Idei and his technology team had their heads in the sand. The sad truth is that if Norio Ohga had been well, functioning, and on top of his game the way he was when I first joined the company, I’m sure that he would have been motivated to join forces to create the Internet successors to the transistor radio, the cassette tape, the Walkman, and the CD. Ohga got it, and was always focused on the big picture, and he would’ve grasped that the Internet was all about sharing. But now he was semiretired and had relinquished nearly all of his power.
Sony ultimately created an online store in conjunction with Universal that was called Pressplay. It was criticized for not having enough content—of course, nobody had the full store the way Napster illegally did—and crazier still, even with only two companies involved in the venture we had to deal with a formal inquiry from the Department of Justice about whether this combination was creating antitrust issues. We were still making great profits, but slowly there was slippage. I knew, and we all knew, the music industry needed to be completely rethought and reconfigured. So I began to formulate a new model based on what I had seen while working with Jennifer Lopez and Celine Dion.
When Al Smith first told me about music being downloaded on the Internet, I had pointed out to him the huge numbers that Celine’s albums were selling after the movie Titanic.
“You may sell 60 million this year,” Al said. “But next time it’ll be 40 million. The time after that it will be 20. Then 5…”
Al was right. We all assumed that the fan wanted the quality recording. It didn’t matter if you had these lesser-quality bootlegs out there, because a serious fan would want the better quality recording.
Even when Napster hit and Internet piracy started, those of us from a different generation were thinking, Oh, well that’s okay. It’s not really going to impact sales because kids are going to want to hold the CD booklet. They’re going to want the better version of the recording. We thought that they were going to want what we wanted when we were kids. Well, guess what? It turned out they didn’t care.
These kids were happy to listen to a crappy MP3 version for free rather than buying it. Once downloading started, it became a part of the culture. It was the start of generations growing up to believe that music should be free, and not believing in the value of intellectual property. It was really a whole cultural revolution, because it was not only the ease with which you could obtain the music and share it with your friends, but also the belief that you shouldn’t have to pay for it.
Even though the sales numbers were shrinking because of free downloads, that didn’t mean there was any less love or demand for Celine’s music. This became quite apparent when we teamed up with her husband and manager, René Angélil, to create a breakthrough for Celine in Las Vegas. Celine was going to appear for a five-year run at Caesars Palace, at a theater the hotel was renovating just for her. We helped arrange new alliances with Chrysler, and I got the company to commit to being a $10 million sponsorship partner. I also worked along with René to bring in funding from billionaire entrepreneur Phil Anschutz. René worked tirelessly to get the deal done, and it was a tremendous success.
Even though the geniuses behind Cirque du Soleil helped create the theatrical spectacle, there were people in the industry who questioned how all this would turn out. Flash-forward: Celine sold out every single night for five consecutive years.
The retail store placed directly next door to the theater to sell Celine’s memorabilia and merchandise turned out record numbers. It became a huge windfall for Caesars, a magnet and a destination, drawing guests into the casino, and it was a win-win for all of us, and mostly for Celine and René, who shared in the revenue of the whole entity.
Watching what was happening all around us, I began to have many discussions with my senior execs about turning Sony Music into a total entertainment company. The idea was to sign artists and develop them and their intellectual property, and then form a management team inside our own company. This way our company could form alliances with venues all over the world (exactly like the one hosting Celine in Las Vegas), manage and book the talent, sell the tickets, and manufacture and sell the merchandise. We could also have extended agreements with those artists to own and share in all of their ancillary revenues, as we were the ones funding and financing their development and success, anyway.
Let me give you an example of what I’m talking about. We signed Jennifer Lopez and spent millions of dollars on marketing and developing her. She sold millions of albums and evolved. After her success had peaked in record sales and was on the decline, J.Lo became a billion-dollar brand. Fragrances. Clothing. Cosmetics. Hair care. You name it. This new concept would mean we’d have a share in all of this, and our newly forged alliances with all the venues would turn us into what Live Nation is now, only we would have had it even better, because every artist that the company developed would be an investment and annuity in the company’s future.
Managing music and musicians like this would have been a radical concept—but one so familiar to me. Don’t forget my roots coming up in the business were tied to exactly what I’m talking about here. It would not have compromised our day-to-day core business whatsoever. It would have been meant to be an adjunct, a parallel business to enhance what we were already doing, and we had plenty of experience going down this road. For instance, one of the first acquisitions we made when I arrived at Sony was a deal with Pace Entertainment to buy amphitheaters. That was our entry into owning venues, and a very successful one. Then we acquired Signatures, and expanded it into a merchandising company that sold products at concerts and retail outlets. This was prospering, as well. The idea of corporate sponsorship was so familiar to me from my past that it was a natural. And we knew that we easily could have attracted outside investors, so this could all be done off the balance sheet with no capital investment to hit our bottom line.
If only I could’ve looked into Norio Ohga’s eyes and explained the concept to him, surely we would’ve gotten the nod. But I was now proposing this idea to Sir Howard and his Tokyo boss, BusinessWeek’s worst manager of the year. Enough said.
Meanwhile, back at the ranch, Michael Jackson was preparing his first major album in six years since Dangerous. Michael would generally write and look at 120 songs before he edited them and selected the songs that would end up on his new album. But recording costs on Invincible were beginning to spiral out of control.
One weekend while Thalia and I were in Miami, Michael asked me to come to see him. He was doing some recording at the Hit Factory in Miami. This studio had five or six recording rooms, and Michael had booked every single one of them around the clock.
Thalia and I arrived at the studio and went inside to find Michael. But the studio was empty. Nobody. No producers. No engineers. Nothing. It was like a scene out of The Shining. Normally, there are people working in every one of those rooms that were costing around five thousand dollars per day. One of the studio managers came walking down the hall. “Where’s Michael?” I asked him. He pointed back to the parking lot, and out in the lot I saw a remote recording truck, which is an actual studio built inside the truck. So Thalia and I walked out to the parking lot and knocked on the door. Michael was sitting very quietly, all alone, inside.
I couldn’t believe that he was sitting in a remote truck outside an empty recording studio that we were paying for, while there must have been six more studios inside that he had booked and that we were paying for simultaneously. As Thalia and I stepped through the darkness, there was a blue light, just enough to see Michael.
“Hi, Michael,” I said. “How come you’re not in the studio?”
“I like it here,” Michael said. “It’s quiet. It’s peaceful. It’s private, and I can think.”
The only thing going on in my mind right then was that we had already exceeded costs of $30 million on this album and I hadn’t even heard one single recording yet.
Michael turned to me. “This is going to be a great album,” he said. “W
e’re going to sell more than a hundred million. This is gonna be the biggest album of all time.”
I know that was how he justified all of this in his own mind. To him, it didn’t matter how much he spent—or borrowed—to create his art. He thought he would make it back as soon as the album was released and became a megahit. And all of his handlers—and I mean all of them, every single one, allowed this to happen. No one said no. Ever. You only said yes to Michael Jackson or else you were history.
Michael was so welcoming that day, and he treated Thalia and me as special guests. Thalia told him a story about when she was a young teenage girl, back in the days when she was Mexico’s next rising star, how she had gotten up onstage at one of his concerts and danced with him. Michael remembered. For some reason, the image of Thalia as a young girl opened the door to Michael telling her a story about his childhood, and how hard it was for him, and what he had to endure at the hands of his father through the daily rehearsals. I’m not going to go into any of the details that he told us, but they would make any parent or child shiver. My point is, you would never mention details like those to anyone you saw as an enemy or the devil. It was so sad to hear arguably the biggest star in entertainment sitting in the back of a dimly lit recording truck telling these stories. Thalia and I almost had tears in our eyes. You wanted to just put your arms around Michael and hug him. There never was any question in my mind, then or now, that all of Michael’s intentions were loving and good, and that he was a kind soul. Which was why we were all in shock when eight months after Invincible was released, the poor sales flipped Michael into becoming another person.
We were advancing Michael tens of millions of dollars to rent all this studio space, pay an army of producers and writers and directors to create his short films. And then on top of that he went to the banks to borrow huge amounts of money, loans that we cosigned at Sony, using half of his ownership of the Sony/ATV catalog as collateral. This put him in a very compromising and vulnerable position. Invincible needed to be hugely successful to wipe those debts off the ledger. Everyone in the company was shocked that he was not advised against making all these business decisions. We are still shocked to this day.
One day, the album was done. And Michael, the ultimate perfectionist, finally handed it over to us. Everyone in the company thought that it was good, but by no means Michael’s best work. After years of recording and close to $40 million in the red, we were not about to ask him to go back and cut some new tracks. For all we knew, that might take another two or three years.
We were all hoping that the work was good enough to get the legions of Michael Jackson fans to rush out and buy it. Simultaneously, we helped arrange with CBS to do a television celebration of his career at Madison Square Garden. We were hoping that it would tie in as a huge promotional vehicle for Invincible. The concept was to film two special-event concerts. We all looked at this as a very encouraging sign. We had hoped that it would propel a concert tour that would help shore up more album sales after Invincible was released.
It was called the thirtieth-anniversary special because various artists came to celebrate Michael’s three decades in show business. Usher, Gloria Estefan, Ray Charles, and Whitney Houston were among the artists on hand to perform Michael’s music over the years. Michael’s family was there to sing with him and reenact the success of the Jackson 5. Marlon Brando and Elizabeth Taylor showed up to make speeches. Ticket prices were among the highest ever for a concert. The best seats went for $2,500 and included dinner with Michael. Within five hours of being placed on sale, the entire Garden had been sold out for both dates. I can’t say for sure, but it has been reported that Michael made more than $7 million for those two performances. Seems like the right number to me. It would have been a complete success and a beautiful stepping-stone toward the release of his new album if not for one thing. The date of the second of these two concerts was September 10, 2001.
Obviously, nobody was talking about Michael Jackson on the following day.
Right after the first night of Michael’s Madison Square Garden concert, Thalia and I had left for L.A. She was to perform in the Latin Grammys. We were at the Beverly Hills Hotel when the phone rang just before 6 a.m. local time on September 11. I had a bad feeling when I heard the phone ringing that early. I was told to turn on the television because an airplane had hit one of the World Trade Center towers.
I dialed my office while I was fumbling with the television remote control. My office in Manhattan was on the thirty-second floor and had a perfect view of the towers. My two assistants were talking to me, trying to describe what was going on over the phone, when I could hear them scream, “Oh, my God! Oh, my God!” Then I looked at my television screen and saw the second plane hit the other tower. And that’s when we all knew that something terribly, terribly wrong was happening.
My first thought was my children: Michael and Sarah. I knew that Sarah was going downtown that morning to the DMV. I began to feverishly make calls to them, but I couldn’t reach them. I kept trying as reports came in of the plane crashing into the Pentagon and another crashing in a field in Pennsylvania. The full impact of this was beginning to set in. We were under attack. We were all in total shock and scared to death, not knowing what was next. And then, no telephone service to New York at all.
All the airports had shut down. Marc Anthony, who was staying at the same hotel with us, had a tour bus. We all packed and were moments from jumping on it to get back home, if that was our only way. Finally, when we were able to get some telephone service, I found out that both of my children were safe and uptown. Not knowing what was to come, I tried to get them out of Manhattan as soon as possible.
As soon as the flight ban was lifted, we were able to secure an airplane that enabled all of us who had come to L.A. from Sony to rush back to New York. I just wanted to go home and hug my kids.
On the plane, I had flashbacks of stories being told to me by my friend John O’Neill, who had so generously helped make the introductions for me at Saint Patrick’s Cathedral. John had been a special agent for the FBI in New York in charge of counterterrorism. When we’d all be out sitting in a restaurant, after a couple of drinks, he’d go off on a tangent, and go on about a guy named Osama bin Laden—who, quite frankly, none of us had ever heard of. We’d all turn to him and say, “John, calm down, this is the United States of America. Nothing is going to happen to us.”
But he would rant and continue on about how dangerous this guy really was. And the saddest and sickest thing was that when he left the FBI, he had become the director of security for the World Trade Center. He was so happy and proud when he got that position.
I never was able to reach John on 9/11. The next year, while I was watching a documentary on PBS, I saw him, running around the burning lobby with bodies falling all around him. The sad irony is that The Man Who Knew died at the hands of the man he tried to warn everybody about.
Thinking about it now makes me feel nauseous. None of us on that airplane knew what to expect as we flew in, but as we were circling Manhattan we got a bird’s-eye view of what had happened. There was dead silence on that airplane until we landed and long afterward.
We all knew that everything in life would be different going forward.
Walking into my office the next day, I was full of emotions. My assistant’s first instinct after having witnessed this tragedy was to get up and hug me. We all hugged each other, and we all thanked God that we were safe.
Nobody who lived in New York felt comfortable. There is an uneasiness to this day that something could happen. And we were a target during that period of anthrax threats to the entertainment companies. But through any and all tragedies life always seems to go forward and that’s what we did, putting on a concert at Madison Square Garden to provide relief for the families of the victims.
Business everywhere was affected by the tragedy, and we were certainly not immune as we all went back to our day-to-day jobs. In fact, it took months for any of us
to begin to feel like we were in full operation again. It was a trying time, having to restrategize, deal with lots of emotions and sensitive feelings surrounding so many people who’d been affected.
A month later, we released Michael Jackson’s Invincible album, and the good news is that it immediately shot straight to Number One.
But it opened to mixed reviews along with lots of publicity and speculation about Michael’s personal life as opposed to focusing on the music. Within a month, it was out of the Top 10.
Invincible sold only eight million copies worldwide. We were all disappointed. Michael’s perception was that it was not acceptable and that we had failed him. It was certainly nowhere near the sales that we needed to recoup more than $40 million in expenses. Michael began to call Dave Glew in the middle of the night and ask us to hire independent promoters, to try to manipulate chart numbers, and to do anything to get the album back up to Number One.
Glew and I had constant conversations with Michael and his entire management and legal entourage, explaining how all the controversy surrounding his career certainly had not helped. Although the music on Invincible was really good, there was something missing.
When you are used to hearing “Yes, Michael, yes, Michael, yes, Michael, yes,” from everybody who is around you, it must be unbearable to hear, “No, Michael, we cannot and will not put millions more into the promotion of this album.” Sales had completely stalled, and that was after we had already spent a global marketing budget of more than $25 million.
Artists always react when the success they expect is not achieved. The first thing Michael did was tell his lawyers that he would not sign a new contract with us—and that his intention was to fulfill the remaining obligations on the existing deal and then become a free agent. Then something snapped in his mind and he decided to lash out at me publicly.
I was on a weeklong vacation that summer with Thalia when I heard her yell to me to come quickly. She was on the other side of the room, watching the news.
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