Music Industry Eyes on George Michael Suit : Courts: The pop star is challenging Sony on the fairness of long-term contracts. Some say the outcome could change the future of the recording business.

Pop star George Michael’s career rests on his next performance.

One year after the singer filed suit to sever his contract with Sony Music Entertainment Ltd., his case comes to trial here Monday, with Michael as the first witness.

While any superstar case attracts publicity, Michael’s case against the United Kingdom unit of Sony Corp. is garnering particular attention because of the broader ramifications for the record business. The 30-year-old singer alleges that long-term contracts--like the eight-album deal that ties him to Sony until the year 2003--constitute a restraint of trade. Michael’s lawyers have asked the court to force Sony to produce the contracts of other stars such as Michael Jackson and Bruce Springsteen.

Should Michael win, the case could set a precedent requiring record companies to sign artists for far shorter periods, or even on a project-by-project basis. That could bring greater freedom and financial rewards to some artists.

“This will clarify whether or not the standard type of agreement is enforceable,” says Ed Bicknell, the manager of Dire Straits and a critic of record company practices. “I applaud what he’s doing. He’s either mad or very brave.”

Record companies, however, argue that changing the present system would be bad for artists and consumers. By signing fledgling acts to lengthy deals, music companies are assured of reaping substantial profits from the small percentage of artists who hit the big time. If they are forced to cut their investment in newcomers, they say, there will be less diversity in the types of recorded music available.

Sony declined to comment.

Although the outcome of the trial, being heard in British High Court, would set a precedent affecting only British record companies, U.S. lawyers would probably use a verdict in Michael’s favor as grounds to raise the same issues in U.S. courts.

Michael originally signed with CBS Records as part of the pop duo Wham! When Wham! went by the wayside in 1986, CBS exercised its “leaving member clause” and kept Michael on as a solo act. After Japan’s Sony Corp. acquired CBS Records in 1988, the company renegotiated its contract with the singer.

Although Michael alleges that his contract is financially unfair, he says the suit is not about money but artistic freedom.

“Since the Sony Corporation bought my contract, along with everything and everyone else at CBS Records,” he said last year, “I have seen the great American music company that I proudly signed to as a teen-ager become a small part of the production line for a giant electronics corporation who, quite frankly, has no understanding of the creative process.”

In his suit, Michael says Sony’s share of the profits from his recordings constitute a “seriously inequitable apportionment,” with the company averaging $2.78 in profits for every unit sold, at today’s exchange rate, compared to his 87 cents.

He also complains that his contract gives Sony the right to shelve any record it deems commercially non-viable. Therefore, Michael’s suit says, Sony can insist on a “particular quality” to his music.

As part of the suit, Michael asked that Sony disclose its confidential recording contracts with others. When Sony refused, the British court ordered that a request be issued to the courts in New York to compel the music company to comply.

A hearing has been scheduled for next Friday in New York Federal Court.

If the terms of Sony’s secret deals with superstars such as Springsteen, Jackson and Barbra Streisand were revealed publicly, say music sources, the result could be a shattering of myths and the end of clauses that ensure artists no one else is getting a better deal.

But that appears unlikely. Even if Sony is ordered to turn the information over, says Dick Leahy, Michael’s music publisher and longtime friend, it “will be subject to the confidentiality of the court.”