B.  Applying the 10 step Dilanchian KML Framework 

In this section we apply the 10 areas of best practice in the Dilanchian KML Framework to assess Brown's achievement. For general guidance each area of that Framework is overviewed in a yellow-highlighted paragraph in the commentary below.

What is the Dilanchian KML Framework?

• The Framework is a proprietary methodology comprised of 10 areas of expertise broadly within the disciplines of law and management consultancy. "KML" is an acronym for Knowledge Management Leadership.
• The Framework puts into practice our belief that improved management of knowledge provides insights for better deal making and contract preparation and better and more useful legal advice generally.
• In our firm we use the Framework when advising clients, particularly clients seeking a structured approach for contract preparation and for building their businesses or organisations.
• The Framework is particularly useful for intellectual capital or intellectual property.
  
• The Framework is overviewed in a graphic in our Website page titled How we work.
• The Framework is also overviewed in text and a graphic here. It is also cited in paragraph 8 of a popular article on this site titled Special Collection: Entrepreneurship.
  

   Market Knowledge 

1.  Understand the market in which you operate

• Dilanchian KML Framework Step 1: It is helpful in entrepreneurship to know the relevant industry, sector and market and the trends and drivers in them. When the entrepreneurship is in art, entertainment or show business an additional element is needed - an appreciation of the aesthetics that attracts the audience's response. The business can live or die on this. 

These performance techniques were largely learned. In his autobiography (see James Brown Resources) Brown describes going in Augusta during his youth to vaudeville, circus and musical performances. He tells us how important to him it was to have a borrowed radio in prison during his youth, listening for the odd rhythm and blues track.

Brown engagingly tells of the people who taught him to play a piano and other instruments and develop the combination of elements that made his sound and performances unique. Key here were - his position as a lead singer, supported by male or female vocalists, driven by a rhythm section (bass and drums) that was consistently second to none, and his audacity in requiring a full brass section even in small venues where higher margins could be earned from smaller outfits. 

Importantly, Brown saw himself as being in the business of drawing an audience for entertainment and for that he bet on originality, delivering value for money and making a big impact.

   Strategic Planning 

2.  Plan your path forward

• Dilanchian KML Framework Step 2: It is vital for the entrepreneur to operate with some degree of planning, eg to link what is known about an opportunity to the market conditions. Planning helps map an entrepreneur's operating environments of law, accounting, economics, science, technology, business and politics. Planning should include preparation of financial documents such as cash flow forecasts. 

Brown targeted areas for learning that were important to him, this included contract negotiation, ownership of recorded music masters and presumably copyright licensing. In his autobiography he says:

Brown's career started to pay off from about 1960. By the late 1960s Brown was flying his band around the country in a private jet. This was a highly practical arrangement, ensuring the band saved time. He says in his autobiography that he told Otis Redding to stop using a plane due to its state of repair. Redding died when that very plane crashed. Later in his career Brown's plane became a drain, with monthly payments of US$12,000 by 1973 and requiring an overhaul of a jet engine costing US$50,000. Brown allowed the plane to be repossessed.

   Asset Evaluation 

3.  Act on an evaluation of your assets, strengths and weaknesses

• Dilanchian KML Framework Step 3: Asset development requires identification and evaluation of the portfolio of intellectual property in a legal sense. It is about know what you have so you can develop it further.
  

Brown was a master at pump priming the mix of his activities to sell records and increase performance fees, royalty revenues and other recorded music income streams.

Following a court case against King Records in 1964, Brown re-signed with King and took control over one of the most vital decisions involved in making money from the music business at the time for him - knowing when to release a single to tie-in with other activity. Brown tells it like this:

   Enterprise Structuring 

4.  People and relationships are your most important assets

• Dilanchian KML Framework Step 4: Entrepreneurship requires linking people with entities and groups of entities, and understanding how to reward and manage employees, contractors and collaborators.
  

In his career Brown formed and maintained long-term relationships including those below.

• Relationship with manager  One of the most important was with his manager. Impressed by a performance in Atlanta, Georgia a fellow performer and friend, Hank Ballard, phoned a booking agent, Ben Bardt of Universal Attractions in New York and told him he'd just seen an act that Universal ought to have. Bardt started as Brown's booking agent and in time Brown asked him to be his manager. The relationship lasted until Bardt died. The fact that Brown called Bardt "Pop" (ie father) says it all. 
• Relationship with record company  Brown maintained a long-term relationship with King Records until his move to Polydor on sale of King Records. It seems from his autobiography that the length of this relationship worked in his favour in terms of control of his music masters, re-negotiation of contracts with King, and termination of them for a fresh new deal with Polydor.  

   Document Management 

5.  Work with your records and documents to manage risks

• Dilanchian KML Framework Step 5: It is valuable to retain knowledge, to both apply it and use it to defend against business and legal challenges. Risk management and legal compliance is usually not possible without the creation and proper management, storage and communication of records and documents.  

Brown says that his poor education - especially for the purposes of making and keeping records - is the key reason he became so entrenched from 1973 in a number of litigation matters, especially with the Inland Revenue  Service (IRS).

The IRS claimed Brown owed US$4.5 million in back taxes for 1969 and 1970s. The IRS seized Brown's documents and records and continued its enquiry. The legal issues continued for years until the IRS concluded there was no case to answer.

The issue involved mostly claims of undeclared profits from Brown's shows and a difference of view as to the characterisation of the US$1,500 a week being paid by King Records to Brown. The IRS view was that it was an income stream on its own, while Brown maintained it was part of his the music royalties due to him from King Records. Brown was ultimately never charged. Some other causes of the problem given by Brown are that he was not properly documenting valid tax deductions and the IRS was not taking them into consideration, hence the IRS was making asumptions and errors in profit calculations and tax due.

   Deal Making 

6.  Improve your negotiation and a deal making skills

• Dilanchian KML Framework Step 6: A structured approach to making deals helps entrepreneurs in negotiations and in reaching at least preliminary understandings, arrangements and agreements. It also supports subsequent needs in transaction planning, due diligence and project management.

Four-Walling: As an illustration of his deal making at work, Brown was a calculated risk taker in tour bookings. Rather than always allowing promoters to take the risks, and hence most of the rewards, sometimes he rented venues to seek a greater share of profits. In renting a venue Brown's team undertook the roles of concert promoter, venue administrator and ticket distributor, instead of leaving all these to the venue owner. When the risks and these roles were well-managed they provided a much higher performance revenue take. The door ticket sales revenue did not have to be shared, nor could various venue owner deductions be made from it (eg for provision of ushers). This venue hire practice is known as "four-walling" in the music, film, theatre and show business generally.

Promotion and ticket distribution:  In an era where central ticket sales companies did not exist, Brown and his manager would leave the band to come up to the next town on their own. Meanwhile he and his manager would drive ahead, visit disc jockeys, do interviews, and line up ticket vendors which included drugstores and barbershops.

Self-funded recording of a live album:  One of Brown's biggest risks was recording a live albumn, Live at the Apollo. It cost him US$5,700 and involved no support from King Records which rejected a proposal to do a live album. To top it off Brown also decided he would improve his deal with the Apollo in doing the album. He rented the Apollo, nobody had done that before. Everything went to plan, except to convince King Records to release the album took considerable time.  When Live at the Apollo was released in January 1963 it stayed on the charts for 66 weeks and eventually made it to number 2. Following this Brown moved from the South to the North, buying a 12 room Victorian place in Queens, New York City.

With such a big album Brown's audience crossed-over capturing the attention of a few hip whites, though he says not to the degree they did for a Rock & Roll singers like Little Richard. Within a year Brown was talking promoters into accepting integrated audiences for his shows even in Macon and August, Georgia.

Integrated audiences: With integrated shows Brown reached the cusp of a truly breakout moment musically and professionally. It came with the 1965 single, Papa's Got a Brand New Bag but really started on Out of Sight. The latter took off across the board, it didn't have to make it on the R & B charts and then cross over.

TV and film appearances:  Brown appreciated the career-making potential of television and film. As his hard work started to first really pay off in 1960, he appeared with the support singers in the Famous Flames on Dick Clark's American Bandstand to lip sync "I Don't Mind" and "Baby, You're Right".

In 1966 on a tour in England BBC TV recorded him in its famous pop show Ready Steady Go. In his autobiography Brown writes: "While I was there taping it several British acts came by to say hello - the Beatles, the Kinks, the Animals. I think a couple of the Stones came by, too. These groups had a real appreciation for where the music came from and knew more about R & B and blues than most Americans."

Later in the 1960s he appeared in Playboy After Dark parties as you can see at YouTube here with "Say it loud - I'm black and I'm proud ."

In the arena of film, Brown's career was revived by The Blues Brothers (which opened in the U.S. in June 1980) and again in Sylvester Stallone's Rocky IV (which was the biggest box office success in the Rocky series) singing what became a huge pop hit, "Living in America". This song was Brown's first top 10 single since the late sixties.

Record company relationships:  Going in the other direction and damaged Brown greatly was his contract with Polydor. In fact he blames Polydor for destroying his sound and losing his audience. 

   Contracting 

7.  A good contract can be money in the bank

• Dilanchian KML Framework Step 7: Ideally structured deal making steps should be taken in advance of negotiations or drafting work for a legally binding agreement; otherwise, while legally perfect, the contract may not relate, as much as it should, to practical or business needs and considerations.

The rise of Rock and Roll in the mid-1950s took the record industry into double-digit growth on the 45-rpm format. There was also a flowering of small independent record labels for the new recording styles of Rock and Roll (eg Chess Records, Sun Records) and Rhythm & Blues (Atlantic Records). The Beatles, Animals, Rolling Stones and other bands of the British Invasion of the 1960s took record sales  on both the 45-rpm and 33⅓-rpm formats to new heights. These bands learned many of their licks from the recording stars of the 1950s. James Brown became a star with King Records.

In his first deal with King Records Brown received half a cent a 45-rpm side for writer's royalties and maybe another half a cent for performance. This was partly because he was splitting earnings evenly with all the Flames. In 1958 Brown entered into a new contract with King and his royalty jumped to five percent, although three percent was standard at the time. Bewildered (see accompanying graphic) was released with King Records in 1960, though recorded earlier.

For 15 years Brown was loyal to his first record company, King Records. He left the company only when its assets were sold to Polydor. Polydor was a European company which entered the U.S. market in 1969. Brown writes in his autobiography: "After the transfer of the personal services contract [of Brown with King Records] and title to the masters [master recordings of his studio performances], we negotiated a new long-term contract with Polydor that gave me a substantial advance, a production company, a separate office so I could be independent from them, and artistic control of my work."

In 1972  Polydor merged with giant Philips owned Phonogram Records to create PolyGram in the US. Polydor continued as a subsidiary label until 1998 when Universal Music Group bought PolyGram. As we will see in the next section (Section 8 - Commercialisation) this did not affect Brown as he had independently secured his position and control over his IP rights.

Brown says his fortunes turned negative as soon as he signed with Polydor. He says Polydor took him in directions both in terms of sound (eg disco from 1975 onwards) and image that did not suit him. He separated from Polydor in about 1980. It was at this low point that he met John Belushi and Dan Aykroyd who offered him the role of the preacher in The Blues Brothers.

   Commercialisation 

8.  Target to leverage value from what you are creating

• Dilanchian KML Framework Step 8: Understand the process of commercialisation through each of its stages, phases and exist paths. The options for an exist path include licensing, trade sale, merger, business sale or a float. The stages may also include the design, production, marketing, sale, distribution and support of a product, service, technology or business. It may also be relevant to understand and apply to these - design upgrades (including new versions or editions), customisation of offerings (eg for specific markets or classes of customers) and offerings extension (eg brand extension). 

From business and intellectual property commercialisation perspectives, perhaps the crowing achievement for Brown was his signature of a “Bowie Bond” in June 1999. It netted him about US$26 million as a loan against the future royalties of his music. The deal was with David Pullman, a New York financier. The picture which leads this post shows Brown and Pullman and appears on the website of The Pullman Group LLC.

Brown’s long-term popularity and his catalogue of 750 songs made him bankable. The deal with David Pullman capitalised on this and leveraged Brown's bag of IP in recorded music into cash. 

The term "Bowie Bonds" was coined as a phrase referring to the first well publicised instance of the securitisation of intellectual property rights. These bonds got the name "Bowie" by being the asset-backed securities of current and future revenues of David Bowie's collection of songs recorded prior to 1990. The Bowie Bonds were issued in 1997 and bought for $55 million by Prudential Insurance Company. 

   Legal and Regulatory Compliance 

9.   Minimise legal risks and comply with the law

• Dilanchian KML Framework Step 9: Business and corporate activity is regulated; disputes, litigation or breach of law can all be show stoppers. Proactive compliance is recommended. 

Unfortunately Brown and the litigation and criminal law arms of the legal system were not strangers.

• Record contract litigation: He did not release a single new vocal release for almost 12 months because of a 1964 contractual court dispute with King Records, in which he was represented by Marty Machat, the lawyer who handled the Rolling Stones and others in the US. While the court result did not favour Brown, King Records provided him with a new contract with a royalty rate of 7% Brown recalls in his biography, and then 10%. However the key provision was that King had to pay Brown US$1,500 per week no matter what and they could charge it to royalties. For Brown this meant security of cash flow. Had Brown recorded this deal in a tax-effective way he would not have to have endured years of Inland Revenue Service tax queries in the 1970s (see above - 5. Document Management).
• Business purchase litigation: He endured law suits affecting at least one of his three radio stations. He bought the first in 1968, WJBE in Knoxville, Tennessee and followed with WEBB in Baltimore and WRDW in Augusta. The case involving WEBB was with the people he bought it from, who claimed money was owed.
• Payola litigation:  He became embroiled in a payola trial facing allegations of paying a radio program director at one of his radio stations almost US$7,000 to play Brown's records.
• Traffic violations imprisonment:  In 1988 a domestic dispute led to a police pursuit, all of which may have been a misunderstanding, but in any event Brown was tried and sentenced to six years in a South Carolina prison.

   Assets and Knowledge Management 

10.   Manage what you have or hire people to do so

• Dilanchian KML Framework Step 10: For organisational coherence and portfolio valuation it is vital to know what you have, what it is worth in different contexts, and how to manage the assets into the future. For example, if the key assets are a set of signed contracts - understand them and evaluate them so as to use them strategically.

The commercial licensing of James Brown's music catalogue is administrated by Jay B. Ross and Associates, P.C. which operates the GodfatherofSoul.com website.

Brown married a number of times. Following his death there have been reports of legal disputes involving conflicting claims to his estate from recent and past partners. The evidence is yet to appear as to whether Brown will be as successful in managing his affairs after his death as he was in life.

This analysis of the life and achievements of James Brown from an intellectual property law perspective ends here. However in the next section you will find a useful list of references including links to James Brown videos and related articles. 

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