Beatles On iTunes: What Took So Long?

From the day iTunes launched nearly 10 years ago, the questions started over when the Beatles catalog would be added to the digital music store.

As iTunes influence grew in scope and power -- eventually becoming the world's largest digital retailer of any format -- those questions only grew louder, fueled by persistent a rumor that a deal was just around the corner.

Those questions were finally dispelled on Nov. 16 when Apple proudly announced the addition of the entire Beatles catalog to iTunes. It's impossible to point to just one sticking point that held up the deal for so long. Many like to blame the surviving Beatles members and family for being overly concerned with protecting the catalog from piracy. Others think it was just about money.

But the truth is that the Beatles long holdout was a Gordian Knot of legal wrangling, ego and financial demands that was years in the making. But all of that unraveled in a matter of mere months.
While the three parties involved -- the Beatles' Apple Corps, EMI and Apple -- have been discussing the issue for years, the endgame began this summer when Roger Faxon took over as the head of EMI's recorded music division. According to EMI representatives, Faxon made settling the Beatles/iTunes affair a top priority.
Much of the impasse was between Apple Corps and EMI. Although EMI has the rights to exploit the Beatles catalog under an existing agreement with Apple Corps, there was enough ambiguity in the deal that EMI was not free to fully negotiate in the digital realm as it would have liked.
"Apple Corp and EMI had some major issues to work through with respect to the granting of rights to exploit the master recordings that the Beatles gave EMI," a source with knowledge of the relationship says. "EMI would never be in the business of doing something against the wishes of the Beatles."
According to EMI representatives, Faxon met with Apple Corps CEO Jeff Jones in September and "in a matter of hours" worked out the broad strokes of an agreement that allowed the process to move forward.
"Roger has really led EMI down this path," says Dominic Pandiscia, executive VP of EMI Music Services North America. "We can't understate his influence on making this moment happen."
Equally important is the role of Apple Corp's Jones. His predecessor, Neil Aspinall, was behind the 30-year trademark battle between Apple Corp and Apple, and was also considered an "intractable" negotiator when it came to disputes over copyright and royalties with EMI. Jones has since proven a more cooperative partner.
"Jeff Jones did what many people thought was impossible," one industry insider says. "He was critical to making this happen."
Helping matters was the Sept. 9, 2009, release of the entire re-mastered Beatles catalog on CD, as well as the simultaneous release of "The Beatles: Rock Band" videogame by MTV. The CD reissue was a phenomenal success.
The band sold 3.3 million albums in 2009, according to Nielsen SoundScan, compared to 1.4 million in 2008. The videogame did not meet analysts' sales expectations, but to date has sold more than 2 million units worldwide, according to MTV.
"The unbelievable response to the physical remasters that year showed the market for Beatles repertoire just continues to grow and reach new fans," Pandiscia says. "All parties, all stakeholders, were very focused on finding a way to bring this catalog to market digitally." 
The exact terms of the deal remain unknown, but it's widely assumed to have two critical elements. First is that Apple paid a "substantial" advance for both the catalog and the exclusive rights to sell it digitally until sometime next year. Second, Apple had to satisfy the surviving Beatles desire to present the catalog properly. According to sources that have negotiated with the Beatles in the past, their primary concern is over creative expression than money.
"If you look at the presence you see on the iTunes store today, that's a very unique visibility point for any catalog," Pandiscia says. "The additional marketing components that will be revealed throughout the course of this campaign speak to the unique components of what this partnership is."