In 1980, early in his solo career, singer Michael Jackson asked up-and-coming entertainment lawyer John Branca to renegotiate his songwriting contract with music rights management company BMI. For the young attorney, it was an opportunity to hitch a ride on a rising star. Careful negotiation strategy was needed.
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Discover step-by-step techniques for avoiding common business negotiation pitfalls when you download a copy of the FREE special report, Business Negotiation Strategies: How to Negotiate Better Business Deals, from the Program on Negotiation at Harvard Law School.
Branca said he tried to manage Jackson’s expectations for the deal so that he could exceed them and turn him into a long-term client. At the same time, Branca aimed high in the negotiation with BMI, explains Harvard Business School professor James Sebenius in the first episode of his new weekly podcast, Dealcraft: Insights from Great Negotiators.
“When I did come to [Jackson] with a number, and it was much bigger than he was expecting, or that I let on, we had a happy, happy conversation,” Branca told Sebenius.
Based on this success, Jackson increasingly enlisted Branca to negotiate his deals. And Branca went on to build a stellar career representing artists from Bob Dylan to the Beach Boys to Dr. Dre.
In the Dealcraft episode, Sebenius interviews Branca about memorable business negotiations he engaged in with and for Jackson, and draws insights that all of us can apply to our most important negotiations.
Pressing Pause
Early in their working relationship, Jackson challenged Branca to negotiate ownership of Jackson’s master recordings from Epic Records, a subsidiary of CBS Records. At the time, only a few superstars owned the rights to their own masters. “Michael Jackson was simply not yet in their league,” explains Sebenius.
Moreover, the head of CBS Records, Walter Yetnikoff, was known for being extremely difficult and mercurial. Branca was sure that Yetnikoff would respond with a “profane no” if he tried to negotiate for Jackson to secure his masters, according to Sebenius.
The time wasn’t right, Branca concluded. “Let me work on it,” he told Jackson. “It might take a while.”
In 1982, Jackson partnered with film director Steven Spielberg and music producer Quincy Jones on a limited-edition box set for the movie E.T., which included narration and a new song by Jackson. Without Yetnikoff’s permission, Jackson licensed the recordings to MCA Universal, a rival of CBS Records.
Furious, Yetnikoff called Branca and ordered him to tell Jackson to drop the project. Negotiations went nowhere, and Yetnikoff successfully sued to have the boxed set pulled from stores and Jackson’s song barred from release.
Time to Do a Deal
In November 1982, Jackson released his hit album Thriller, which stayed at the top of the Billboard charts for 37 weeks. With hits such as “Beat It” and “Billie Jean,” it would go on to become the biggest-selling record in history.
Amid Jackson’s success and growing power in the music industry, Yetnikoff came to regret his decision to sue the singer over the E.T. box set and song, according to Branca. “Walter used to call me Branca,” the lawyer recalls. “But [one] day, he called me up, and he said, ‘John . . . I think I screwed up.’”
“I think you did, Walter,” Branca replied.
“Is Michael mad at me?” said Yetnikoff.
“How would you feel?” said Branca. “You embarrassed him. He was trying to build a relationship with Steven Spielberg, and you did this so publicly.”
“Well, how can I make it up to him?” said Yetnikoff.
“You need to give him ownership of his masters.”
“Done,” said Yetnikoff.
“I’m not just talking about Thriller,” Branca clarified. He meant Jackson wanted ownership of all his past and future master recordings.
“Done,” said Yetnikoff.
“So that’s how it happened,” Branca told Sebenius. “Walter screwed up, and we took advantage of it.”
Striking When the Iron Is Hot
The negotiation lesson is clear, according to Sebenius: “Sometimes it doesn’t make sense to try to negotiate something you have in mind right away, but instead wait for the circumstances to become more favorable. And to recognize when the right time comes and to have clarity on what exactly you want. And when the right moment arrives, like Branca, you have to be ambitious in your ask, provided you can justify it.”
In future episodes of Dealcraft, Sebenius will analyze deals by negotiators such as Blackstone CEO Steve Schwarzman, climate negotiator Christiana Figueres, and numerous secretaries of state, gleaning strategic insights for business negotiations, diplomacy, and beyond.
Have there been times when you delayed business negotiations until conditions were more favorable?
Claim your FREE copy: Business Negotiation Strategies: How to Negotiate Better Business Deals
Discover step-by-step techniques for avoiding common business negotiation pitfalls when you download a copy of the FREE special report, Business Negotiation Strategies: How to Negotiate Better Business Deals, from the Program on Negotiation at Harvard Law School.
