Michael Jackson was essentially the Bill Gates of music. He owned full or partial rights to nearly TWO MILLION songs – including recordings by The Beatles, Eminem, Hank Williams, Shakira, and thousands of other artists.
I am the last to desire to make the struggles of a grieving family any more public than they already are. The unfortunate truth of the matter, however, is that the issue is already public – and not only that, Michael quietly had amassed a tycoon’s wealth in recording rights that most of the public doesn’t even know about, including the rights to a truly astonishing number of songs through his partnership with Sony Music. And the decisions made will decide the fate of a great number of the world’s most important recordings.
(Featured image from Wikipedia user John Wiley)
1. The number of historically important recordings involved is significant.
Most remember Michael in his sequin-festooned “King of Pop” persona from the 1980’s – one white glove covered in rhinestones. A second image of Michael in his later years, unwell and enmeshed in legal drama, also persists in our culture. A third – the Michael Jackson who, behind the scenes, quietly and with verve and purpose bought up a vast great share of the entire world’s music industry – is mostly unknown to us, and yet that Michael is the one who will predominate in this article.
Apparently Jackson was not just once a young performer eager to be the best in the world – he was, quietly, very nearly the music industry’s version of Bill Gates, consolidating his personal wealth over and over again by investing some of the proceeds of his mammoth solo career into quietly purchasing smaller artists’ works wholesale. Sly and the Family Stone’s entire catalog was one of Michael’s first purchases. He purchased Jerry Lewis’ “Great Balls of Fire”. Big Joe Turner’s “Shake Rattle and Roll”. Percy Sledge’s “When a Man Loves a Woman”. Dion’s “Runaround Sue”. Scores of other recordings. And, yes, at one point, a great many early Beatles recordings that the artists themselves had signed away the rights to before they were famous came up for sale – and Jackson snapped them up.
Then, in the mid-1990’s, the catalog of recordings in question substantially improved – because a very odd sort of deal happened. Sony Music approached Michael, who was not an insignificant distributor and licensor of other people’s music himself at this point, and offered to merge their ENTIRE CATALOG with his – not even his songs, just that of other artists he owned – to form what would become Sony/ATV – currently the world’s largest publisher of music, with TWO MILLION songs under ownership.
That means Michael Jackson owned a stake in the recordings of Eminem, Lady Gaga, Akon, Shakira, Neil Diamond, Bob Dylan, Hank Williams, and dozens more artists, according to CelebrityNetWorth. There is no categorical list of the rights that are in question. However, if you pick a random song you like, there’s a non-trivial chance either Jackson owned it outright or had a stake in it through Sony.
LINK: Michael Jackson Estate coverage at CelebrityNetWorth
2. Yes, it seems probable there is some executor fraud going on, to say the least.
Now that you understand the size of these holdings, it’s not hard to understand why the feuding has erupted.
Jackson’s entire estate – including his percentage of all the material and artists in question – was valued by his executors in official documents at a comical $7 million or so. His image licensing rights were put in at a comical $2,105 – that’s two thousand, one hundred and five dollars, not two million. More comically, the Beatles holdings in question were valued at zero.
There really are not words to express how absurd this is. A single valid signed piece of Michael Jackson memorabilia is still worth far more than two thousand dollars, alone, at auction. The Beatles’ recordings are worth uncounted millions. Eminem’s are as well. So are Williams’. So are dozens’ more artists’ in the collection. Any reasonable valuation of Michael’s estate is in the hundreds of millions or more, as it is reputed to have earned from $100-200 million a year in recent years.
IRS auditors are not known for their sense of humor in these matters. There may have been minor brain hemorrhages in the first few IRS agents to review Jackson’s estate filings, if IRS agents still indeed run on blood, or ever did. So they have quietly revalued the estate at about $1.2 billion dollars in value, and they would like a rather large chunk of everything that a great deal of the world’s music will make for the next few years.
3. The magnitude of the sum asked for by the IRS is, however, just as speculative in the other direction.
Is it fair to put the grieving Jacksons on the hook for SEVEN hundred million FUTURE dollars?
Jackson’s image, music, and holdings will be unquestionably valuable for some time. But the entire recorded music industry is quietly being obliterated by new streaming models, and they don’t pay as well – even for view counts like Jackson’s and those of the artists whose rights he owned. And IRS “agreements” tend to be more legally binding than other documents, and have a painful way of containing more potential criminal penalties than other agreements if violated.
Are the Jacksons essentially going to be put in debt slavery if Michael’s estate fails to produce? As absurd as it sounds given the current income of the estate, stranger things have happened, especially with the state of recorded music sales dropping as millenials embrace streaming instead. And that would be an ugly fate for America’s most prominent African-American music family to endure, as their investment in his talent was substantial. It shouldn’t be fair for the government to potentially take more than the estate will make, and that’s a question that should be asked.
The other take home lesson is that any estate that isn’t properly tended is going to be up for grabs – or worse – by the IRS. This is not a new lesson, but it is potentially an ugly one. No one loves estate fraud, but no one loves seeing anyone crushed to bankruptcy by taxes either. The first duty of any estate should be towards the intents of its will as stipulated, with regard paid to the needs of the grieving family – and while no one reasonably thinks any Jackson will go broke any time soon, even great fortunes may dry up in large families. Michael actually had a very, very clear will, whose intent cannot be disregarded no matter how exotic the valuations get. If the interest is not for the children and Mr. Jackson’s mother and his charitable interests first, that is a clear violation of the interest of the deceased.
“Michael Jackson’s postmortem plans haven’t changed much over the years. His 1995 will names John Branca, Bert Mitchell and Marshall Gelfand as co-executors. Like all subsequent versions of the will, it specifies that the King of Pop’s interests be placed in an entity known as the Michael Jackson Family Trust, which stipulates the following distribution: 20% to charity, and the remainder split between a lifetime trust for Michael’s mother, Katherine Jackson, and a trust for any children Michael might have. Upon Katherine’s death, any remaining funds would revert to the children.” –Forbes
LINK: Jackson Estate Proceedings at Forbes.com
4. The cause of Michael’s death was questioned and may yet be contested in civil trials.
I have no desire to speculate firmly in print about the causes and circumstances of Michael’s death, having not left nearly his level of revenues behind for my own family at this point, and being inclined to remain of sound body and mind into my older years in the best hopes of someday doing this.
Suffice it to say there were substantial – though never close to substantiated, as of yet – rumors that his death with Propofol was not accidental. A few family members have wondered the same.
This cannot be legally entered into the record unless there are new trials. At this point, Conrad Murray – his doctor – is jailed, but not for any form of homicide – and retrial would be considered double jeopardy.
At the same time, it means there is a need for care to be taken in this entire matter – and public discussion and investigation. I literally saw, at one point, over Los Angeles, a plane flying a banner that said “China demands justice for Michael Jackson.” Michael was a diplomat – sanctioned by former President Reagan – to the entire world. People still care. People are still grieving his passing.
5. What happens to the recordings involved if the estate fails to meet future revenue estimates? Do they become the legal property of the IRS?
Michael was essentially curating a non-trivial percentage of the world’s music library, and by some reports left an incredible amount of unreleased material on his own as well.
What would happen to it if the estate cannot make the payments? Does the IRS takes possession? Is there any interest in musical curation among the executors or the IRS? Preservation?
Many of the recordings in question could be potential Library of Congress candidates one day for historical preservation, adding yet another potential wrinkle to the mix.
Jackson unquestionably contains a number of singles that any music historian would regard as relevant. So do the Beatles – who are internationally significant to Britain as well. So does Eminem. So do, unquestionably, countless artists not mentioned with worldwide reach.
There is a case that – whatever his civil struggles in later years – Michael Jackson was the most popular human being who ever lived. Those familiar only with his later trials and albums may not remember his golden era in the 1980’s, when Michael was the most recognized international figure in entertainment history. While a few stars (actually, only three – Rihanna, Eminem, and Shakira) have ever accumulated more Facebook “likes” than Jackson, Jackson’s fanbase contained many international and older viewers the world over in Africa and other continents without Facebook reach that are probably not listed. Michael Jackson’s music has been verifiably played in Antarctica. He may STILL be the best-known person in the entire world. His reach as an entertainer is quite possibly impossible to estimate.
6. The music industry is already struggling, en masse. Is confiscation of $700 million in future revenues the best way to tend America’s musical garden?
As a writer, my opinion has no legal basis on this matter – and my opinions are NOT those of Be A Music Pro as a whole.
I am only interested in the issue as an American who hopes our cultural heritage and that of the world will be preserved. There are TWO MILLION songs at stake – including most of the world’s favorite artists’ catalogs. It is impossible to overestimate the influence of Sony Music’s catalog – comparable to Disney’s in film, or that of Electronic Arts in gaming.
Worse, as huge as the sum is to any average citizen, the sum the IRS will repossess if they get their way is utterly insignificant to the mammoth Federal budget. Everything the IRS has asked for amounts to only 0.02% of the U.S. Federal budget for one year. That’s not two percent, that’s two-hundredths of one percent. The money repossessed would essentially vanish into a great vast bureaucracy.
Uncounted legends’ work will be affected by this – including sampling, licensing and distribution rights. Eminem’s recordings were and are as important to urban areas as the Beatles’ once were to the suburbs; as Hank Williams’ were to the country. And important recordings are essentially living concepts, even if recorded decades ago. There is sampling, re-releasing, licensing – and all these things that comprise the secondary market are, just as with most entertainment industries, as important or more than the original sales in the modern era. The recordings involved will not perish through lack of interest. Many people will be working with them in years to come – but legal dramas have a way of stifling re-releases until the courts figure out who owns the remainder of a contested estate. If the courts appoint a large conservatorship, one runs into what might be called the “Liberum Veto” problem – referring to an infamous historical cavalry-era political era in Poland in which any one lawmaker who was opposed to a measure could vote it down, even if that person was the only one in opposition. (It strangled the country’s governance and nearly got the entire area annexed by its neighbors.)
I will be a sad music writer and fan if the “living” sampling, licensing, and distribution of recordings involved get strangled by legal wrangling and the singles mentioned here became impossible to broadcast or license. So would much of the world be. It has a way of killing legacies. The closest historical example might be the legal wrangling over Walt Disney’s estate – however, Disney as a corporation was able to continue Walt’s work without a serious commercial hiccup. That may not happen here. Unlike Disney, Michael never really established his personal identity as a corporation – his recordings are owned by his vehicle Mijac Music, but that’s not the household name Sony is.
How much is Sony Music at risk? What will happen to the recordings of other significant artists they bought? Can one imagine if Disney’s estate had been sued by the IRS for the future profits of “Snow White” and just about everything else he ever did?
It illustrates why this matters to everyone in music.
Let’s hope for the best, music fans.
Bump Magazine 
