Saturday, August 15, 2009

On This One, Joe Was Right

The CBS Records Group seemed to be attractive to Joe Jackson because of the black artists in its Epic label. Their distribution and promotion reputation was also highly regarded as top-notch. Ron Alexenberg, president of Epic, was interested in the Jackson 5 since he worked under Motown's Ewart Abner. He felt that Berry Gordy had not utilized the full potential of what the Jackson 5 had to offer. He and Joe began to negotiate for the Jackson's toward signing on to Epic and Alexenberg went to Walter Yetnikoff, president of CBS Records. Yetnikoff felt that the group was not hot property, but Alexenberg assured him, "Trust me. This group isn't finished. It hasn't even begun yet."
The deal was struck. The group receive a "signing bonus" of $750,000, plus an additional $500,000 "recording fund," used to produced the group's albums. They were to be paid $350,000 per album. The advance money from CBS was to be paid from royalties, but the royalty rate was 27 percent of the wholesale price for records in the United States. At Motown, they were paid only 2.7 percent, and the group's expenses and studio time was deducted from that, leaving them with almost nothing. To show what a significant deal this was, in 1975, an album retailed for $6.98 , $3.50 wholesale. The Jacksons at Epic would make 94.5 cents per album sold in the United States. At Motown, the group made 11 cents worldwide! Do the math! After each of the group's albums sold over $500,000, the royalty rate increased to 30 percent, or $1.05 a record.
Of course, there was a catch. Yetnikoff would not allow the brothers to write, produce, or choose their material. After much debate, the agreement was that the brothers could choose three songs per album, and an unwritten clause that if the group submitted three good songs, they could be up for consideration.
Michael was amazed that the group was worth so much, that this is the kind of contract that other well known acts were used to. He admired his father's courage and strength to come up with what was best for their careers and future. "I have to admit it. This is one incredible record deal. My father has done an amazing job for us."

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