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Jackson’s Earning Potential Is at the Heart of a Wrongful-Death Suit

July 28, 2013 by

Four years after his death, Michael Jackson still rules the music business.

Jackson’s importance to music and his continuing earning potential have been on display in a courtroom in Los Angeles this summer as members of his family battle with the promoter of his final concerts over who was responsible for his death, a question that may be worth more than $1 billion.

The darker part of Jackson’s legacy is also on display: the drug dependence, financial fecklessness, accusations of sexual abuse and the inescapability of his family, which first propelled him to stardom as a child and now continues to live off his fortune.

To judge by the market, that history is largely forgiven, if not forgotten. Forbes estimated that the estate made $145 million last year through a range of music and merchandising deals; the only living musician to come close, according to the magazine, was Dr. Dre with $110 million, mostly from the sale of his company Beats Electronics.

 Cirque du Soleil’s tribute, “Michael Jackson The Immortal World Tour,” has sold more than $300 million in tickets since it opened two years ago, and last month an elaborate new Cirque show, “Michael Jackson One,” opened in Las Vegas.

Projects like these keep money pouring into the estate even as Jackson’s album sales have slowed from a peak after his death. Since 2009, the estate is estimated to have earned at least $600 million.

“Time is an elixir,” said Stephen G. Hill, the president of music programming and specials at BET Networks. “We’ve already seen in four years that what is really celebrated about him is his music, and his place among the greatest entertainers of all time.”

The wrongful death suit against the concert promoter A.E.G. Live, brought by Jackson’s 83-year-old mother, Katherine, hinges on the narrow question of whether Jackson or the company was responsible for hiring Dr. Conrad Murray, who administered the anesthetic that killed Jackson in June 2009. Dr. Murray is serving a four-year prison sentence for involuntary manslaughter.

Mrs. Jackson, who with Jackson’s three young children is suing A.E.G. Live, gave emotional if sometimes confused testimony last week, as her lawyers’ last witness before the defense began making its case.

 “They watched him waste away,” Mrs. Jackson cried from the stand, encapsulating her lawyers’ argument that A.E.G. Live ignored Jackson’s health and pressured Dr. Murray to do whatever it took to get him on stage.

But the trial, now entering its 14th week, also shows Jackson’s exceptional role in the music industry. As with everything he did, his comeback was planned on a huge and risky scale.

Even though Jackson had not toured widely in more than decade, some $30 million was spent to mount 50 shows in London, with rough plans for a world tour to follow. Hours before his death, the show’s insurers were still seeking details about Jackson’s health, prompted by news reports that he suffered from a variety of illnesses including lupus, cancer and anorexia, according to an e-mail shown in court.

Lawyers at the trial have delved, often in numbing detail, into the minutiae of the music business to try to assess Jackson’s earning potential. Last week, nearly an hour of combative questioning was devoted to the seating capacity of the Rose Bowl in Pasadena, Calif.

 A major question, beyond the culpability of A.E.G. Live in Jackson’s death, is how much money the entertainer might have made had he lived. That amount has been hotly disputed in court. Arthur Erk, an accountant called by the Jacksons, gave a future earnings estimate of $1.5 billion, but his analysis and methodology — Mr. Erk said that much of his information came from the Web site Wikipedia — were attacked by lawyers for A.E.G. Live.

Like plenty of other artists, Jackson turned to touring by necessity, said Stan Soocher, an associate professor at the University of Colorado, Denver, and the editor of the journal Entertainment Law and Finance.

Article source: http://www.nytimes.com/2013/07/29/business/media/jacksons-earning-potential-is-at-the-heart-of-a-wrongful-death-suit.html?partner=rss&emc=rss

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Google Expected to Start A Competitor to Spotify

May 14, 2013 by Leave a Comment

Google is planning to introduce the new service as early as Wednesday at Google I/O, the company’s annual conference for software developers. The subscription feature will be connected to Play, Google’s online media hub, complementing its download store and “locker” feature, which lets people store their digital entertainment collections online, according to these people, who spoke on the condition of anonymity before Google’s official announcement.

News of the announcement first appeared on The Verge, a technology-oriented Web site. A Google spokeswoman declined to comment.

Google has been developing entertainment features for Android mobile devices, which puts the company in direct competition with digital music leaders like Apple, whose iTunes store is the largest retailer of music — digital or physical — in the United States. While Android phones and other devices remain extremely popular, Google has had limited success with its download store, people in the music business say.

By expanding to streaming music, Google will be tapping into the most rapid growth area in digital music. Spotify, which was founded in Sweden in 2008 and came to the United States almost two years ago, now has more than 24 million regular users, six million of whom pay about $5 to $10 a month for premium service. Pandora now has more than 200 million users, the vast majority of whom use it free.

Apple is also said to be developing a Pandora-like Internet radio service, although its negotiations with record labels and publishers have been slow.

Google’s streaming service will not include a free tier, according to the people briefed on the plans. The subscription rate was not known, but was expected to be similar to that of Spotify and other competing services like Rhapsody and Rdio, about $10 a month.

To get the licenses it needs, Google has been negotiating with record companies for months — a slow process in any case, which sometimes takes longer in Google’s case because of its complicated relationship with the major record companies. While record labels now turn to Google’s YouTube for a big part of their promotional campaigns, the labels’ trade group, the Recording Industry Association of America, has criticized Google for not doing enough to combat online music piracy.

Google is said to have licensing deals for the service with the three major record labels: the Universal Music Group, Sony Music Entertainment and the Warner Music Group. Representatives of those labels declined to comment.

Making matters more complicated, the service to be unveiled this week is one of two parallel music services being prepared by separate branches of Google. YouTube, which last week introduced a few dozen paid video channels, is also said to be developing a music service. The details of YouTube’s service are unclear, but negotiations are said to be continuing with music companies.

Article source: http://www.nytimes.com/2013/05/15/business/media/google-set-to-introduce-music-service-to-compete-with-spotify.html?partner=rss&emc=rss

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Media Decoder Blog: Bronfman Stepping Down at Warner Music

December 5, 2011 by Leave a Comment

Edgar M. Bronfman Jr. in 2007Mark Lennihan/Associated PressEdgar M. Bronfman Jr. in 2007

4:15 p.m. | Updated Edgar M. Bronfman Jr., who has been a major player in the music industry since the mid-1990s, is stepping down as chairman of the board of the Warner Music Group, effective Jan. 31.

Mr. Bronfman will remain a board director, but he told employees in an internal memo that his “other obligations are beginning to take an inordinate amount of time.”

In the music industry there had been widespread expectation that Mr. Bronfman, 56, would be leaving the company soon. Warner was sold to Access Industries in May for $3.3 billion, and last month Warner lost a bid to acquire EMI, a long-sought goal of Mr. Bronfman’s.

EMI, the home of the Beatles, the Beach Boys and Pink Floyd, was instead sold for a total of $4.1 billion in a two-part deal that divided the company between Sony and the Universal Music Group, a division of the French conglomerate Vivendi. Warner has made several attempts to merge with EMI over the last decade.

The company is expected to name a new chairman by January.

The news of Mr. Bronfman’s departure was first reported by The New York Post. A Warner Music spokesman declined to comment.

An heir to the Seagram fortune, Mr. Bronfman has had a mixed career as a media mogul. Through a series of multibillion-dollar deals beginning in 1995, he created the Universal Music Group, still the world’s largest music company. In 2000, he sold Seagram to Vivendi for $34 billion in stock, which plummeted in value after Vivendi made a series of acquisitions that nearly bankrupted it.

Mr. Bronfman stepped down from Vivendi in 2001, but in 2004 he led a team of investors that bought Warner Music from Time Warner for $2.6 billion and took the company public the following year.

As Warner’s chief executive, Mr. Bronfman pushed to develop its digital music business as well as its so-called 360 contracts, which let the company make money on its artists’ tours, merchandise sales and other areas in addition to record sales.

In August, he stepped down as chief executive to become chairman of the board and focus on an EMI deal. Stephen F. Cooper, a turnaround expert who had previously worked at the Enron Corporation and Krispy Kreme Doughnuts, took over as chief executive in August.

In another memo to Warner employees on Monday, Len Blavatnik, the head of Access Industries, praised Mr. Bronfman’s stewardship of the company.

“It was his vision in transforming W.M.G. into a progressive, modern music company that made W.M.G. so attractive to Access,” Mr. Blavatnik wrote. “Given that vision and his years of expertise in the industry, as a director at W.M.G., he will continue to be an important part of our leadership and I look forward to his many future contributions.”

The music industry has suffered punishing losses over the last decade, and many in the music industry were surprised that Mr. Bronfman was able to sell Warner this year at a higher price than his investor group had paid seven years ago. But some analysts have been critical that Warner did not turn out to be a good deal for public investors. The company set the stock price for its initial offering at $17, and it was sold to Access for $8.25 per share.

“The transaction worked out very well if you look at the Warner Music Group as private equity investment,” said Richard Greenfield, an analyst at BTIG. “It worked out well for the original, pre-I.P.O. investors. But it never worked out as well in the public markets.”

Article source: http://feeds.nytimes.com/click.phdo?i=9cef26fabe66e9f3bb4539f89b8f60e7

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At Sony Music, a Plan to Dominate the Industry

November 8, 2011 by Leave a Comment

“My plan here is very simple,” he said on a recent visit, leaning back in his sofa. “To help create the pre-eminent record company in the world.”

Mr. Morris, one of music’s reigning patriarchs, took over Sony in July, after 15 years at Universal. He is widely seen as the most capable hand to steady Sony’s music division, which has been plagued by internal quarrels since its merger with BMG in 2004. So far he has been aggressive in trying to remake the company, the home of artists like Bruce Springsteen, Beyoncé and Usher.

At 72, his age and experience summon up the inevitable charge that as part of the industry’s old guard he is ill-equipped to thrive in the digital age. Mr. Morris rejects that notion, pointing out his role in creating Vevo, the hugely successful music video site.

Yet Mr. Morris is also an embodiment of one of the unchanging realities of the music business: that despite all the changes in technology, there is still money to be made in hits, and staying successful means holding on to a bigger piece of a shrinking pie. One way he has done that is hiring strong creative executives who can spot the next stars.

“He is a master at attracting and developing executive talent,” said Jon Landau, Mr. Springsteen’s manager. “No one is better at picking the people who pick the hit artists.”

Last Friday afternoon, after months of talks, Mr. Morris signed his first major new deal, with Dr. Luke, the pop producer behind big hits by Katy Perry and Kesha. It creates a record label, Kemosabe Records, to be financed by Sony and run by Dr. Luke in Los Angeles. And, perhaps most valuably, it also gives Sony exclusive rights to Dr. Luke’s services as a producer for five years.

Already sounding like a label boss, Dr. Luke said between the signing and the Champagne last Friday: “I plan to sign only artists that I really love and really want to work with. I also believe that songs are the bloodline of a label, so I will still be instrumental in creating and acquiring them.” Dr. Luke is a 38-year-old former guitarist with the “Saturday Night Live” band whose real name is Lukasz Gottwald.

Mr. Morris, a creature of habit, called the Dr. Luke deal an attempt “to duplicate a magic trick” 21 years ago — his bankrolling of Interscope Records, which was co-founded by the producer Jimmy Iovine and has become one of the most successful labels in the business. Dr. Luke, Mr. Morris said several times in an interview, is his new Jimmy.

“He’s the best guy at the moment, as far as a writer and a producer,” he said. “He and Jimmy are very different, but it’s the same kind of level of intellect and talent.”

In turn, Dr. Luke seemed ready to adopt Mr. Morris as a mentor.

“Doug has an amazing history, creating labels, finding talent,” he said. “I felt there is a lot I could learn from him.”

Mr. Iovine, for his part, said he was still close with Mr. Morris, but noted that they were now playing for different teams. “If we played on the Lakers and he got traded to the Knicks, I would still love him,” he said. “But when we get on the game floor, we still compete.”

Kemosabe will become Sony’s fourth label division, with Dr. Luke reporting directly to Mr. Morris. The label is expected to become operational in January, and Dr. Luke will have free rein to hire staff members and sign artists. One trade-off: because he can now produce only Sony artists, Dr. Luke will not be able to work with Ms. Perry, who records for EMI.

Mr. Morris started his career in the 1960s as a songwriter (he co-wrote the Chiffons’ “Sweet Talkin’ Guy”) and held top positions at Atlantic Records and the Warner Music Group before Edgar M. Bronfman Jr. hired him in 1995 to run the collection of labels that would become the Universal Music Group.

Article source: http://feeds.nytimes.com/click.phdo?i=6a1575506926a672307ec2bb3b5af23a

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