A year after George Michael’s death, how singer’s expensive legal battle with Sony changed the music industry

“Last Christmas” is a holiday playlist season staple. But for George Michael, the song’s composer and performer and one of the most renowned British singer-songwriters of the modern era who died on Christmas Day last year, his holiday season 25 years ago was likely especially fraught.

The pop star had filed suit to sue his record label Sony Music Entertainment, owned by the Sony Corporation SNE, +0.07%   in October 1992 in the London High Court, claiming restraint of trade and inequality of earnings and bargaining power.

Ever since he rose to fame with the duo Wham!, Michael’s music had been distributed by CBS. But after CBS got taken over by Sony in 1987, Michael felt he was being exploited by his label and, even though he had renegotiated his deal in 1990, felt increasingly despondent with his eight-album contract.

Michael had enjoyed stellar success with 1987 album “Faith” but Sony took exception to the singer refusing to promote the follow-up record 1990’s “Listen Without Prejudice” and refusing to appear in promo music videos.

In turn Michael strongly objected to the terms of his contract by which Sony possessed ultimate power of approval, being able to reject any material it did not like and prevent him from recording for any other label. The star, who did not come out as gay until his arrest for a ‘lewd act’ in a Los Angeles lavatory in 1998, was further upset by Sony executives reportedly using homophobic slurs against him.

George Michael’s QC claimed in court that between 1987-1992, he had made worldwide profits of £7.35 million ($9.8 million) compared to Sony making £52.45 million ($70 million). According to Paul Russell, then Sony Music Europe President, on the first day the case reached court in October 1993, Michael said to him, “‘Well, one of us is going to have a happy Christmas’, because he thought it would be over by then.”

In fact the case lasted until June 1994 when Lord Justice Parker ruled the Sony deal was reasonable and fair. The case reputedly cost Michael £4 million ($5.4 million.) The singer drew ridicule in the aftermath of his legal loss by saying the verdict amounted to “professional slavery.”

Michael subsequently resumed his recording career in 1996 after signing a record deal with Dreamworks and Virgin with Sony reputedly getting a 5% override. Even though George Michael ended up re-signing with Sony in 2003, the case continued to dwell on his mind.

He told a BBC radio documentary “The Red Line” recorded shortly before his death and which was not made online due to rights restrictions, “I can honestly say I would do it again.”

“The people in the industry thought, ‘Of course he’s going to win.’ The contracts of the 1980s had been got rid of in the film industry in the 1950s so why were they still there in the 1980s? It’s the only industry on earth that has no free agency.”

Michael added: “Any logical CEO would have thought, ‘OK he’s going to do this, he’ll get it out of his system’….I would have given someone who had given them “Faith” a little respect and a little time to sort out my life. It would only have been a couple of years.”

Yet Suzanne Kessler, Entertainment attorney at Bone McAllester Norton and former in-house attorney at A&M Records and Universal Music Group, said while George Michael was on shaky legal ground, he still deserves sympathy.

“There are two sides to this tale,” she said. “The music business is a relationship business and he was uneasy with what was happening. A label often wants an artist to continue to trade on their established brand with the public. But after “Faith” Michael was trying for a new direction, to be taken more seriously as an artist instead of just as a pop star sex symbol.”

“From his point of view, it was a tough pill to swallow that the label was making more money off of him than he was making. The parallel today is with subscription streaming services and other digital music where the artist is still not making what they would consider a fair return.”

Deborah Wagnon, an associate professor at Middle Tennessee State University specializing in music industry legal issues, actually interned in London at Russells, George Michael’s entertainment law firm, in the mid-1990s.

She said the case should never have gone to court. “It was horrifically unnecessary what happened- George Michael did not have the law on his side,” she said. “Perhaps he had justice and an ethics argument on his side but the time to raise his objections would have been upfront before he entered into an agreement with full representation.”

She compared Michael’s case to singer Kesha’s ongoing attempt to break her contract with former producer Dr. Luke, on the basis of allegations that Dr. Luke had sexually assaulted and verbally abused her. “As upsetting as it was, because it felt unfair, it [Michael’s record deal] wasn’t illegal,” Wagnon said. “It’s a similar situation to Kesha, in that the wrong done to her was arguably, according to Kesha, of a criminal nature, but it was not in breach of the contract she signed.”

In his verdict on the Sony case, Lord Justice Parker was scathing about Michael’s manager Rob Kahane calling him “a thoroughly unreliable and untrustworthy witness.” Michael fired Kahane shortly after the legal defeat.

“The manner in which he pursued the case was very confrontational and going after Sony on restraint of trade was a very UK argument,” said Wagnon. “He was praying for a heightened level of thinking even though there had not been a legal breach. Unless Solomon is your judge you can’t count on that!”

She added: “George Michael changed the industry over time simply by virtue of people like me teaching artists to never have a George Michael scenario happen to them.”

Michael’s case impacted on other pop superstars. Prince, who also had legal battles, paid pbulic tribute to the star at the 1994 MTV Music Awards, saying “Peace to George Michael.” Mariah Carey, then a Sony artist married to the label head Tommy Mottola, told the Guardian earlier this year about Michael, “We went for a three-hour dinner, and we had a lot in common: we both had these big issues with Sony…we had quite the conversation about it.”

“The case had a huge impact on me at the time because I realized that artists have a responsibility to themselves to be fully informed and representatives of artists have a duty to make absolutely certain they know and understand what they are signing,” said Wagnon.

“George Michael was a human laboratory for the power of the right of approval with respect to creative decisions and his contract that allowed anything he turned into Sony having to be in their view commercially satisfactory. Legally speaking Sony held all the cards.”

“The problem for George Michael was that however unappealing certain aspects of his contract with Sony might have been, this was an agreement he entered into freely after receiving legal and business advice,” Daniel Cohen, a former British music industry lawyer who now works in the tech biz said. “He wasn’t some no-nothing kid that a rapacious record company chose to exploit and artists are expected to honor the agreements they make unless it can be proved they’ve been unfairly tricked.”

Kessler said that artists “still see a long-term exclusive recording contract as the dream”, citing Blake Shelton’s recent decision to re-up with Warner Bros. But she said Michael’s case likely deterred more pop stars from taking legal action against their record companies: “It made it less attractive for artists with multi-album exclusive deals to sue their labels. The impact on record labels was probably a collective sigh of relief that they could still recoup from their heavy investment in the artist’s career.”

Although Michael sold over 100 million albums in the course of his career, he only recorded two albums of new material in two decades after the court case. “He kept a brave face and made the best of it but it ruined his career,” said Wagnon.

Michael remained conflicted about Sony until the end. His friend and musical collaborator David Austin told GQ Magazine that three months before George Michael died, “he turned around to me and he said how he wished he’d never taken Sony on in the first place.”

“Because it dented the armor for his career in America. He was a guy that was firing on all four cylinders, and it just blew that candle out. But the stress and the strain must have been so hard at the time that he couldn’t have done anything else. So yes, he regretted it, but he probably wouldn’t have changed it.”

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