Saturday, September 27, 2014

Don't Make the Beatles' Merchandising Deal

When I was a young boy during the 1960s, I worshipped The Beatles - John, Paul, George, and Ringo. Under the business guidance of their manager, Brian Epstein, the Beatles became the most popular band in the world. They inspired a great deal of what we think of today as "the Sixties." Even at the age of 72, Sir Paul McCartney still fills stadiums. The Beatles all became rich beyond their wildest dreams. I hope that all of our work becomes so widely accepted and influential. But while Brian Epstein's guidance helped make the Beatles household names and fabulously wealthy, Epstein also lost millions because he made some agreements without researching the industry. One of the worst deals they made was with a British businessman named Nicky Byrne. According to Bob Spitz' biography, The Beatles, Byrne approached Epstein's lawyer, David Jacobs, in 1963. Byrne convinced Jacobs that he could make the Beatles a great deal of money if they gave him their merchandising rights in the United States. Byrne had run a variety of entertainment businesses in the U.K., and convinced Jacobs that he would be the best man for the job. Jacobs asked Byrne what he planned to pay the Beatles, and Byrne said, "Ten percent." Jacobs wrote that amount in the contract that Epstein signed, giving Nicky Byrne 90% of the profits of Beatles merchandise sales outside the U.K. The story goes that when Brian and the boys landed in America in 1964 Byrne met Brian at his suite in the Plaza Hotel and handed Epstein a check for $200,000. Brian asked what it was for. Byrne calmly replied, "that's your ten percent." Epstein finally realized that merchandising was worth millions of dollars and that he had given it away to a stranger. They immediately started renegotiating with Byrne, and eventually sued him to recover the rights. However, even after the suits were settled, millions of dollars were lost. That's an important lesson for all content creators: Don't make that deal. Don't give up 90% of your merchandising rights to someone you don't know. You may be laughing right now and saying, "of course I wouldn't do that." But the ranks of creators are full of artists who did exactly that, or worse, gave up all control over their work. Take the time to research the industry standard so you know a good deal when you see one. If you don't have the time or the inclination to do this, at least find an agent and/or manager who does know the business. Have them explain it to you, and represent you in negotiations. Finally, don't sign any contract you don't understand. Either figure it out yourself or hire someone who knows that particular area of the business.