When an artist such as George Michael decides the time is right to sign a new record contract, it is the eight lawyers in Sony Music UK’s in-house team who are at the sharp end of the legal and business affairs. More specifically, it is group head Alasdair George.
“I’m a fan,” admits George (Alasdair, not Michael), “but that’s going to sound terribly sychophantic. I made no secret at the time that I was personally delighted to be handling the deal. There are certain people who, probably because they’re stars, you enjoy meeting, and George would fall into that category. I hadn’t actually met him before that deal and we met on the day he signed it, and personally it was a great delight. But I wouldn’t say I was struck dumb and totally in awe.”
It would seem to be a decent perk of the job, meeting stars of the calibre of George Michael during your daily grind, but George the lawyer does not appear to be particularly starstruck. A member of the management team of Sony Music UK, he has been with the company through one of the most turbulent times in the history of the music business.
This March, EMI laid off 1,500 staff, while in the same month, Warner Music Group announced it was shedding one-fifth of its 5,000-strong workforce. The move came the day after its takeover by Canadian tycoon Edgar Bronfman closed. None of the major record labels (the others being Universal and BMG, which are in merger talks) have escaped.
It is enough to bring the most starry-eyed lawyer back down to earth.
But George’s calm and measured nature, plus a sense of humour that is fairly obvious from the life-sized cardboard cutout of Lieutenant Commander Worf from Star Trek: The Next Generation in his office, suggests he is more than capable of handling the industry’s legendary rough and tumble.
“The woes of the record industry internationally are well documented,” says George. “Every company will have to do something, and that means cutting its cloth to meet the circumstances. The reports I’ve read about what Bronfman hopes to save in annual overheads – around $250m [£137.7m] to $300m [£165.2m] a year – translates to something of the order of 25 per cent headcount. But Bronfman has paid $2.6bn [£1.6bn] and has got to make it pay back. EMI went through a significant cost-cutting exercise, as did we. I have to believe that Universal and the others will be doing, or will have done the same, although some companies do it by stealth more than others – are less public, let’s say.”
For its part, Sony Music UK has had redundancies over the past few years, but George says it has had no US-style Black Friday.
“Wherever possible it was natural wastage, although not entirely,” he admits. “Eighteen months ago we reorganised our labels and where we previously had Epic, Columbia and S2 as the prime labels, we recut it so we created a UK repertoire division and the international repertoire division [where previously they were mixed]. That was done so that particularly the marketing people who were working on UK artists didn’t get, as one might call it, distracted by the demands of Sony Music in New York or Canada or wherever. And in that process a number of people went.”
The company in the UK is now 265 strong. Four years ago it was 410. At a corporate level, Sony Music UK has also pared back over the years. These days it has only two divisions – recorded music and music publishing – after its distribution division was merged with Warner Music five years ago to create the Entertainment Network. Its recording studio division, formerly the Hit Factory and latterly Sony Music studios, was hived off to former Sade producer Robin Miller in March this year.
“It would be wrong to say we’ve sold it,” stresses George. “Our plan was to sell the studio as an ongoing business and that didn’t happen, so in the end we simply surrendered the lease and the landlord granted a new lease to Robin, so it was fairly straightforward in legal terms.”
What has not proved to be so straightforward legally is Sony’s ongoing merger with BMG. The deal stalled in Europe last week, with both companies given two weeks to respond to the European Commission’s confidential complaints. The final decision is due on 22 July. George is not involved personally in the merger, as it is being led out of New York, with Cleary Gottlieb Steen & Hamilton advising Sony.
Consequently, he refuses to comment on the deal. He is more forthcoming, however, about the external lawyers he instructs in the UK.
“We don’t have a panel and we don’t tend to beauty parade for work,” says George. “We did use external lawyers on the studio disposal. The person we usually use, Jackie Newstead at Lovells, is on maternity leave, so we instructed Shaun Lamplough. Our main point of contact is Lesley Ainsworth on the competition side and Marco Compagnoni on the corporate and commercial side. Normally when something comes along that we don’t know who’ll do it, we’ll plug in to one of those two and they’ll find somebody suitable. We’ve been using Lovells for one kind of work or another for eight or nine years.”
As for other matters, it is that oldie but goldie: horses for courses. “We’ve used Clintons for a lot of our litigation,” says George. “I’ve been using them for 12 or 13 years minimum. These days it tends to be Andrew Sharland. I’ve got a great working relationship with Andrew. We share the same sense of humour, that sort of thing. And more importantly, he’s an incredibly bright guy, very switched on, with a commercial awareness that’s all too lacking in many litigators.
“We also use CMS Cameron McKenna for our pension plan work. Having said we don’t have a panel or beauty parade, Camerons got the work as a result of a beauty parade a couple of years ago. We’ve also used The Simkins Partnership for overspill work or if we’ve been short-staffed – primarily Julian Turton or Julian Bentley.”
Sony Music UK has also used Addleshaw Goddard occasionally. George says that as far as he is concerned, he has noticed no change in the service from the firm since its merger. “I’ve got a lot of time for William James there on the corporate and commercial side. If a background knowledge of music is required, then someone like William would be better placed than Marco, who’s far more City.
I’ve also used Paddy [Grafton-Green, Addleshaw Goddard senior partner and legendary music business guru]. He has a wealth of experience. Where he comes into his own is corporate deals, where you need understanding of tax issues, but we have an awful lot of that in-house.”
Cost is obviously an issue for George, as with any other in-house lawyer, but Sony Music UK does not spend a lot of money on external lawyers. Again, as with most companies, it can fluctuate wildly because the team could be short-staffed and therefore need external lawyers, or it could have a major piece of litigation or, as George says, “the OFT [Office of Fair Trading] crawling all over us. Then we’ll find ourselves spending £250,000 more than I’d expected us to. But I wouldn’t expect us to spend more than £200,000-£250,000 on external legal fees.”
For its part, the legal department has been relatively stable during the turbulence of the music business in recent years, losing just two lawyers in the last four years. The current total of eight lawyers does not include the team that looks after the publishing side of the business. “We handle the non-day-to-day business affairs work that comes up, such as litigation relating to publishing or corporate work, acquisitions, that sort of thing,” says George. “But the routine nuts-and-bolts, such as signing writers and so on, that’s all done by publishing next door. That leaves eight of us handling pretty much everything else. That includes the negotiation of record contracts from start to finish. Once an artist is signed, it’s the negotiation of a whole manner of different types of deals around that, such as if a producer needs to be brought in for an album, negotiating the producer deal – it may be a promo video deal, clearance of samples and so on.
That’s what most people would see this department as primarily there to do.”
As well as meet and greet the odd superstar from time to time and help him sign on the dotted line.
Head of legal and business affairs
Sony Music UK
|Organisation||Sony Music UK (also covers Ireland)|
|Head of legal and business affairs||Alasdair George|
|Annual legal spend||£200,000-£250,000|
|Principal law firm||Lovells|