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Working it out, iTunes to sell Beatles titles

Working it out, iTunes to sell Beatles titles

By Ben Sisario and Miguel Helft, The New York Times | Updated: 7 June 2012 17:30 IST

Highlights

For the next generation of Beatles fans, the wait could soon be over. Apple is expected on Tuesday to announce that it has finally struck a deal with the Beatles, the best-selling music group of all time, and the band’s record company, EMI, to sell the

For the next generation of Beatles fans, the wait could soon be over.

Apple is expected on Tuesday to announce that it has finally struck a deal with the Beatles, the best-selling music group of all time, and the band's record company, EMI, to sell the band's music on iTunes, according to a person with knowledge of the private deal who requested anonymity because the agreement was still confidential.

Depending on the terms of the deal, customers for the first time will be able to buy "Please Please Me," "Hey Jude" or "A Day in the Life" online rather than on a CD and perhaps even as individual tracks. While the move to digital downloads does not quite rival the band's first trip across the Atlantic to appear on "The Ed Sullivan Show" in 1964, it is an acknowledgment that online purchases dominate the music industry's sales strategy.

Apple and EMI declined to comment, and representatives of the Beatles and Apple Corps, the band's company (not to be confused with the technology company), could not be reached.

One of the last major holdouts against selling its music via digital downloads, the Beatles are the ultimate prize for any music company. The group has held on to blockbuster sales four decades after breaking up -- it has sold more than 177 million albums in the United States alone, according to the Recording Industry Association of America -- and held on to untouchable cultural prestige.

Since opening its iTunes music store seven years ago, Apple has reshaped the music industry and become the largest music retailer in the United States. But the Beatles catalog had always eluded the company and Steven P. Jobs, its tenacious chief executive.

Still, while getting access to the Beatles catalog has plenty of symbolic significance, it is unlikely to bolster the company's bottom line.

"It is very symbolic because Steve Jobs is a huge fan of the Beatles," said Tim Bajarin, an analyst with Creative Strategies, who has been following Apple for more than two decades.

But for all the success of Apple in becoming the largest distributor of music on the Internet, the iTunes store is not a major source of profits for the company. Apple executives have said that iTunes is roughly a "breakeven" operation.

"The music itself is a vehicle to allow them to sell more iPods and iPhones, which is where they make real money," Mr. Bajarin said.

And despite the deal's symbolism, its financial value for the Beatles is uncertain. About three-quarters of all albums sold in the United States are still CDs, and physical albums remain far more profitable for record companies than downloads.

Apple did its best to tease the industry -- and Beatles fans -- with a mysterious message on its Web site on Monday, saying that an "exciting announcement from iTunes" -- one "that you'll never forget," no less -- was coming on Tuesday at 10 a.m. Eastern time. As news reports began circulating online and sharp-eyed bloggers read the tea leaves on Apple's site -- a possible reference to a Paul McCartney song, another to the semaphore symbols on the cover of the Beatles' album "Help!" -- calls began to ricochet around the music industry that the deal might be for the digital holy grail.

Mr. Jobs has tried to make a deal with EMI and the Beatles many times before, but negotiations have always broken down, usually accompanied by a flurry of online rumors, accusations and conspiracy theories. Further complicating the relationship between the parties, Apple Corps, the Beatles' company, and Apple, the computer company, had been embroiled for decades over trademark disputes.

In the past, Paul McCartney has said that a deal for Beatles' downloads would have to be approved by all the band members or their heirs.

Like AC/DC, Bob Seger and a few other major acts that sell old albums in large numbers, the Beatles stand to earn far more money from sales of CDs than downloads. But with each new compilation or reissue, like the remastered versions of Beatles albums that went on sale last year, Beatles fans have shown their willingness to buy their favorite music again and again; in the 2000s, only Eminem sold more albums in the United States, according to Nielsen SoundScan. Terms of the deal, including the pricing of the songs, could not be learned. For years, Apple insisted on selling all songs for 99 cents. But in 2009, after intense pressure from the music industry and sometimes rancorous negotiations, Mr. Jobs agreed to terms that the industry called "variable pricing." Apple now sells songs for 69 cents, 99 cents or $1.29.

As news of the deal spread throughout the music industry on Monday, many wondered if the Beatles would get a special pricing deal.

The publicity bonanza of a major iTunes announcement could be just the thing to get fans excited. Millions of fans can already listen to their favorite Beatles albums on their iPods, iPhones and other digital music players, since they have been able to transfer tracks from their CDs to the digital devices.

"Anybody that hasn't managed to come up with a digitized version of the Beatles' song by now never liked the Beatles," said John Perry Barlow, a former lyricist for the Grateful Dead and the co-founder of the Electronic Frontier Foundation, an online civil liberties organization.

But Mr. Barlow said that having the Beatles catalog on iTunes could help introduce younger listeners to songs that have become part of our collective cultural heritage.

"That music is timeless," Mr. Barlow said. "It's probably some of the most remarkable songwriting created by humans and there are new generations coming along that don't already know these songs."

Mr. Barlow the deal also represents a personal victory for Mr. Jobs.

"Steve Jobs has finally become the dominant Apple," he said.

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