|The favourite song|
of the IRS ...?
Reporter Jeff Gottlieb of the Los Angeles Times, here,summed up the challenges in trying to properly value the estate as follows:
Most estates are much easier to value than Jackson's. You can look up the prices of stocks and bonds. You can check comparable properties for real estate. With a business, you can compare sales with a similar firm. But how do you value Jackson's likeness?" This is something unusual," [Andrew] Katzenstein [a tax expert] said. "He was one of the premier entertainers of our time. So there are really no comparables, and it leaves the valuation question open to a huge range of possibilities. "Do I think his likeness was worth $2,105? No. But was it worth $400 million?"As for the valuation itself, Gottlieb noted that
The Jackson estate probably would argue that before he died, the singer had neither toured nor released a CD for several years, and his public image had been severely damaged by allegations of child molestation. Companies were not exactly begging Jackson to endorse their products or trying to make deals with him. Since he died, Jackson's recordings have gained new life. The estate had earned $475 million, according to a court filing in July 2012. Forbes magazine reported in October 2013 that Jackson was the highest-paid celebrity that year — dead or alive — earning $160 million.
“… the Jackson estate would have hired appraisers to determine how much his assets were worth at the time of his death, including his likeness. One document mentions a report by the venerable firm Bonhams & Butterfield.”The question this Kat would have for Bonhams & Butterfield, here, or whatever firm served as appraiser for the estate, is how does one go about deciding: (I) what is meant by Jackson’s likeness/image; and (II) how to assign a separate and distinct value (as opposed to trade mark rights and copyright) for such likeness/image? Truth be told, there may no aspect of IP (or IP-like) rights less certain than the rights than the right of publicity in one’s likeness (an excellent discussion of the challenges in understanding this right can be found in Professor Sheldon Halpern’s book chapter, ‘Publicity Rights, Trademark Rights and Property Rights”.) Thus, while the valuation of a patent portfolio may differ from appraiser to appraiser and from point of time to point of time, at least there is a common understanding of what constitutes the underlying patent right. By contrast, there is no agreement on what exactly are the contours of the right of publicity, much less how this right is interwoven within the fabric of other IP rights in general, and with the IP rights of Michael Jackson and his estate, in particular.
As such, given the uncertainty in our legal understanding of the nature of the right of publicity, what exactly were the guiding principles for the various appraisers in valuing these assets (even taking into account that the initial valuations might have been more or less stalking positions for the later “negotiations” over the exact tax amount owing)? Lurking behind this question is an even more fundamentally matter, something that this Kat has encountered in various circumstances during his professional career, namely, to what extent is there, or indeed should there be, any substantial overlap between the legal and accounting/valuation understanding of the right of publicity? Taking into account the chasm-like differences in valuation offered by the various parties regarding the Jackson estate, this Kat wonders whether the field of IP valuation might be well-served by considering a way of bridging these conceptual differences. Or maybe, just maybe, treating the valuation of publicity rights as a form of alchemy serves the interests of all concerned.