Sony's (SNE) agreement with Michael Jackson's estate, worth an eye-popping amount of money, proves the company is betting on audiences' perpetual inspiration to lay out their cash for his "new" recordings.
The pact is worth as much as $250 million and encompasses 10 album releases, to be parceled out over seven years, The Wall Street Journal reports. The deal guarantees the Jackson estate at least $200 million.
In one way, betting on Jackson's unparalleled musical starpower makes sense. In the wake of his June 25 death, Jackson's power to generate revenue reverted to Thriller-era levels, as radio stations played MJ marathons (and saw higher ratings as a result), and listeners actually bought his records, a feat few artists achieved on a mass scale last year.
Reign of the King
In 2009, album sales plunged 8.5% over 2008. But Jackson's catalog bucked that trend. He was the top-selling artist of 2009, with sales of his catalog totaling 8.2 million copies between Dec. 29, 2008, and Jan. 3, 2010. (Compare that to Taylor Swift, at no. 2, who sold a total of 4.6 million albums.) His greatest-hits compilation Number Ones, first released in 2003, sold 2.4 million copies in 2009 and was the year's third-biggest-selling album.
But one album mixing Jackson's newer material with older songs also sold well. The soundtrack to his posthumous film This Is It, which included the newly released title track, has sold 1.5 million copies in the U.S. since its Oct. 26 release and continues to move respectable numbers. (It was No. 57 on last week's Billboard 200, which tracks the country's top-selling albums.)
The first new release under the Sony deal, which retroactively includes money made from This Is It, is expected to further mine unreleased material from Jackson's vaults. Jackson's manager, Frank DiLeo, told Rolling Stone that Sony had access to at least 100 unreleased songs in Jackson's archives, including collaborations with current hitmakers like Ne-Yo and will.i.am.
Is This It?
But will a Michael Jackson release with a more muted media response, long after his death, prove as lucrative -- particularly if the material isn't up to his the high standard of the most indelible hits of this notorious perfectionist? Consider the song "This Is It," which contained one piece of new material within a fleshed-out demo of a song he wrote with Paul Anka in the 1980s. The other songs on the collection were bona fide hits: "Beat It," "Black Or White," "Man In The Mirror."
In contrast, look at the 25th-anniversary reissue of Thriller, released in 2008 with remakes of four tracks as duets with the likes of Kanye West and Fergie. The only new track to chart in the U.S. was "Wanna Be Startin' Somethin' 2008," remade as a duet with Akon that peaked at No. 81 on Billboard's Hot 100. That was low for Jackson, and for "Wanna," which hit No. 5 when it was first released in 1983.
The deal also encompasses revenue from alternate revenue streams, like video games, movies, and theatrical interpretations of the King of Pop's work. (There's been speculation about a Cirque de Soleil show incorporating Jackson's songs, like the Beatles-themed Love, which is still playing in Las Vegas.)
Relying on Jackson's back catalog as a revenue source will surely prove to be a smart move for Sony, and Jackson is one of the few pop stars left to have a wide-reaching audience willing to pony up for his music. But audiences might grow weary of paying for unproven material, and Sony should be wary of saturating the market with songs that Jackson himself didn't think worthy of including on his albums.
Investing in Emerging Markets
Learn to invest in a globalized world.View Course »