in which Michael went from champion to underdog within a matter of hours in 1993 and instead of being loyal to him, standing at his side, they bit the hand that had and will now continue to feed them, disregarding the fact that Michael was a human being and not a disposable commodity. There have been many artists rocked by scandals, some true, some not, but many have not suffered the devastating blow that Michael himself and his career had to endure when he was undoubtedly innocent of all allegations against him. Sony should have helped to rebuild his career--instead they were helping to break it apart, piece by piece, and likely during this demise eying for a profitable means directly through Michael that would not have to face any issues with public relations or image--that means being the ATV catalog.

Please listen to the following to get a better understanding of Michael's stance on Sony and the music industry in general.

Michael's "Killer Thriller" Speech:
http://www.youtube.com/watch?v=aW1T1DZdWrA

See 5:40, Michael and fans chant "Sony Sucks"--it was not just about Mottola:
http://www.youtube.com/watch?v=MhxrmaDCHKM&feature=related


The 1991 Contract

Please read the following sources for information on the 1991 contract between Michael and Sony:

http://articles.latimes.com/1991-03-21/news/mn-654_1_michael-jackson


http://www.nytimes.com/1991/03/21/movies/michael-jackson-gets-thriller-of-deal-to-stay-with-sony.html

To the best of my knowledge, no one has a copy of this contract but Lynton Guest claims he was able to view it in his book, "The Trials of Michael Jackson". Some information about this contract has been revealed, however, through various sources online. I think enough of it is known to piece some key information together though having an actual copy of the contract would be fabulous.

When Michael signed into this new agreement/extension that was to be valid until March of 2006 (15 years) he had supposedly "entered into an agreement to create feature films, theatrical shorts, television programming and a new record label for the Japanese conglomerate's American entertainment subsidiaries". Basically none of this happened, certainly nothing worthy of recognition and/or profit for Michael or Sony, either. There was no TV programming, no feature films, no theatrical shorts unless you try to count the hidden gem "Ghosts" which most non-fans have never heard of or seen. A record label dubbed "Nation Records" never came to fruition but MJJ Music was created (http://www.last.fm/label/MJJ+Music). Filmmaking had been a childhood ambition for Michael--one that he never got to really pursue--something (moreover, someoneS) always got in the way. "He doesn't need the money. So you say we have this fantastic company that has all these avenues for you. Give us your albums and you can do movies, TV shows." That is exactly what Sony did--they wanted the music, his greatest asset. However, just years later he did find himself needing the money, or so he thought (this will be addressed later). By Michael going further and further into debt, Sony became closer and closer to controlling the ATV catalog which contains 251 of the Beatles most precious songs. The Sony/ATV catalog owns and administers over 500,000 song copyrights today (http://en.wikipedia.org/wiki/List_of_Sony/ATV_Music_Publishing_artists).

At times the contract from 1991 has been dubbed a "billion dollar contract" but it would have been Sony, not Michael, making this amount over time. "Tommy Mottola, the president of Sony Music Entertainment, said the company based the estimate of $1 billion in retail revenues on the 40 million copies of "Thriller" and 25 million copies of "Bad" that have been sold, at an average of $10 per record, or $650 million." I know Michael always felt the need to top himself and had aspirations of beating "Thriller's" success but for Sony and Mottola to even remotely assume Michael would ever create another "Thriller" is shocking and, in all honestly, purely ignorant and unbelievable. What "Thriller" achieved was a once-in-lifetime event for not only Michael but all of us living now, too. It was more than just a perfect album--it was a cultural phenomenon. "Thriller" set the time piece to the decade if not for the century and then paved the way to how music videos/short music films should be created. It established guidelines that were to be aspired--not surpassed. Maybe Michael did not know this but those in the music industry did. To build a contract off such a notion was already a step in the wrong direction for Michael--in fact, it was a burden placed on him as far as I am concerned.

Of Michael's reported possible earnings through the new contract, "Jackson, 32, reportedly could receive more than $120 million per album if sales match the 40-million-plus level of his smash mid-'80s album "Thriller." Two sources close to the talks said the reclusive singer is guaranteed an advance payment of $5 million per record plus a 25% royalty from each album based on retail sales." No artist could or can top "Thriller's" sales and honestly not many artists could even rival the sales of Michael's subsequent albums, either. Though the royalty rate is very good, the advance payment of $5 million is pathetic. This schematic means Michael could only make money off his albums if they sold well. If his album did not sell well, then his profits would be minimal. In my opinion, this payment scale would have protected Sony from losing money if Michael's albums failed to sell and all albums sold after the 1993 scandal were plagued with problems which I hope to cover in the next blog. Here is a breakdown of some math from this $5 million/25% royalties payment plan:

"HIStory" sold 20 million copies (40 million CDs total): 20 million album sets x $20 dollars (assuming the two-disc set was double the amount of a single CD) = $400 million x 0.25% for royalties = $100 million GROSS + $5 million advancement = $105 million GROSS for Michael for "HIStory"

"Blood on the Dance Floor": 6 million albums sold x $10 per album = $60 million dollars x 0.25% for royalties = $15 million GROSS + $5 million advancement = $20 million GROSS for Michael for "Blood on the Dance Floor"

"Invincible": 13 million albums sold x $10 per album = $ 130 million dollars x 0.25% for royalties = $32.5 million GROSS + $5 million advancement = $37.5 million dollars GROSS for Michael for "Invincible"

At first glance these seem like great figures but keep in mind a) these figures of total album sales are current--including the surge in sales after his death, b) they are not confirmed, at least, not by me, and c) we do not know what his NET income was for these albums. I do not know how much Sony did or could have taken out for advance payments, including costs like the reported $30 million it took to make "Invincible". If such was to come out of Michael's gross earnings for "Invincible", then that would have left him making only $7.5 million for "Invincible", with only $2.5 million of that coming from royalties since its release--and this would have been for about 5 years worth of work ("Invincible" was worked on from 1997-2001). So, Michael would have earned about $1.5 million a year for "Invincible", not including taxes or other costs recalling also that the 13 million sales figure is current.

I would assume that Sony would have recouped, at minimum, their advancement costs as any business would not want to put themselves in a hole. I am also not sure where the cost of promotion and pressing of the CDs would fit into this equation, either. Even though Sony would have earned 75% off album sales I would still assume (though I am not sure) that an artist would at least be responsible for the cost of making their own albums as the company would lose profit if they did not recoup some, if not all of the costs before the album was released. Think of that $30 million for the production/creation of "Invincible" as a loan from the bank except the bank is Sony. That is how I would assume business is conducted when you are dealing with such massive sums--no company wants or can afford to give away free money. This schematic I mentioned above is also how the "This Is It" tour was set up with AEG--Michael was being "loaned" money to prepare for his tour and once his tour began the first profits were to go to AEG to cover advancement costs, not Michael. AEG went further than just wanting to recoup advancement costs and I hope to soon go back and discuss the AEG contract again as more details have come to light, serious details. I will also discuss "Invincible" in more detail in another blog soon, too.

The six albums to be completed for the 1991 contract were to be done over 15 years which meant an album would be released on average every 2.5 years. Michael typically released an album every 3-5 years and this seemed to work for him, too. So, not only was Michael expected to release a new album every 30 months but to also balance that work between tours, movies, television shows and other work. Sounds a bit too much, right? "If that trend continues (just based on his albums), he will be approaching 60 when his final record under the Sony deal hits the stores. One source predicted that Jackson will step up the pace now. He also reportedly will augment his new material with a "greatest hits" collection. But Schulhof (Chairman of US Sony Corporation until 1995) said he was not concerned." "But some financial analysts called the Jackson deal extravagant. 'They (had) better hope he stays popular,' said one analyst who asked not to be named. Another accused Sony of 'grandstanding.' I have to agree with this--it was grandstanding, and a burden like I mentioned before. Michael was 32 years old when he signed this contract. That means the contract should have been valid until he was 47 years old. Though he could (and should) have remained a pivotal force in the music and entertainment industry, it is unrealistic to think Michael would have sustained the same force being seen in the early 1980s or even the early 1990s into the mid-2000s, especially when he was going to have to "step up the pace" and begin work on film, taking away from the music. Michael was a perfectionist--he would have preferred to have more time on his than more material. He obviously had a "quality, not quantity" belief in his work. Why would Sony want to put these type of demands on him, then, when it had worked for him in the 1980s when with CBS? Was this the beginning of the attempt to make Michael fail in order to capture the ATV catalog or just purely coincidental? I am not sure.

More on Michael Schulhof:

http://www.time.com/time/magazine/article/0,9171,983851-1,00.html

The above article highlights Schulhof's achievements while at Sony including Sony's entrance and failure in Hollywood and his departure from Sony in December 1995--one month after Michael merged his ATV catalog with the Sony catalog for somewhere between $50-$90 million. Was this merger more for Michael who was rumored to be having financial issues but had just released "HIStory" and would be going on tour soon or for Sony who was contemplating the sale of their failed film division and was directly hurting from Schulhof's big purchases during his tenure with the company? I would seem to think it was for the latter.

In the next blog, I will began discussion on the albums released under this contract from 1991 and describe the faults with those releases. I will also likely then discuss the merger of the ATV catalog with the Sony catalog and discuss some of the information concerning the loans taken out then under the tenure of Myung Ho Lee who later helped fuel the filth written by Maureen Orth.