How Paul McCartney and John Lennon Lost Ownership Of The Beatles Catalogue

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The year was 1982. Michael Jackson flew to England to record the track “Say Say” Say, Say” together with former Beatle Paul McCartney at the famed Abbey Road studio. It was the second partnership between Paul and Michael The first was 1981’s “The Girl Is Mine,”” that was included on Jackson’s hit album “Thriller”. When they were working on “Say Say, Say”Say, Say” Paul invited Michael to stay with him as well as his wife, Linda at their home in the suburbs of London. The night was a bit gloomy, and after they had eaten dinner together, Paul took out a large leather book and set it on the table in the dining room. This particular book included every single song and publishing rights Paul has acquired over the last 10 years. Paul was obvious to Michael that having publishing rights is the sole way for him to earn REALLY significant income in the industry of music. Paul also boasted that during the year, he made around $40,000 from his catalog of music:

“Every time someone creates one of these songs I earn a fee. Each time you hear these songs played on the radio or performs live I’m money. “

Paul added that none of this income resulted directly from Beatles songs, since as amazing as it is it was not his property to own them. This free advice would hurt Paul in the groin two years after and when Michael bought the complete Beatles catalog at $47.5 million. Paul felt a bit backstabbed, in the back, and his connection with Michael was permanently damaged. How did Paul McCartney and John Lennon become the sole owners of the Beatles catalog, to begin with?!!

Paul as well as Michael (AFP/Getty Photos)

Young Lennon & McCartney Make a terribly poor business decision

The month of February 1963 was one year prior to the time that The Beatles appeared on Ed Sullivan and Beatlemania was a global phenomenon the director Brian Epstein suggested that John Lennon and Paul McCartney should form a firm to safeguard their rights to publish. Since at the time, The Beatles were still a mystery, Epstein encouraged Lennon and McCartney to collaborate with a reputable publisher that could help them get their music in front of radio station owners and well-known television hosts in England. Epstein, Lennon and McCartney soon signed with veteran editor Dick James, who quickly got The Beatles an appearance on the British popular television show “Thank for Your Lucky Stars.” On February 23, 1963 Dick James assisted the 23-year-old Lennon and young 21 year-old McCartney by forming a new company named Northern Songs. Northern Songs would be 50 percent controlled by Dick James and his partner Charles Silver, 10% owned by Brian Epstein, 20% owned by Lennon and the remaining 20 percent controlled by McCartney. Later, McCartney would explain that they were simply too young and inexperienced to have realized that this was a bad deal. They didn’t even have the contract. It’s amazing, McCartney also admitted that neither John or John never actually had a chance to meet Charles Silver.

Northern Songs now owned the copyright to 56 Beatles compositions, and demanded the Lennon and McCartney create at least six new tracks each year up to 1973. One month later on March 22, 1963, the Beatles debut album Please Please Me debut in England. Two months after, the album hit top spot on UK charts of music and stayed there throughout the duration of 30 weeks (when it was substituted by their second album With The Beatles). Beatlemania quickly spread around the world , and the four band members all became millionaires. As The Beatles were rich and richer, so became Brian Epstein, Dick James and Charles Silver.

It was in 1965 that Dick James and Charles Silver discovered that Northern Songs could avoid a very huge capital gains tax when it became a public company. In 1965, when Northern Songs was listed on the London Stock Exchange, Lennon and McCartney were left with 15 percent of the company which was valued at 320,000 ($2.3 million in current dollars). James and Silver still controlled 37.5 percent of the company , worth $800,000. ($6 million in the present).).

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In the summer of 1967, shortly after Brian Epstein died of a drug overdose, Lennon and McCartney tried unsuccessfully to wrest the control of their music to Dick James and Charles Silver. James as well as Silver were so irritated with the failed coup that they decided to sell their whole stake to a company known as ATV Music Publishing for $2.5 million ($17 million in current dollars). They didn’t take the time to inform Lennon and McCartney. In reality, John found out about the deal through an article in the local newspaper while on honeymoon in the company of Yoko Ono. ATV was now the major owner of 88 iconic Beatles songs that were recorded by more than 3,000 artists until the time of this sale.

Paul as well as John still could earn 25 cents per dollar that ATV made from their music, but this was nothing in comparison to what they likely earned. To make up for it, ATV offered to buy the rights remaining for $14.755 millions ($100 million today in dollars) However, Lennon and McCartney declined. They also failed to convince an investor group to buy ATV in a hostile acquisition. In addition, Lennon as well as McCartney were required to write brand new tracks for ATV up to 1973. In 1969, the Beatles were willing to transfer their remaining rights to ATV for $5.738 million ($36 million in today’s dollars) with the condition that they were removed from their contract right away.

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The ownership of The Beatles catalog would not change between 1969 and 1981 at which point ATV was transferred by the Australian business tycoon called Robert Holmes a Court. In the lead up to this sale McCartney had the option to buy The catalogue of ATV in the amount of $40,000. The singer reached out to Yoko Ono to ask what she thought about sharing the cost, however she insisted that the catalogue was not valued at more than 20 million dollars and they ultimately declined. It’s fair to say that at the time, McCartney was valued at hundreds of billions of dollars and could have purchased the catalogue for himself however he was concerned that purchasing the catalogue by himself would appear uncaring and disrespectful to the legacy of John Lennon.

Michael Jackson Makes A Move

Robert Holmes a Court was not interested in purchasing ATV music in the long run. He immediately fired nearly all ATV employee and declared that the music part of the company was to auction. The year 1984 was the time McCartney received the option of making the first offer on the catalog however, by this time, McCartney had made it clear that there was no interest due to the fact that he believed the catalogue was “too expensive. ” At the same time Michael Jackson’s legal counsel, John Branca, got information that ATV was up for auction. Since the moment he had his fatal meal in the company of McCartney two years ago, Jackson had been on an acquisition spree for publishing rights. When he learned that ATV Music was for sale, Michael instructed John Branca to make whatever it took to purchase The Beatles catalogue…

For more information on the story of how Michael Jackson bought The Beatles catalogue and transformed it into a billion-dollar music empire, follow the link below for the second part of this story!