What every fan should keep in mind – when reading something about Michael Jackson – is what the MAN himself told us and have a concrete idea how things really work in the music industry. Then, Michael Jackson words become crystal clear. We have enough knowledge of recording artist contracts and how rights and obligations on both of the parties convey to help to point out the stories that do not add up to the claims made by Mr. Branca during his depositions and those spread around by media for a lifetime. And we wish to help our community to clearly discern the contradictions and the misleading narrative enveloping the web and the news after 2009.
Michael Jackson was not a newbie, neither a naive nor an ignorant. He knew the business very well. He grew up in the music industry and saw the music industry grew up with him. He did know everything, but sadly be aware of what surround you, sometimes it’s not enough to win a war.
When MJ and his brothers left Motown Records, signed on with CBS Records, in 1975. According to John Branca, after “Off The Wall”, he negotiated for MJ a separated contract and a new agreement with BMI, a company that collects artists royalties coming from the public performance of the songs (relating publishing, not recording royalties).
Immediately after “Thriller” MJ had been involved with ET production and sang the storybook of the movie. This resulted in a lawsuit between Universal and CBS as reported by media of that time.
Meanwhile “Thriller” became the biggest selling album of music history.
And again, according to Mr. Branca latest deposition for the IRS case, during the period of the “Thriller” project, MJ contract had been renegotiated several times and one of the benefits he got, was to gain the ownership of his master recording, including his previous album”Off The Wall”.
There is something that does not add up in what John Branca has claimed in his deposition. Actually, Mr. Branca was not Michael Jackson lawyer in 1990. At that time MJ legal team was composed by Bertram Fields and Allen Grubman. And they were in charge and they negotiated with CBS his new contract conditions. At the time, it was reported that Michael was unhappy with his CBS contract, which John Branca was trying to renegotiate for many months. Reportedly Michael was threatening to move to another label during his contract dispute with CBS (CBS that later became Sony). By 1989 and 1990, Michael was becoming increasingly influenced by David Geffen. The closeness of Mr Branca with the then CBS Records Group president Walter Yetnikoff (shortly after replaced with Tony Mottola) and Geffen , might had been some of the reasons that caused John Branca replacement with three specialist attorneys: Allen Grubman (to handle negotiations with his record company), Lee Phillips (music publishing), and Bertram Fields (litigation).
In 1988 CBS Records was renamed Sony Music Entertainment when the Japanese company bought it, together with a host of subsidiaries, including Epic Records, MJ’ label. As Lynton Guest worded in his book, “Michael Jackson became entangled with the Sony Corporation almost by accident”.
“In March 1991 news was spread in the media that MJ renewed the contract with Sony and “inside sources,” revealed he was guaranteed an advance payment of $5 million per record plus a 25% royalties from each album based on retail sales. The contract bridged records, movies, and video software. Articles of that time also reported a 15 years contract and 6 albums to provide, plus a certain number of video/movies (http://articles.latimes.com/1991-03-21/news/mn-654_1_michael-jackson). This link and many others are HEARSAY. Why we consider the tabloid news Hearsay? First thing the word “royalties” result random: MJ had much more than just 25% IF he was the owner of his master recording.
The second thing is that we found in the Sony/ATV Operating Agreement, under article 11 (Additional covenants) section 11.2.1 marked “Exclusivity” the correct date of the contract together with another date when it was amended. It also tells that generally, news surface only when there is an interest to let the world know what convenient for some!
To recap: “Off The Wall, Thriller and Bad” were recorded, produced and distributed, with Epic label under CBS wings, and “Dangerous” arrived when Sony had already control of the company and the label. That’s interesting to outline…
The screenshot below is coming from Greenburg book, a source considered by some “reliable”. Actually, it appears to be a suitable tale to show Branca’s “representative skills”. MJ and Branca separated, from the summer of the ’90 until ’93. So something is “off” with the “mid 90” period. Actually, the information is superficial and sloppy regarding the contractual rules in the recording agreements. Especially because the Operating agreement of Sony/ATV tells us that the amendment was made in 1994, and definitely it was Mr. Branca “signature”.
The few examples we have described above, are a warning to help fans to understand how confusing, unclear and imaginative, the information is given by the media, resulting in a wrong, false and manipulative news. And most of the fans sites and blogs, duly report those kinds of news as reliable source creating timelines that have nothing to do with real facts.
Let’s get into some history of how artists contract with record labels were and how evolved: it’s no secret songwriters, producers, and other creative talents were tremendously ripped off in the early parts from the ’20s through the ’50s and ’60s. In the ’60/70 artists signed the contract in terms of years: 1 years with an option of further four. Artists looked at those contracts, thinking that they had a five-year contract with a record company but actually it was not the case. The record company didn’t have to pick up the second year. In fact, what most of the artists might not have seen in the following pages, was a provision that stated that during that contract year, the record company had the right to record one album on the artist, but they also had an option within that first year to ask the artist to record a second album. And if the artist didn’t deliver that second album within that one-year period, that one-year period was extended until they did complete the second album.
Between 1950 and 2000, the recording contracts were very confusing, possibly intentionally confusing and definitely non-transparent. It was very hard for artists reading contracts and be able to figure out how they were going to get paid and what their actual royalty rates were, the key provisions, the terms, how long the contract lasts, the various types of royalties they were entitled, the advances and the myriads of clauses helping them to get more confused. Then with the advent of MTV, videos became very popular, and record companies decided that it was not the case to have an artist to release an album per year, but every two or three. They wanted to put out a video on each single and make three or four singles on an album over the course of two years. The album sales would continue over a two-year period and the videos broadcasted.
In the ’90s – after some lawsuits brought up to record companies – there was a change in that provision and the term “year plus” became “period”, which meant that the first period would be the time it took to record and release an album plus some months, to let the record companies check the album reception in the marketplace, before they would pick up the option for the second period. And during each period, the artist was required to record one album. There was no real difference between the two things: “Six of one and half a dozen of the other!” Artists were still bound to an 8 to 10 periods for contracts that were a very long period of time.
We all remember when Prince stopped going by the name “Prince” and just went by a symbol. Prince was the first vocal example of what was happening between artists and record companies.
He went on the Today Show and had “slave” written on his face. His point was that he felt that record companies signed artists with long agreements and were treating them like slaves due to the exclusive rights to their recording services for such an extended period of time, and he was asking the artists community to really start advocating for more fairness, more transparency!
Prince signed his first contract in 1977. And this contract didn’t end until he negotiated a settlement in 1995 with Warner Brothers Records. At that time, he still owed two albums to them. That gives some kind of an idea of the length of the contracts and why artists, were really upset about provisions that required them to stay with one company for such extended period of time and possibly their whole career. In 1995 Prince then was able to release one single, “The Most Beautiful Girl in the World,” through an independent distributor, Al Bell’s Bellmark Records.
That record became very successful. It was what the industry calls a “one-off”. After he ended his contract with Warner Brothers Records, Prince became known as being the one artist who could have one-offs with various major record labels. In short, he could have released albums with different companies each time. Very few artists could do that, but his example gave the possibility of that happening.
Then, the major label first offered to sign a six-album contract. And it was the ability of the artist attorney to wisely say no and negotiate with record companies a lesser number. Nevertheless, was the record company that had the right to pick up the option. Record companies wanted the right to pick up the options because they claimed to invest a lot of money over the artist in recording, producing, marketing, distributing the record. So they had the right of trying to get some profit from that initial investment…
But contract negotiation key it always comes down to the artist leverage.
If the artist has sold a lot of products, if he is very popular and become a very important asset to the record company, he’s in a position to negotiate better terms.
And MJ had a lot of leverage and surrounded by a bunch of lawyers in double-breasted suits. Right?
So, that’s how the record companies dealt with artists. And we can easily understand that Michael Jackson dispute with Sony Music started long before then the “Invincible” production; it might have to do already with the History album, followed by Blood On The Dance Floor, Ghosts short film distributions and many other projects with Columbia Pictures that did not go in the right way! Here few excerpts of 1995 ” MJ news International “showing how fans clubs complained about Sony at that time:
The exclusive recording services mean that whoever makes that mechanical reproduction and distributes it – usually the record company – has to get a license for the mechanical reproduction from the publisher of that particular song. The publishers do that by issuing licenses to the record company to be paid the mechanical royalty for the sale and distribution of the recordings of their songs. But usually the transference of ownership clauses sound like this:
That mechanical royalty rate is $0.091 per copy for recordings under five minutes or $0.0175 cents per minute for recordings over five minutes.
It’s a substantial amount if you think MJ wrote songs that really have been and still are selling in the millions.
Just image a song like “Billie Jean” which is 4:54 minutes that sold and still sells millions of copies.
Let’s make a simple example:
You sell at $0.091 per copy, and for 1 million of copies, you’re entitled to $91,000.
That’s what the publisher gets paid.
Under a co-publishing and administration agreement, the Songwriter gets 75% of the $91,000 or roughly about $68,000.
Now that’s just for one single.
Add these numbers to an album that sells a million copies.
That’s $910,000 in mechanical royalties alone and to the songwriter $680,000.
So you can see why the mechanical right is such an important right to the songwriter and still possibly the top income generating right for the popular songwriter.
By retaining some or all control of the creative output the artist is in a position to maximise its earnings throughout the career. And Michael Jackson knew the mechanism very well.
However, being untangled with Sony due to the Sony/ATV partnership we believe that MJ was involved in an agreement of a “master license deal”. That’s mean the label take 15-25% of all licensing earnings. This secures the master license revenue to the label while allowing the artist to retain the majority revenue and the control of his master recordings, being free to take it away from the record label and get into the distribution agreement with another or even sell it.
Impossible not to notice that something is wrong if we put together the 2002 news spread worldwide during MJ “Invincible war” where tabloids and music critics were picturing a Michael Jackson mad and angry because he could not get his masters recording back then from Sony???
However, we have noticed that MJ own Estate appears comfortable with Media news. In Fact, considering the many inaccuracies written in the MJ Estate ‘s pre-trial memorandum of the ongoing IRS case (see capture below), we believe that this example, together with many other examples, show the origin/the source of tabloid ‘s narratives.
Besides the fact that the “Invincible” album contains 16 songs and not 14, we find the comments concerning the sales untrue and totally tasteless. Actually, figures revealed on November 11, 2001, tell us that “Invincible” had sold 4.4 million copies worldwide – in just 2 weeks! Becoming the #1 spot on charts in countries around the world including The U.S., The U.K., Australia, Belgium, Denmark, France, Germany, Holland, Hungary, Norway, Sweden, Switzerland, and Turkey. (not to mention the 13 million+ copies worldwide and 2 platinum disks).
Moreover, the pre-trial memorandum contradicts Branca’s claim made in his deposition on February 7, 2017, which is:
In the above caps, Mr. Branca asserts that during 2002 his work with MJ diminished steadily due to the many new advisers, counselors appeared in Michael life. However, he claims that immediately after the album Invincible his firm was involved in renegotiating MJ agreement with Sony and they got him the “opportunity” to get out of the Sony contract quickly because he did not want to be at Sony anymore. So they addressed “certain things”…
Well, it seems that Mr. Branca loves to take merit he does not have. Actually, there is no trace of him during that period. Attorney Marty Singer was engaged in the Sony contract settlement. However what he clearly omits to tell to the judge is that MJ grew suspicious of him due to an embarrassing “conflict of interests” in rendering his legal services to Sony. MJ sent him a termination letter on February 2nd, 2003 due to this “conflict of interests”.
Here below briefly described a timeline of the “Invincible” events. (no gossip) It will help to form your own opinion:
June 06, 2001: News hit the world that Michael has completed the recording of a new album: what we did not know was that it would be his last studio album with unreleased material.
June 13, 2001: Producer David Gest announced the “Michael Jackson: 30th Anniversary Celebration, The Solo Years” CBS announced they would have broadcast the mega event in fall as a two-hour special.
June 15, 2001: Sony Music and Michael Jackson confirmed the final release date for “Invincible” for September 25, 2001, later it will be postponed to October 29, 2001. (30 for the US).
June 19, 2001: “You Rock My World” to be the first single to be released from the forthcoming album.
June 28, 2001: At the end of June Jay-Z, brought Michael Jackson onstage during a break in his performance at “Hot 97 Summer Jam 2001”. Although Michael didn’t perform, just his presence was enough to elicit the loudest pop of the night.
July 11, 2001: it was announced that “You Rock My World”, first single of “Invincible” will not be commercially released in the U.S.A. (Strange)
August 01, 2001: Michael launched his official website with own domain, www.michaeljackson.com.
August 17, 2001: Michael’s long-awaited first single of”Invincible”, “You Rock My World” premiered on the US radio station “Jammin 105.1”. “An unidentified source leaked the song to the radio without authorization from Sony Music or Michael Jackson and the entire album was leaked and available on Sony Russian site over a month before the official worldwide release. (very strange).
August 30, 2001: Michael Jackson, opened up the NASDAQ stock market.
September 06, 2001: Michael Jackson made a surprise at the Metropolitan Opera House in New York where the MTV Video Music Awards were being held and appeared on stage as part of ‘NSync’s performance of the song “Pop”.
September 07 and 10, 2001: Michael Jackson played two amazing shows at Madison Square Garden.
September 20, 2001:“You Rock My World” hit the US Billboard Charts at # 10 – a huge accomplishment for a single that is not available commercially and is based on airplay points alone.
September 20, 2001: Some of America’s biggest pop stars led by Michael Jackson, recorded a single – “What More Can I Give” – raise money for the victims’ families and survivors of last week’s terrorist attacks in New York. ( according to Mark Shaffel, one of the reasons Sony did not give permission to release the song was the difficulties to get all the artist licenses and they felt it was counterproductive for the Invincible promotion).
September 21, 2001: Michael Jackson’s “You Rock my world” short film premiered throughout the world [with the exception of the U.S.A.].
September 26, 2001: the clip premiered on TRL in the U.S.A.
October 08, 2001: Michael Jackson’s first single of “Invincible”, “You Rock My World” hit the stores.
October 21, 2001: http://www.cc.com confirmed that Michael would have performed at RFK Stadium in Washington, DC at “United We Stand – What More Can I Give – to raise money in support of the recovery efforts from the September 11th attack on America.
October 15, 2001: all four re-issues [“Off The Wall”, “Thriller”, “Bad”, “Dangerous”] containing previously unreleased material plus a new booklet with new photos, were officially released. Oh really? Re-issue of 4 albums it’s ok during the promotion of Invincible but a charity song is counterproductive? And at Michael Jackson expenses? That’s for sure!
October 21, 2001: Michael took over the stage again, performing “Man In The Mirror” and “What More Can I Give”.”United We Stand: What More Can I Give?” raised about $ 2 million through the sale of more than 46’000 tickets.
October 29, 2001: Michael Jackson’s first studio album in six years, “Invincible” had officially been released [US release date: October 30]. The album is available in five different colours covers for a limited time.
November 01, 2001: ABC sealed a deal with event producer Clear Channel Entertainment to air the “United We Stand” special on.
November 08, 2001: Mega event on at New York’s Time Square: Jackson fans gathered in the streets surrounding the Virgin Megastore, where the King of Pop emerged on a small stage covered with red carpet.
November 11, 2001: figures revealed: as of then, “Invincible” had sold an astonishing 4.4 million copies worldwide – in just 2 weeks!!!”#1 spot on charts in countries around the world including The U.S., The U.K., Australia, Belgium, Denmark, France, Germany, Holland, Hungary, Norway, Sweden, Switzerland, and Turkey.
November 12, 2001: “Greatest Hits: HIStory Volume I” had been released [US release date: November 13].The disc feat. 15 remastered greatest hits and 72 minutes of music. Another re-release? What about the master recording sound owned by MJ? Did he ever give his consent to do such thing while promoting a new album? And at Michael Jackson expenses? That’s for sure!
November 14, 2001: Invincible in preliminary ratings released. “Michael Jackson: 30th Anniversary Celebration” had tumbled the competition, including ABC’s “NYPD Blue” – garnering an 18 percent share of the TV audience. Michael Jackson’s 30th Anniversary concert special draw a record 25.7 million American viewers this Tuesday, November 13th, on CBS.
December 03, 2001: “Cry”, the second single release of “Invincible” had been commercially released. The release feat the previously unreleased track “Shout”. (Sadly, it would prove to be the last single release of “Invincible”. The single was not commercially released in the U.S.A., instead “Butterflies” should have been commercially released but it was canceled later).
December 05, 2001: radio station KIIS-FM announced a special appearance of MJ at “KIIS-FM’s Jingle Ball”, on December 19, 2001, at Staples Center, Los Angeles.
December 05, 2001: the NAACP Image Awards announced six nominations for Michael Jackson’s new album and the “30th Anniversary” for next year’s NAACP Image Awards.
December 21, 2001: Michael Jackson made a special appearance at “KIIS-FM’s “Jingle Ball” in Los Angeles, receiving the “Lifetime Achievement Award”.
December 30, 2001: it was announced that Michael will attend the “American Music Awards” next year, and be awarded the “Artist of the Century Award”.
January 10, 2002: Michael Jackson made a special appearance at the “29th Annual American Music Awards” and was presented with the “Artist of the Century” Award. As Jackson took the stage to a standing ovation, he thanked a long list of people, including actor Marlon Brando – “my other father” – and then split. Acts who perform on the earlier show generally do not get invited to the more prestigious Grammy Awards in February, putting Michael in a fix. He had initially backed out of the American Music Awards altogether, prompting show producer Dick Clark to file a $ 10 million lawsuit against Grammys boss Michael Greene for unfair competition.
January 17, 2002: it was announced that Michael’s vocals are used on “It’s Not Worth It” – a brand new song off Brandy’s new album titled “Full Moon”, due in stores March 05, 2002.
February 09, 2002: Michael Jackson made a brief appearance alongside Elizabeth Taylor at the “Art for AIDS” fund-raiser held at Laguna Art Museum in Laguna Beach, California.
February 11, 2002: the “16th Annual Soul Train Music Awards” announced that Michael Jackson is nominated in the category Best R&B/Soul Album, Male for “Invincible”.
February 13, 2002: it was announced that Michael Jackson, Sting, Barry Manilow and Randy Newman are amongst the latest names to be inducted into the “Songwriters Hall of Fame”.
February 23, 2002: Michael won three awards [out of six nominations] at the “33rd Annual NAACP Image Awards” which took place at the Universal Amphitheatre, Universal City, CA. Michael won for Best Variety Special: “Michael Jackson: 30th Anniversary Celebration”, Best Performance in a Variety Special: “Michael Jackson: 30th Anniversary Celebration” and Best Music Video: “You Rock My World”. However, Michael did not attend the ceremony.
February 26, 2002: Michael Jackson’s Neverland Entertainment invested $ 15 million – $ 20 million in Mark Damon’s production and distribution company MDP Worldwide, making Michael and his new producing partner Raju Patel major shareholders in the company
March 29, 2002: Michael Jackson made a special live performance at the “American Bandstand 50th Anniversary” TV special.
April 11, 2002: Michael’s participation to the Democratic National Committee’s “Every Vote Counts” event that will take place in New York City on April 24 at the Apollo Theatre in Harlem.
April 21, 2002: Michael Jackson performed “Dangerous” at the “American Bandstand 50th Anniversary” TV special in Pasadena, California. He did his “Dangerous” performance twice. The show was aired on May 05th on the ABC network.
April 24, 2002: Michael Jackson rocked the US Vote giving a rare performance to launch a campaign aimed at persuading United States citizens to register to vote. Jackson was greeted by an enthusiastic crowd at the Apollo Theatre in Harlem, New York. The concert raised almost $3m for the Democratic National Committee.
Shortly after news changed and culminated with Michael paraded in New York City and in London on a double-decker holding up Mottola pictured as “devil” and big posters with written “Sony sucks” and “Sony Kills music”.
His Fandom supported him and manifested their disappointment for the poor marketing of Invincible all over the world.
The main reason for Michael been mad so much at Sony was much deeper and weighty than the reversion of the master recording. Michael had most of his royalties rights pledged with Bank of America. These incomes had to be put in accounts to guarantee the payments of the interests as a security of the loan itself. And his royalties and ATV revenues were not credited into the accounts where it was supposed to be. Here below the excerpts of Bank of America security loan agreement which explain the above issues:
The money was NOT there, as shown by the documents we have revised. And MJ himself said the money was not there.
So, according to Branca’s deposition (see the capture below), in the ’80 MJ obtained his master recording ownership from Sony but for some reasons, the masters were still heavily linked to Sony. Looking at the Media narrative since from the ’90 up to 2009 we cannot find any hardcore evidence when the master’s reverted back to Michael’s possession. Some say 2009, others say 2011, 2012. By the numbers published, we can assume he had a “Master license agreement”. However, the court probate documents do say “joint venture and distribution rights”. This leads us to think that the MJ Estate owns the master’s, but made a Joint Venture with Sony (with the company MJ Venture), SOLELY for the distribution rights. Sony’s deal ONLY includes distribution rights. So, WHY Sony had so much control over the Masters when Michael was alive?
Branca alleges that despite an ownership of a wholly 100% of the master recording, Sony held a percentage deducting the advances given to MJ? No way! Mr superlawyer is hiding something here!
“Advances” are another contractual provision and should be kept and recorded separately in the accounting records! We could understand if he was talking about a percentage in term of distribution agreement but NO way his claim stand up!
And actually to support our strong doubt about Branca’s words and corroborate Sony accounting “bad habits”, Michael Jackson lawyer Marty Singer explained in summer 2002 that they were considering suing Sony Music for questionable accounting practices, breach of an agreement and fiduciary duties.
Singer said they had asserted claims against Sony. Enron-like accounting claims concerning the under-reporting of revenues to Michael Jackson as well as other alleged improper accounting practices, that could be worth hundreds of millions of dollars. One of his representatives said that he believes Sony may have wanted Michael to fail so the company could have more leverage in a dispute involving his joint-publishing venture, Sony/ATV, which owns the Beatles catalog and is valued at close to a billion dollars. The dispute related to more than claims involving the recording agreement. It was also related to their business relationship in the publishing venture, which was Sony/ATV.
One of the Sony’s lame excuses to justify the suspension of the Invincible album marketing was actually the word “advance”. But what is the mechanism of the advances in an exclusive recording contract with a records label? And how Records companies Screw artists out of Royalties?
How did Sony screw financially Michael Jackson?
In many ways and crucial were the unclear and convoluted clauses of the Sony ATV operating agreement. It will be a pleasure to explain how it worked that damn agreement set up by Mr. Branca & Co.
Stay with us for the second part where we will talk about…
- John Kellogg, Music Business Second Legal Aspects
- Digital Technology and the Allocation of Ownership in the Music Industry. The Centre for Market and Public Organisation 09/228, Department of Economics, University of Bristol.
- Transaction Costs Determinants of “Unfair” Contractual Arrangements. American, Economic Review, Klein B.
- Documents excerpt from the Prescient lawsuit (2007) Bank of America loan and security agreement(exhibit)/Michael Jackson deposition held on June 12, 2006, at the Westin Hotel, Versailles, France
- http://www.TeamMichael.com (Branca depositions)