26
Mar
10

Business model “Michael Jackson”

The death of Michael Jackson on June 25, 2009 triggered a sales boom for his music. The American industry magazine Billboard published Soundscan sales figures for his albums the week after the “King of Pop’s” death, showing three of his albums occupying the top positions in the U.S.-album-charts and five more of his albums entering the Billboard-Top-50-list. Jackson’s music also ruled the weekly iTunes and Amazon download-charts after his death.

However, these figures do not reflect the popularity of the artist in recent years. While the Recording Industry Association of America (RIAA) awarded the 28th Platinum record for the album “Thriller” in March 2009, this was one of the few awards for Jackson in the world’s most important music market in years. The last time Jackson was awarded a platinum record (more than 1 million units) in the U.S. was for “Number Ones” in 2005. Jackson’s records did not sell as well at the beginning of the 21st Century as they did in the 1980s and early 1990s, when he had reached the peak of his popularity.

Especially for the decade from 1979 to 1989 Michael Jackson deserved the title “King of Pop” also from an economic perspective. Based on RIAA-numbers the exceptional position of the pop icon can be reconstructed at least for the U.S. market. However, these numbers also help to reveal the problems of the superstar strategy that the music-majors pursued in the early 1980s.

Looking at the facts and figures of the sales success of Jackson’s music more closely, we can discern how they reflect the major’s strategy to make more money with fewer acts. This strategy was pursued after the music market collapsed in the late 1970s, and Michael Jackson was among the first of a number of superstars to whom this new recipe for success was applied. It was no accident that CBS-Colmbia, which was one of the majors of the time, invested all its hopes in Michael Jackson. At the time, he was still remembered for being the child star of the “Jackson 5″, and he had just launched his solo career as an adult musician, after the management contract with his dominating father had expired in 1978. The result was the funk and disco-inspired album “Off the Wall”, which sold 1.5 million units by the end of 1979. In 1982 followed “Thriller”, which was awarded 20x platinum in the U.S. by 1984. If we consider that in the years 1982-1984 approximately 1.4 billion long-play formats (LP, MC and CD) were sold in the U.S., “Thriller” alone achieved a market share of at least 1.4% (!). Nothing else, indeed, can demonstrate better the impressive economic role the superstar effect played for the music industry in the 1980s.

Michael Jackson is prototypical. Compared with the stars of the 1960s and 1970s, he produced in two decades – excluding the countless compilations – “only” 7 regular albums, while the Beatles released 13 albums in 7 years – if the parallel releases in the United Kingdom and the United States count only once. Other pop icons of the 1960s such as Elvis Presley, Johnny Cash or Bob Dylan created more music in a decade than Michael Jackson did in his entire career as an adult solo musician. This is no criticism of the creative power of the “King of Pop”, but it highlights the changed production conditions under the superstar business model in the 1980s.

Compared to the stars of previous years, Jackson’s albums sold much better. “Thriller” reached, 28x-platinum in the U.S. to date. This was only topped by the Eagles’ “Hotel California” (currently 29x platinum in the U.S.). “Bad” sold 8 million times, “Off the Wall”, “History” and “Dangerous” each 7 million times, and the two alleged chart-flops, “Invincible” and “Blood On The Dance Floor”, sold at least 2 million times each. And basically there is no Jackson album that did not achieve at least gold status (more than 500,000 units sold) (see Table 1).

Table 1: The award status for Michael Jackson’s albums in the U.S. (1979-2009)

Souce: RIAA (http://www.riaa.com/goldandplatinum.php).

Overall, Michael Jackson has sold approximately 69.5 million albums until now, according to RIAA. Nonetheless, he is “only” 11th the eternal RIAA rankings, which is led by the Beatles with 170 million albums sold (Table 2); but there is certainly no artist who has sold as many sound recordings in such a short time.

Table 2: Top selling album artists in the U.S. (1959-2009)

Source: RIAA (http://www.riaa.com/goldandplatinumdata.php?table=tblTopArt)

And he is in good company with Billy Joel, Elton John, Madonna, Mariah Carey, Whitney Houston and Bruce Springsteen, who have also benefited enormously from the music majors’ strategic change to superstar pop in the early 1980s. Astronomically high, non-refundable advances, huge marketing budgets, including expensive music video productions (just think of “Thriller”), vast tour expenses etc. had driven production and marketing budgets to unprecedented heights.

But these funds were then not available for other purposes, despite the superstars’ sales success. Thus less money was channeled to Artist & Repertoire, and less successful artists were dropped if they did not have sufficient chart success, – just think of Van Morrison, Don McLean , Tracy Chapman etc.

The decision for the superstar strategy was supported by the booming market of the late 1980s and early 1990s. A&R was outsourced by the majors to indies, which, if they were successful, were either bound by exclusive distribution agreements, or simply taken over.

With the digital revolution, which turned an album into a single-track market, the superstar strategy became an economic boomerang. Successful artists such as Prince, David Bowie and George Michael, whose brands were established by the majors’ vast production and marketing funds, set out on their own with the help of online self-marketing. But the majors still continued paying exorbitant advances (see, for example EMI for Robbie Williams and Sony Music Entertainment to the Jackson heirs). However, the slumping market is no longer strong enough for the majors ever to earn this money back. But since the majors had neglected A&R and had deprived themselves from their own creative roots, they were not able to serve the flourishing track-culture on the Internet adequately. Thus, the back catalogues remain the only solid source of income, although filesharing-networks basically offer this repertoire for free.

It sounds cynical, but the death of Michael Jackson is a true blessing for Sony Music Entertainment, and brings again a lot of money into their empty coffers. But this “death effect” will fade away, and then Sony Music will also have to deal with declining sales and turnover figures. Sony Music, however, cannot rely any longer on the business model “Michael Jackson”. This major music company as well as the others will have to look for alternatives if they do not want to become history like the “King of Pop”.

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2 Responses to “Business model “Michael Jackson””


  1. April 6, 2010 at 12:42 pm

    Jackson just died to early, but I guess he has written his great songs allready. I think it is just sad for him personally.


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