When Universal Music Group announced in February that it had completed a recorded-music deal with Prince’s estate, one sentence stuck out. Not only would the company license the majority of the artist’s recordings since 1996, but also, “beginning [in 2018], UMG will obtain U.S. rights to certain renowned Prince albums released from 1979 to 1995” — the years that the artist was signed with Warner Bros. Records and released his most commercially successful recordings by far, including the “1999,” “Purple Rain,” “Parade,” “Batman,” and “Diamonds and Pearls” albums.
That sentence sent reporters digging through their notes, pulling out their calculators and hounding reps for both record companies. Prince had cut a new deal with Warner in 2014 that sources say garnered him the rights to the majority of his work released on the label (albeit with certain key exceptions). So how was UMG’s claim possible?
Ten weeks later, it turns out the deal may not be all it was cracked up to be. Sources say that representatives for the estate — including the estate’s initial, temporary administrator, Bremer Bank; Comerica Bank, its current administrator; and special advisers Charles Koppelman and L. Londell McMillan, the latter of whom led the recorded-music deal — may have misrepresented the terms of the Warner assets, and Universal may attempt to nullify the deal and seek a full refund of approximately $30 million. (The news was first reported by the Wall Street Journal.)
If that happens, the estate and Comerica — which this week named a new special adviser, Spotify executive and former Lady Gaga manager Troy Carter — will be forced to put the recorded-music assets back up for auction. (A source tells Variety it is possible that Universal could simply revise the existing deal for a lower price, but such an outcome is unlikely.)
Looming over the situation is the reality that Prince’s biggest hits are 25 to 35 years old and in many ways are rapidly losing value. “Every day these assets aren’t being exploited, that’s lost money that you’ll never get back,” one source says. “And the longer they’re tied up, the more you lose.”
Prince’s fierce efforts to gain control over his music further complicate the situation: As part of those efforts, he allowed many of his recordings to become unavailable — many of his albums are out of print, his music was unavailable on YouTube for years before his death, and in July 2015 he removed it from all streaming services except Tidal (it has since become more widely available). While those tactics may have tightened his financial control over his music, they also removed much of it from mainstream culture; millions of people are much less aware of his music than they might be, had it been more widely available.
Indeed, Koppelman alluded to an expiration date for the assets in a January interview. “Deals have a gestation period,” he said. “If you’re talking about Broadway or movies, even if you did the deal today, [the product won’t be ready for the marketplace until] two years down the road. How relevant will it be then? I’m not sure. The public grows up every day and the attention span doesn’t last forever.”
Given that scenario, a source tells Variety that all parties are seeking to resolve the matter as quickly as possible, and hope to avoid court proceedings that would tie up the assets for months or years. (Koppelman, McMillan, Carter, and reps for Universal, Warner and Comerica either declined comment or had not responded to Variety’s requests for comment at press time.)
One might well ask how such a situation could have happened, with two banks, two experienced music-industry advisers, two major record labels, a judge and multiple attorneys involved — even given the chaos surrounding Prince’s estate. The artist died suddenly of an accidental overdose on April 21, apparently leaving behind no will and his business affairs in disarray.
The problem, sources say, may lie in the complexity of Prince’s 2014 deal with Warner. That deal, negotiated by Warner Bros. Records chairman/CEO Cameron Strang, was struck as the rights to albums from Prince’s Warner catalog were becoming eligible to revert to him. (A 1976 revision to U.S. copyright law allows creators of intellectual property to reclaim ownership 35 years after a work is first released or published; the first of Prince’s 18 albums for the label was released in 1978.) The 2014 deal, for which Prince was represented by attorney and CNN commentator Van Jones, had different terms for certain albums: Warner retained the rights to soundtrack albums to Warner Bros. films — including Prince’s biggest-selling albums, “Purple Rain,” “Parade,” and “Batman “– in perpetuity. But the other albums were subject to varying terms, territories (Warner retains non-U.S. rights to most recordings in perpetuity), formats (digital vs. physical), and term lengths.
One source tells Variety that the complex terms of the 2014 deal would be easy to misrepresent or misunderstand if read quickly or cursorily.
Koppelman and McMillan signed on as special music-industry advisers in June and, with a January 2017 due date for the first installment of a $100 million estate-tax bill, quickly set to work securing the late artist’s music assets. In addition to updating the 2014 Warner pact (clearing the way for the November release of the Prince 4Ever compilation and a forthcoming deluxe edition of “Purple Rain,” both with unreleased tracks) and the Universal recorded-music deal, those include a publishing pact with Universal, performing rights with Irving Azoff’s Global Music Rights, and merchandising with Universal’s Bravado. Those deals also cleared the way for much of Prince’s music to be made widely available on major streaming services; from July 2015 until February of this year, Prince’s music was limited to the Tidal streaming service, via a deal made by the artist that is currently being contested by the estate.
Koppelman and McMillan’s arrangement as advisors to the estate, which sources say netted them a 10 percent commission on each deal, ended when Bremer voluntarily stepped down as administrator. However, McMillan remains deeply involved, as he represents four of Prince’s six likely heirs (although his representation of one of them, Alfred Jackson, is disputed by another attorney); Van Jones represents two.
While the Universal deal gave the company rights to most of Prince’s non-Warner material as well as the hundreds of unreleased recordings in his much-vaunted “vault,” sources say the company was far more interested in the proven hits from the ‘80s.
This latest development suggests that the legal battles around Prince’s estate will become even more tangled and complex in the months and years to come.
This article can be found on VARIETY.COM