Here is my brief(ish) summary of events surrounding Mike Oldfield's contractual arrangements with Virgin, according to the book 'Richard Branson - The Inside Story' Mick Brown (1988).
Virgin signed Mike Oldfield in 1972 into what was very much a standard industry contract for the time. The contract was for 10 albums and the royalty rate was 5%, and Richard Branson was Mike's manager. The paradox of having Branson as both manager and head of the record company did not occur to Oldfield until 1976, by which time he had produced 3 albums which had sold enormous numbers and the contract had not once been reviewed. While a 5% rate may have been fair in 1972, Oldfield noticed that new, inexperienced artists were currently being signed at 8% or 9%, People such as Tom Newman were urging Oldfield to seek an improved arrangement with Virgin, but Mike would never challenge his friend Richard. However, he engaged a lawyer and in April 1977 an ammended contract was signed granting 8%. Oldfield asked Branson to continue as his manager and Branson agreed. In 1978 Oldfield underwent "Exegsis" therapy and emerged a new man - gone was the painfully shy, diffident recluse, and in his place an extrovert!
A Top 20 disco (of sorts) single followed with "Guilty," and an enormous tour which lost a fortune for both Oldfield and Virgin. For Virgin the loss was 250,000 pounds. Immediately prior to the tour Branson ceased to be Oldfield's manager, and somebody else (Sally Cooper?) supervised the tour. Slowly, due to shifting dynamics, their friendship began to drift apart.
Oldfield grew increasingly unhappy and his new manager and accountant alerted him to the alarming fact that he was short of money. The more he thought about it, the more he felt that the renegociated contract had not gone far enough. Furthermore, he felt that Virgin were becoming increasingly unhelpful towards him and his music as their interest shifted towards punk music: "I wasnt getting any respect....I couldn't get hold of Richard when I wanted to, so I decided to put my foot down and straighten things out. I got a new lawyer and said 'I just want out.'
In July 1981 a firm of lawyers acting for Oldfield issued a writ against Virgin for 'repudiation' claiming that the original 1972 contract was invalid. Branson was shocked and thought Oldfield's lawyers were "trying it on." He felt that the initial deal was fair under the circumstances, especially considering Oldfield had been turned down by all the other major record companies. Virgin had taken a risk with Oldfield, as every record company does with every artist, and given him a chance when no one else would.
The writ could not have come at a worse time. In mid-81 Virgin was doing badly - the company had made redundancies, the roster had been cut back, and Branson was in no mood to be conciliatory let alone generous - even to Oldfield. Underlying this was a feeling of incredulity that Oldfield, one of his oldest friends, was taking this step at all, and that they had drifted so far apart without Branson having read the warning signs.
For Oldfield, extracting a satisfactory settlement with Virgin had become a point of principle, inextricably entwined with his feelings for the man he had long regarded as friend and protector, and his need to prove something to himself: "It had got to the point where I said I can't respect myself unless I am prepared to stand up and fight Richard...for my own personal self-esteem I needed to actually make that stand."
The argument ground on for almost two years, in a mood of escalating resentment and bitterness. Virgin's lawyers urged the case to go to court because they considered they were on solid ground. But Branson was very reluctant to face his old friend and the man on whom Virgin's fortunes had been largely built, across a courtroom. While Branson considered that a contract was a contract, he was coming around to the belated realisation that a suitable gesture to Oldfield much earlier in his career - increasing his royalty rate after Tubular Bells, for example - could have prevented
all of this ugliness. An independant manager would have been fighting on Oldfield's behalf for just such a concession; but for a manager who also owned the record company that meant arguing against himself.
At a final meeting it was agreed that Oldfield's royalties should be increased, in varying amounts according to territories. He also received a large sum of money, which included all the commission Branson ever earned as his manager. In return, Oldfield agreed to add 3 more albums to his Virgin contract. The final, symbolic point on which Branson relented was giving Oldfield an increased royalty on all future sales of Tubular Bells. The deal was settled exactly 10 years since Tubular Bells first entered the charts. In time, Branson and Oldfield even became close friends again.
Mike Oldfield Tubular.net