Thread by @kolourrmusic

Michael Jackson leveraged songs written by The Beatles into earning over $1,000,000,000.

Yes, The Beatles.

🧵 for every Independent Artist, Creative, Entrepreneur, and Future Mogul.

Before we begin, it helps to understand the business of music.

With music, every song has two sides to it: the master and composition (publishing).

Typically, Record Labels own the master while the songwriter(s) and/or their Music Publishing Company owns the publishing.

The Master and Publishing each generate their own royalties. A song can also generate an upfront licensing fee.

This usually requires the approval of the owner of the master recording as well as the publisher of the song.

This 🧵 deals with just the publishing

Music publishing is further divided into two halves.

The picture represents the total music publishing pie in a song.

One half: Publisher’s Share,
Another half: Writer’s Share.

The Writer’s Share always belongs to the songwriter(s) and never be assigned/sold

cont...

If a songwriter does not have a contract with a Music Publishing Company, the songwriter(s) retains 100% of the Publisher’s Share.

The Publisher’s Share can be assigned/sold

The Publisher’s Share CONTROLS the copyright to the composition (lyrics + music) of the song.

Songwriters assign a Music Publishing company to collect the Publisher’s Share on their behalf in return for a percentage of the royalties and/or corresponding ownership of the copyright.

3 Common Publishing deals are:

Administration,
Co-publishing,
Full Publishing/Buy-Out.

In an Administration Deal, songwriters (s) retain 100% copyright of their songs but authorize the Music Publishing Company to act on its behalf in collecting the Publisher's Share in return for 15 to 20% of the royalties.

In a Co-publishing deal, the songwriter and the Music Publishing company co-own the copyrights (Publisher’s Share) of the song 50-50%.

Songwriters pick these deals due to the cash advances provided and song-pitching services rendered by the Music Publishing company.

In a Full Publishing/Buy-Out deal, the Music Publishing company retains 100% of the copyright (Publisher’s Share) in the song with sole administration rights.

Songwriters sign these deals because of the very large up-front payments or if they have been tricked.

The two revenue streams for music publishing are Performance Royalties (concerts, bars/restaurants, radio, tv, film) and Mechanical Royalties (tiny % on-demand streams, music sales).

The Writer’s share and the Publisher’s share are paid according to the picture.

Now that you understand how music publishing works, let’s take a look at what went right for Michael Jackson and what went wrong for The Beatles.

In 1963, John Lennon and Paul McCartney started their own Music Publishing company called Northern Songs at the urging of their manager Brian Epstein and music publisher Dick James.

Northern Songs would act as the sole owner of the Beatles catalog (Publisher's Share).

Lennon-McCartney did not understand how Much Publishing worked.

Here’s what Paul McCartney said of the deal, “We had complete faith in Brian Epstein when he was running us. To us, he was the expert”.

McCartney was only 21 and Lennon was 23 at this time.

The equity of Northern Songs (Publisher’s Share of Music Publishing) was broken down as follows.

In 1965, in an effort to reduce their tax burden, Northern Songs was floated on the London Stock Exchange.

The equity was broken down as indicated in the picture.

This time, Ringo Starr and George Harrison were each given 0.8% each of the newly public company.

As you might have suspected, George Harrison wasn’t a fan of this deal and felt he had been cheated of the copyright of his songs.

In 1967, Beatles manager Brian Epstein died of an accidental drug overdose.

Lennon-McCartney hoped to renegotiate a fairer deal but this caused tension between them and Northern Songs majority equity owner Dick James.

In 1969, Dick James and his partners secretly sold their entire stake in Northern Songs to Lew Grade’s Associated Television (ATV) without informing Lennon-McCartney, owned by Associated Communications Corporation (ACC).

ATV also owned the copyright to 4,000 other songs.

Upon hearing of the sale, Lennon-McCartney set out to regain control of the Northern Songs.

They also needed to convince a consortium of investors to sell them their shares and buy back NEMS Enterprises, their ex-managers company which contained shares in Northern Songs.

During one of the board meetings with the consortium of investors, Lennon remarked, “I'm sick to death of being fucked about by men in suits sitting on their fat arses in the City!”

It’s safe to say this did not please the investors.

Lew Grade from ATV approached Peter Donald, a major shareholder in the consortium with an offer of 40 shillings (£2) per share for the consortium’s 15% holding, which was accepted.

This resulted in Lew Grade’s ATV effectively owning 54% of Northern Songs.

To regain control over Northern Songs and go up against Lew Grade no longer made sense.

Lennon-McCartney sold their remaining stock in 1969 to ATV effectively relinquishing any ownership in Northern Songs (their Publisher’s Share).

In 1970, the ownership structure of the Beatles Catalog looked like this

cont...

ACC, the parent company of ATV started suffering losses in the late 1970s and with a dropping share price, was looking to offload a few assets.

In 1981, Paul McCartney inquired about purchasing Northern Songs but Lew Grade was more interested in selling the ATV as a whole

Around the same time, Australian businessman Robert Holmes à Court was acquiring shares in ACC and in 1982 successfully acquired the entire company.

With that sale, Northern Songs switched owners once again.

In 1984, Robert Holmes à Court decided to put the entire ATV catalog up for sale.

Contrary to popular belief, Paul McCartney was given the right of first refusal.

He thought the idea of him owning it himself was odd and tried to convince Yoko to join him. Here’s what he said

Michael Jackson’s lawyer at the time, John Branca reached out to McCartney and Ono with each stating that they wouldn't be bidding.

Here’s why Paul McCartney couldn't justify paying anymore.

So who gave Michael Jackson the idea of purchasing music publishing?

It was Paul McCartney himself during the songwriting sessions together.

They had the Number 1 hit “Say, Say, Say” together

On August 10, 1985, after a very tough set of negotiations, Michael Jackson’s offer of $47.5 million to acquire the entire ATV catalog containing 4000 songs including the entire Beatles Catalog was accepted.

Yoko Ono had this to say about the acquisition, “Businessmen who aren't artists themselves wouldn't have the consideration Michael has. He loves the songs. He's very caring”

The Beatles songs were now being used in commercials, something Lennon-McCartney avoided at all costs.

McCartney felt this destroyed the magic of his songs and devalued it in the long run.

To Michael, it was just business.

McCartney tried writing letters to Michael Jackson asking for a raise.

Michael Jackson always turned it down.

Privately, he said, “If he didn't want to invest $47.5 million in his own songs, then he shouldn't come crying to me now.”

10 years after the acquisition, in 1995, owing to large debts, Micahel Jackson merged the ATV catalog with Sony’s music publishing, establishing the Sony/ATV joint venture in which Michael Jackson owned a 50% stake and received $110 million.

In 2006, amounting to his legal and financial troubles, Sony negotiated a deal on Jackson’s behalf to reduce loan payments on his debts, allowing him to borrow around $200 million and as part of the negotiations, retained an option to purchase 50% of Jackson’s stake.

In 2016, Sony officially agreed to buy out Michael Jackson Estate’s 50% stake in the Sony/ATV Joint Venture for $750 million making Sony Music Publishing the sole copyright owner of 4 million songs including the Beatles Catalog.

Under the US Copyright Act of 1976, which allowed songwriters to retain the publishers’ share of their copyrighted works released before 1978, McCartney and Sony agreed to a confidential settlement in June 2017

If the songwriter were to die within the first 28-year period, the writer’s heirs would be eligible to recapture that publishing share at the end of that first period, which in John Lennon’s case would have been 1990.

A deal was also worked out with the estate of John Lennon.

If you enjoyed this thread,

1.) The end. If you enjoyed this thread, consider giving @kolourrmusic a follow. I am an Industrial Engineer and Indie/Pop artist. I love building, creating, and sharing interesting things I find.

2.) If you’re an independent artist/musician/creative, consider joining @musicavatars, it’s an NFT collection I’m building geared towards taking the best of the PFP NFT world (think BAYC) and combining it with the Music NFT world.

Last point: Independent artist should sign up with a PRO (ASCAP, BMI, SOCAN) to collect their writers share, @songtrust to collect their publishers share in an admin deal and @SoundExchange for their Digital Royalties and distributor (like @DistroKid) for master royalties!