The Beatles' catalogue

MANILA, Philippines - The sudden death of Michael Jackson last week left one question unanswered: What happens now to The Beatles’ catalogue, which he owns? Will Paul McCartney and the John Lennon Estate finally own the Lennon-McCartney compositions?

In January, reports came out that Michael Jackson planned to leave the rights to The Beatles’ catalogue to its rightful owner, Sir Paul McCartney. No confirmation came from Paul McCartney and the reports remained unverified. Michael Jackson, according to the report, felt bad that he has not been for the past 20 years on speaking terms with Paul. This may have compelled, although this remains very doubtful, Michael to alter his will and leave the rights to the Beatles songs to Paul.

Paul and Michael collaborated in the early 1980s. This proved to be mutually beneficial. Paul had his last No. 1 single with Say, Say, Say, a collaborative song between Paul and Michael, which came out in Paul’s album Pipe of Peace in 1983. On the other hand, This Girl Is Mine, another collaborative effort, but this time included in Michael’s blockbuster Thriller album, reached No. 2.

Friendship extended beyond studio work. Paul, appearing in the Oprah Winfrey Show in the mid-1990s, recalled giving Michael three sound business advices: hire a good and honest accountant; make use of music video and invest in song publishing. Michael obliged and subsequently made some of the highly-acclaimed music videos in history. But his most cunning business decision was to trump the joint bid of Paul and Yoko for the rights to some 250 Beatles songs in 1985. When sold by Sir Lew Grade, Michael put up $47.5 million against the reported $20 million offer from Paul and Yoko.

In 1995, Michael agreed to merge ATV with Sony, resulting in a windfall of $95 million. This effectively sliced the ownership of The Beatles’ catalogue 50-50 between Sony and Michael Jackson.

Music publishing can be a very lucrative business, but it used to be the monopoly of the moneyed and well-connected in the entertainment industry. As the publisher, it is one’s responsibility to find artists to record the songs in his catalogue and promote these records. In return, he gets royalties from the record label of any artist who covers the song, the companies who use the song in films and advertisement, the publishers that print the songs, and finally the artists that perform the song live or radio station that gives it air play. The royalties paid for songs are divided equally, as in the case of The Beatles, between the publisher and the artist.

Young as they were in the workings of the music industry in 1963, The Beatles were totally reliant on Brian Epstein, their manager, in making business decisions. At that time, John Lennon and Paul McCartney already demonstrated their gift for songwriting with their first single Love Me Do backed with P.S. I Love You, hitting No. 17 in the British charts. Not satisfied with the way Love Me Do was promoted, Epstein tried to look for another publisher. Bringing with him the followup chart-topping single Please Please Me backed with Ask Me Why, he sought Dick James upon the recommendation of George Martin, the creative producer of the Fab Four.

When James heard Please Please Me, he knew this was going to be a blockbuster and offered to publish it. The deal was sealed when he was asked by Epstein about his plans of promoting Please Please Me. James picked up the phone and called Philip Jones, the producer of Thank You Lucky Stars, played him the song and convinced him to put The Beatles in the lineup of guests in this prime time show. Having lured Epstein, James suggested forming a company – Northern Songs – that would publish even future compositions by the Lennon-McCartney partnership, a far cry from then common song-by-song publishing arrangement.

John and Paul subscribed to the arrangement, in which they would enjoy 15 percent each and Epstein another 7.5 percent, while the controlling block (a total of 37.5 percent of the shares) rested with Dick James and Charles Silver, Northern Songs chairman. John and Paul assigned George and Ringo 1.6 percent each even if at that time, both had yet to venture into serious songwriting.

As songwriting royalties flowed in, both realized they were losing 90 percent of their income to taxes. Upon advice, they resolved to invest their income in a public company, Northern Songs, which went public on the London Stock Exchange in 1965. Following the death of Brian Epstein, The Beatles’ relationship with Dick James became unstable. Their differences reached a climax in 1969 when John learned of James’ plans to sell his and Silver’s share in Northern Songs to Associated Television Corporation (ATV) owned by entertainment mogul Sir Lew Grade without making a first offer to them.

The Beatles staged an attempt to foil the sale, but this effort was weighed down by the ensuing internal feud between them about the choice of management. Thus, in September 1969, the sale to ATV was realized. John and Paul lost the chance to own the rights to some 250 songs they wrote. Losing interest, they immediately thereafter sold their equity in Northern Songs to ATV.

In 1968, George and Ringo opted not to renew their contract with Northern Songs and instead formed their own publishing companies, Harrisongs Ltd. and Startling Music Ltd., respectively, thereby owning the publishing rights to their late Beatles compositions including Something, While My Guitar Gently Weeps, Here Comes the Sun and Octopus’s Garden.

In their solo careers, John would later form Lenono Music and Paul, MPL Communications. Paul, enjoying access to sound business advice from his in-laws, started investing in music publishing, which boasted of the Buddy Holly catalogue. His success in this field allowed him to be generous in sharing this idea to his friend, Michael Jackson; a gross miscalculation on his part, it turned out.

Will the untimely passing of Michael Jackson give Paul and Yoko another opportunity to buy the catalogue? Highly unlikely. First, Paul and Yoko may not be able to put up an acceptable offer to Sony/ATV factoring in future profits. Second, Sony/ATV will not give up this profitable venture, especially now when an agreement to make the catalogue available online seems inevitable, with a remastered set of all studio albums plus compilations of the group due for release this September, together with the Beatles: Rock Band video game.

In the meantime, Paul and John’s estate will continue to receive 50 percent of the royalties from their compositions, which annually run in millions of dollars. Not bad at all on second thought, is it?