by : Business, Dec. 2010

They Are The Champions, My Friend

They Are The Champions, My Friend

The Beatles’ catalog is finally available for purchase on the iTunes music store.  The conflict that delayed distribution dates back to 1978, when Apple Corps,  The Beatles’ record company,  filed a lawsuit against Apple Inc. for the trademark infringement of their name.  Apple Inc. appeared to settle the dispute in 1981 for just $80,000, much less than was though possible at the time. The agreement stipulated that Apple Computer would never enter into the music business, while Apple Corps would never enter into the computer business.  This dispute, however, would be re-opened numerous times over the next few decades as Apple Computer began inching its way into the music space.

In 1986, Apple Inc. was brought to court for violating the terms of the 1981 agreement by adding audio recording software to their computers.  Apple Corps even disapproved of the computer company including a basic software synthesizer in their product.  Eventually, by 1991, this second dispute was put to rest with a hefty sum of $26.5 million.  When the iTunes program was launched in 2001, the contract was breached once again.  Essentially, the iTunes store became an incredibly popular new distribution model, which in turn, directly affected physical sales.  Clearly, Apple Inc. was now an important player in the music industry.

Consumers now embraced Tunes, which helped deflect piracy.  Apple Inc. also inspired the age of the mp3 player, at once making the music listening experience portable and convenient. By 2006, the case went to the High Court in London. The judge, however, would favor Apple Computer.  In 2007, Jeff Jones was brought on as the new Chief Executive of Apple Corps, replacing Neil Aspinall, who had been a close friend of Paul McCartney and George Harrison since childhood.  Aspinall’s mission had been to protect their legacy in every way possible, and his emotional ties to the band members were certainly part of the reason why it took so long for Apple Corps to reach an agreement. On February 5, 2007,  just a few weeks after Jones was hired,  a settlement was reached stating that all trademarks related to Apple Computer would be retained, and that the company could license some of these back to Apple Corps for their continued use.  Ultimately, Apple Inc. compensated Apple Corps $500 million for the ownership of these trademarks.

The Beatles’ entire catalog was thus added to iTunes early this November. Within the first week, two million songs and 450K albums were sold, generating an estimated nine million dollars in revenue.  Such figures washed out concerns that the Beatles were entering the digital world too late.  Many in the industry had predicted that Beatles fans already owned the music in physical format or had already obtained the music in digital format through illegal downloads—all of which would have curtailed demand. In the event, sales figures showed five classic Beatles albums on the U.S. Top 20 charts less than twenty-four hours after release.

Everyone seems to have won. Apple Inc. has acquired a catalog that has long been in high demand at iTunes. The Beatles will receive exposure to an entirely new generation of consumers that should perpetuate their legacy. Finally, EMI, the struggling major which first signed the Fab Four, will experience a much-needed infusion of cash. Let it be.

By Ben Scudder

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