Michael defeat leaves Sony's image clean: The case failed to expose the music industry as rife with dodgy dealings and exploitation, writes Giles Smith

GEORGE MICHAEL'S defeat in the High Court yesterday will certainly have saddened his fans. They have waited nearly four years for a new album from him and, with an appeal pending, they are likely to wait a long while yet.

But the verdict will also have frustrated those who hoped the case of Georgios Panayiotou v Sony Music would cast a revealing light on the practices of the music industry - this glossy, modern multi-million business concern, legendarily associated with dodgy dealings and exploitative practices.

Popular imagination depicts the music business as a monster willing to seize on eager young musicians whose desperation for fame renders them naive, and to pin them to highly restrictive and cruelly imbalanced contracts. In the end, the verdict of Mr Justice Jonathan Parker is the public endorsement the music business would have asked for. Apparently, its hands are clean.

Last October, as details which had hitherto been closely guarded were disclosed, it was hard not to feel that Michael's deal, like any other pop star's deal, was tipped heavily in favour of the record company. Michael, we learnt, receives 37p for every CD he sells and 34p for every cassette. Sony, after paying royalties to outlets such as manufacturers and distributors, receives pounds 2.45 for a CD and pounds 1.49 for a cassette.

Michael's gross world-wide royalties, in a five-year period up to December 1992, amounted to pounds 16.89m. Sony's share was pounds 95.5m. Over the same period, his gross profits were pounds 7.35m while Sony's were pounds 52.45m.

But Sony's defence countered that the apparent imbalance here is deceptive. Pop stars are a high- risk financial investment. For every success there are a hundred expensive failures. Success is frequently short-lived and always unpredictable. The industry needs to profit where it can in order to sustain new growth, which is why a company would hold on to an artist like Michael for as long as it could.

Artists are paid an agreed royalty on sales. But the record companies will first make deductions from the sum on which royalties are paid. Something will be taken off to cover the costs of the packaging, for instance. Something else will be removed to cover the cost of advertising on television.

Two major record companies still issue contracts which contain a royalty deduction for breakages - a clause inserted in the days of fragile, shellac 78rpm discs.

As a result, artists like Michael can claim to have both created and paid for their work, but to hold no rights to it. These remain with the record company. One lawyer has claimed this is like paying off your mortgage, only for the building society to retain the ownership of your home. With Michael's defeat, those practices can continue unchallenged.

The case was revealing in other ways. We did learn, when Michael took the stand in the first week, that he had used a body double for the risque video which accompanied the single 'I Want Your Sex'. 'He was rather larger than me and there was no hair on his chest,' Michael told the court.

And we came tantalisingly close to the mystery of the star's wealth. 'I have more money than I know what to do with.' His actual estimate of his worth was passed on a folded piece of paper to the judge.

Sony will hope the verdict dispels the image of the company as hungry for instant hits, apt to hire and fire and disinclined to think about artists' careers in the long term. This was one of Michael's key claims against Sony. When Sony took over CBS in 1988, Michael was at his peak. His first solo album, Faith, released the previous year, had already sold about 4 million copies and would eventually sell 14 million. He renegotiated his deal at this stage and brought himself in line financially with the pop superstars.

But as he prepared to record his second solo album, Michael realised he was fast growing out of the pin-up role and was keen to be perceived less frivolously as a songwriter and musician. Where once he looked out from the pages of Smash Hits, now he set his sights on The South Bank Show, which obligingly made a documentary about him at this point.

Michael claimed that his second solo album, Listen Without Prejudice Volume One, was deliberately under-promoted by Sony, which was quietly unhappy with this new, serious George Michael, preferring the more obviously lucrative sex-bomb model. Playing down his image as a heartthrob teen idol, he did not appear on the album's front cover and he declined to appear in videos promoting the singles released from that album.

Yet Michael remains a Sony artist. Yesterday's verdict underscores Sony's legal right to hold him to his contract and produce six more albums. But what kind of music would Michael produce under threat of legal action? The arrangement is clearly untenable.

What seems likely is that Sony will sell Michael on to another company. Warners, for whom Michael has already produced an album of performances by other stars, are the favourites to pick him up.

One musician's lone attempt to take on the music industry seems only likely to land him with a hefty bill for costs. After yesterday's verdict, it is difficult to imagine anyone else attempting it in the future.

Meanwhile, some will look at the sums involved and wonder what Michael had to complain about. As one lawyer put it: 'A lot of people are going to think, 'My God, I'd like to be ripped off like George Michael's been ripped off.' '

Leading article, page 15

(Photograph omitted)