Michael Jackson and Pepsi: the contract that changed the commercial exploitation of image rights forever

In the early 1980s, a commercial rivalry was unfolding between two of the leading drinks brands in the United States: Coca-Cola and Pepsi. Whilst the former maintained its market leadership, the latter sought to differentiate itself and increase its market share by connecting with a younger audience. To this end, it innovated and pioneered a marketing strategy based on associating its brand with major figures in the entertainment industry.

Against this backdrop, Michael Jackson had just achieved unprecedented success with *Thriller*, which would go on to become the best-selling album of all time, cementing his status as the most famous and influential artist of the time. For Pepsi, linking its image to that of the singer presented a unique opportunity to strengthen its global positioning and project a modern, dynamic image that resonated with younger generations.

As a result of this strategy, in late 1983 both parties signed a contract valued at approximately USD 5 million at the time, considered then to be one of the largest advertising deals ever concluded. The agreement provided for international advertising campaigns, the use of Michael Jackson’s image, name and performances in television adverts and other promotional media, as well as a commitment to exclusivity with regard to other competing brands in the drinks sector.

Beyond its financial significance, the agreement marked a turning point in the advertising industry. Not only did it cement the model of collaboration between major brands and celebrities, but it also highlighted that a person’s image could constitute an asset of extraordinary economic value, the exploitation of which required highly sophisticated contractual arrangements.

What was actually agreed?

The general idea behind the agreement between Pepsi and Michael Jackson is that the former acquired the right to use Michael Jackson’s image, but from a legal perspective the scope was much broader and more complex. In reality, contracts of this kind do not merely consist of authorising the use of a photograph or a name. They constitute genuine contracts for the exploitation of a set of intangible assets that make up a person’s commercial identity.

In Michael Jackson’s case, the agreement included authorisation to use his name, image, voice and performances in international advertising campaigns, as well as the exploitation of photographs, audiovisual recordings and other promotional materials created for the campaign. Furthermore, the contract set out key aspects such as the geographical scope of the licence, its duration, the extent of the rights granted and the conditions under which Pepsi could associate the artist’s identity with its brand.

Another particularly important issue was exclusivity. As is customary in sponsorship contracts, Michael Jackson undertook not to promote products from competing companies during the term of the agreement, thereby ensuring that the commercial value of his image would benefit Pepsi exclusively within the drinks sector.

Contracts of this kind also typically include mechanisms allowing the celebrity to exercise control over how their identity is used. Prior approval of campaigns, the context in which the image will appear, the selection of audiovisual material and the conditions of dissemination are essential elements for protecting the artist’s reputation and ensuring that the association with the brand complies with the agreed terms.

The agreement between Michael Jackson and Pepsi helped to cement an idea that now seems self-evident: a celebrity’s commercial identity is not a single right, but a set of intangible assets — name, image, voice, reputation and other identifying attributes — that can be licensed, commercially exploited and legally protected through complex contracts. To a large extent, many of today’s sponsorship contracts with artists, sportspeople and influencers continue to be structured around similar principles, albeit adapted to the evolution of communication channels and digital technologies.

The accident and the contractual allocation of risk

On 27 January 1984, during the filming of one of the campaign’s adverts, a fault with the pyrotechnic effects caused second- and third-degree burns to Michael Jackson’s scalp, resulting in his hospitalisation and generating enormous media coverage.

The accident highlighted that the production of a high-budget advert involves not only the transfer of image rights, but also the allocation of a range of risks amongst the parties: the advertiser, the agency, the production company, the technical suppliers and the artist themselves. These agreements typically include provisions relating to safety during filming, production standards, the taking out of insurance, the allocation of liability for any personal injury or property damage, and compensation mechanisms in the event of a breach.

What happened in this case also highlighted the importance of reputation management. When a campaign is linked to a person’s image, any incident affecting one of the parties can have an immediate impact on the other. For this reason, the parties usually include clauses in the agreements that set out what happens in the event of behaviour or events that could compromise the image of one party and, consequently, the continuation of the collaboration.

From Michael Jackson to the digital age: the evolution of image contracts

More than forty years on, the principles that inspired the agreement between Michael Jackson and Pepsi remain fully relevant, although the landscape has changed radically. Whilst in the 1980s the aim was to associate a superstar’s image with an international television campaign, today brands seek to build ongoing relationships with artists, sportspeople, actors, content creators and influencers capable of connecting with millions of people across multiple digital platforms.

As a result of this transformation, sponsorship contracts have evolved in step with the media. They no longer govern solely television adverts or print campaigns, but also posts on Instagram or TikTok, videos on YouTube, appearances at events, exclusive content for social media and even the use of an artist’s image in campaigns run simultaneously across different markets and digital formats. Similarly, the emergence of artificial intelligence, digital avatars and synthetic recreations makes it necessary to define contractually issues that, just a few years ago, were not even considered.

But the shift has been even more profound. The true economic purpose of these contracts is no longer simply to run an advertising campaign, but to create an association between two highly valuable intangible assets: the brand and the celebrity’s commercial identity. Rather than simply hiring a person to appear in an advert, companies seek to associate their products or services with the values, reputation and prestige that person represents. That is why partnerships such as those between Pedro Pascal and Chanel, Lionel Messi and Adidas, Michael Jordan and Nike, or Roger Federer and Rolex now transcend the traditional concept of advertising to become genuine strategic brand partnerships.

Precisely because such partnerships now hold enormous economic value, disputes have also increased when a company uses a celebrity’s identity or creates the impression of a sponsorship or commercial endorsement relationship without the necessary authorisation.

A recent example is the lawsuit brought by Dua Lipa against Samsung in the United States. The singer claims that the company used her image on the packaging of certain televisions without her consent, creating the impression that there was a sponsorship or commercial collaboration that was never authorised. Regardless of the outcome of the litigation, the case illustrates how image rights protect not only against uses expressly agreed in a contract, but also against unauthorised commercial associations that may affect both a person’s economic value and their reputation.

In short, whilst the agreement between Michael Jackson and Pepsi helped to consolidate the commercial value of celebrities’ images, the current reality shows that this very value demands increasingly sophisticated protection mechanisms. In an economy driven by social media, digital platforms and artificial intelligence, controlling who may commercially exploit a person’s identity – under what conditions and for what purpose – has become one of the central issues in entertainment and intellectual property law.

Final thoughts

After so many years, the legal rationale behind the agreement between Michael Jackson and Pepsi remains fully relevant. Today, image is one of the most economically valuable intangible assets for artists, sportspeople, actors and content creators. What has changed is not the subject matter of these contracts, but their scope and complexity. Nowadays, such contracts govern not only traditional advertising campaigns but also social media posts, digital exclusivity, international exploitation, use via artificial intelligence, virtual recreations and mechanisms designed to protect the reputation and commercial value of both the celebrity and the brand.

The commercial exploitation of image rights requires the coordination of multiple legal disciplines, including intellectual property, contract law, data protection, unfair competition and, increasingly, the regulation of new technologies and artificial intelligence. All of this requires increasingly precise agreements to define which uses are authorised, for how long, in which territories and under what conditions. In an economy where personal identity has become an asset of enormous value, protecting it legally is no longer a mere ancillary matter, but an essential element in ensuring commercial exploitation that is secure, efficient and in line with the interests of all parties.