Business lessons from Michael Jackson, entrepreneurial genius

The artist and the man are dead, but the brand he created lives on

Rhinestoned hand reaching out of the ground

(Photoillustration: Erik Putz; Shutterstock; iStock)

In the early 1980s, Michael Jackson was enjoying a historic hot streak. His album Off the Wall was on its way to selling 30 million copies worldwide, and the 23-year-old was preparing tracks for Thriller, his record-breaking follow-up. In 1980, the former child star made $9 million. Three years later, he would earn 10 times that. Jackson had his money. Now he needed to decide what to do with it.

As detailed in Zack O’Malley Greenburg’s new book, Michael Jackson, Inc., the singer’s accountants brought him various real estate deals, none of which impressed him. As a young Motown artist, Jackson had seen so many black entertainers lose control of their art. He’d learned the value of publishing rights, which brought in royalties whenever a tune played on the radio, was performed by another artist, or appeared in a TV commercial or movie. Now he wanted to start his own publishing empire.

Flush with cash, Jackson embarked on a years-long shopping spree. He bought two songs by songwriter Ernie Maresca (“Runaround Sue” and “The Wanderer”), purchased a handful of soul and soft-rock recordings, and paid half a million dollars for the Sly and the Family Stone catalogue. When songs he hadn’t heard came up for sale, he would have his lawyer send him copies to evaluate. “He wanted to be the number one publisher in the world,” said one associate.

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Today, after decades of weirdness, it’s difficult to see Michael Jackson as anything but a cartoonish figure. He was either an impossible innocent—a dancing, singing savant, too naive for this world—or a monstrous grotesquerie with an ever-shifting Halloween mask of a face. The eerie, infantile voice and the sleepovers with children could be seen as sad and creepy or something infinitely darker, but neither caricature gives you the impression that Jackson had any particular business acumen.

In Michael Jackson, Inc., the Forbes writer argues that a full accounting of Jackson’s talents needs to include his entrepreneurial instincts. “Jackson fundamentally changed the formula for monetizing fame forever,” Greenburg writes. The singer was the first musician to have his own clothing line, hawking official “Thriller” jackets and sequinned gloves. He was one of the initial artists to sign massive endorsement deals, earning millions from Pepsi and launching his own shoe with LA Gear, for which he was paid $20 million, a higher figure than Michael Jordan’s 1987 Nike deal.

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Today, when every pop star has a clothing line and signature scent, these forays outside the music industry seem unremarkable, even a little silly. But Greenburg argues that Jackson was the original musician/entrepreneur—the precursor to 50 Cent and his Vitaminwater fortune or Dr. Dre and his $3 billion headphone empire. “Jackson helped flip the paradigm of entertainer as contractor on its head, offering a new path: entertainer as owner,” Greenburg writes.

While Jackson certainly helped usher in an era of endorsement-laden pop stars, Greenburg’s argument for Jackson’s business cunning mostly rests on his publishing empire. After slowly amassing a small collection of songs (and cannily wrangling the rights to his own material), Jackson’s big move came with the purchase of the ATV catalogue, a group of songs by artists that included the Beatles.

At this point, the story is familiar: One evening in the early ’80s, while Jackson was staying with Paul McCartney to record a duet, the former Beatle showed Jackson a binder containing all the songs he owned publishing rights to—the Buddy Holly catalogue, some Broadway hits but not, significantly, anything from the Beatles.

Jackson immediately saw the value in owning a hit song. So when one of his lawyers alerted him that the Beatles catalogue might be for sale, Jackson pounced. Against the counsel of his closest advisers, Jackson went after the catalogue hard, fighting off deep-pocketed competitors, including Richard Branson. “John, please, let’s not bargain,” he wrote in a note to his lawyer John Branca. “I don’t want to lose the deal…IT’S MY CATALOGUE.” Ultimately Jackson offered something no one else could: a concert appearance in Perth, Australia, for the seller’s favourite charity. In 1985, Jackson won ATV for $47.5 million. It’s worth $1 billion today.

While the ATV catalogue was a brilliant investment, Greenburg details Jackson’s pattern of absurd overspending, subsequent failed ventures, and a late career scuttled by child molestation charges and misguided publicity stunts. By the time Jackson overdosed in 2009, he was nearly half a billion dollars in debt.

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When Jackson died, his old associates took over his estate. Branca and music industry veteran John McClain moved quickly to monetize what he had left behind, turning concert rehearsal footage from the abandoned comeback tour into the movie This Is It, the highest-grossing documentary ever.

In fact, in the five years since his death, Michael Jackson Inc. has had some of its best years. The Jackson estate has licensed video games and T-shirts, re-released the autobiography Moonwalk, and launched two successful Cirque du soleil shows. Last year’s Xscape, Jackson’s second album since his death, was launched at the 2014 Billboard Music Awards with a creepy, digitally conjured performance by the King of Pop. And that’s just the beginning: The estate has signed a 10-album deal with Sony for $250 million, guaranteeing a parade of remixed mediocrities from the Jackson vault for years to come. Since his overdose, the Jackson estate has pulled in $700 million dollars—more money than any other musician, dead or alive, has made over that period.

While Greenburg argues this recent success is proof that the singer built his business on a solid foundation, it’s impossible not to take a different lesson from Jackson’s posthumous success. The troubled singer wasn’t the savvy chairman of Michael Jackson Inc.: He was the product. And with Jackson himself out of the way—no longer slowing things down with his embarrassing behaviour, wrong-headed decisions and refusal to release second-tier material from old recording sessions—those in charge of the estate have been able to do the efficient work of wringing cash from his reputation. The artist and the man are dead, but the brand lives on.