Andy on the Road

28 June 2009

So how about that Beatles catalogue?

Filed under: huh.,intellectual property,music,theroad — Andy @ 10:13 pm

(All too perfect, and care of Flickr user motionblur)

The factoid is legend, known to anyone who watches VH1 or has a taste for music industry gossip: Michael Jackson in the 1980s bought out a large slice of the Beatles catalogue, beating out Mr. Paul McCartney himself for it.  A lot of us are wondering, now that Jackson’s deceased, What’s going to happen with the Beatles’ songs?  Where are they going to go?  Who has the rights to them?

To answer that question, one must understand the how Jackson obtained the Beatles catalogue in the first place.  And to understand that, a little British television and music history must be explained (and a major hat tip to Wikipedia for helping me thread this all together).  We start with Associated Television, or ATV: a British television company which decided in the 1960s to create a publishing wing to handle the royalties of theme songs of ATV shows and wholly-owned subsidiary Pye Records.  This was the early 1960s, and around the same time the Beatles, just beginning their world success, formed a publishing company called Northern Songs, owned by the group with Brian Epstein and Dick James.  In 1963 virtually all Beatles songs were owned the publishing company, but by 1965 Ringo Starr and George Harrison each had formed their own publishing company to handle their songs, leaving only the catalog of Lennon and McCartney.  Around 1965 the group decided to take Northern Songs public on the London Stock Exchange, with Lennon and McCartney each owning 15%, Epstein with 7.5%, Dick James with 37.5%, and Harrison and Starr with about 1.6%.  The balance (a little under 25%) was traded publicly.  Following the death of Epstein, attempts were made to renegotiate the split between Lennon, McCartney, and James, but to no avail.  James sold his share to ATV Publishing, and ATV was able to take a majority share out of publicly traded stock and own Northern Songs.  Despite a tough fight from the Beatles, they were unable to stop the sale, and lost control of their catalogue.

After a vibrant 1960s, publishing the likes of the Moody Blues, the Kinks, and Donovan, and managing the UK sales for Chess Records, ATV Publishing was expanding heartily, obtaining the impressive catalogue of Leiber and Stoller (highlights include “Jailhouse Rock,” “Kansas City,” “Hound Dog,” “Yakety Yak,” “On Broadway,” “Stand By Me” (shared with Ben E. King), “There Goes My Baby,” and “Charlie Brown”).  However, bad business decisions and generally bad luck sank ATV, and by the mid 1980s they were looking to be bought out.  After an Australian businessman flipped ATV Publishing and sold a great deal of the assets in the process, the ATV catalogue, Beatles songs and all, went for sale, precipitating the sordid storm between Yoko Ono, Paul McCartney and Michael Jackson we’ve all heard before, ending with Jackson owning the ATV catalog for $47 million.  Most critical to this sale was the exclusive right to license Beatles songs, which Jackson did in a myriad of commercials.  (These were covers of songs, typically, as Apple Corps still owned, and still owns today, the sound recordings themselves.  Apple Corps is considerably more stringent about licensing the recordings.)

About a decade later, in 1995, tech megacorporation Sony decided it wanted to get into the music business, and offered Jackson $90 million for a 50% stake in ATV.  Thus was formed Sony/ATV Music Publishing, a catalogue of publisher’s rights second to none, which later bought up publishing houses Acuff-Rose (with Roy Orbison, Hank Williams, and all of the Grand Ole Opry crowd. As Jeff Tweedy put it, “name me a song that everybody knows / and I’ll bet you it belongs to Acuff-Rose.”) and Famous Music (with soundtracks to a vast number of Paramount / Viacom movies).  Today the catalogue has everyone from Bjork to the Beatles, and 50% of it was Michael Jackson’s.

And now what?  What’s going to happen to that massive collection of songs?  Shortly after Michael’s death Product Shop NYC and several other blogs reported that Michael had left his share in the Beatles catalogue to Paul McCartney, a decades-overdue olive branch for the once-close friends.  What would be most interesting, should this be true, is whether his interest included the right (or even more exciting: the sole right) to license Beatles songs.  After all, if the songwriter/publishing deal is anything close to a typical contract, royalties should have been split 50/50 over the past decade between the songwriter and the company.  So, Paul and John (and later, Yoko) were still getting their 50% from royalties, but Michael was keeping the other 50%.  This isn’t really about the money; this is more about the control.  To own the catalogue now would mean that Paul has the power to decide where the Beatles are licensed commercially.

Shortly after the buzz was out that Michael’s will left the songs to Paul, an anonymous source inside Sony/ATV told Bloomberg that Sony/ATV will retain the Beatles catalogue.  Strictly speaking, both Bloomberg and Product Shop NYC could be accurate: Michael had, at most, 50% of the corporation, so he could only give his 50% stake to McCartney, meaning that Sony/ATV would still maintain some degree of control.  The specifics of who can do what with what songs will only be made clear with the scrutiny of the contracts, documents, and agreements (most likely with a trip to the courts in the process).  Meanwhile, there are rumors that have been artfully explored by Bill Wyman (the writer, not the Rolling Stones member) that Jackson accepted a 50% buyout on his 50% ownership from Sony.  Should this be true, then Jackson could only devise 25% interest in Sony/ATV to McCartney.  And on top of all of this, there’s the massive levels of debt we’ve all heard about, over which no one seems to have an accurate handle.  Creditors buying up Jackson’s debt are certainly going to try and get a piece of Sony/ATV in collateral, as Wyman details in the article above.  It’s entirely possible that some large investment bank will wind up with Jackson’s interest in the Beatles catalogue, once all of the dust has settled.  And furthermore, we still haven’t seen the will yet.  It’s entirely possible this fact about the will isn’t true, or it’s from a will which has since been superseded, or there are conflicting wills.

Given the man at the center of all of this, I’m willing to bet we’ll see a lot more drama and show before we find out where those Beatles songs are going to land.  As of this moment, we simply cannot say for sure.

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