I'm trying to imagine what it must be like to compete with Apple's digital music business. Say you're some muckety-muck with Napster, or in charge of Zune for Microsoft. You just had a nice, long Thanksgiving, giving thanks for either surviving another year in the very long shadow of the iPod and iTunes, or patting yourself on the back for releasing your 1.0 music player and serivce, perhaps even looking at your "Black Friday" sell-through numbers and thinking, "Hey, not bad."
Click on the iTunes music store and punch in "Beatles" under artist search. More than 50 albums will pop up, including Arthur Fiedler and the Boston Pops Play the Beatles, but none are the real deal. Fans wishing to download the actual Fab Four in MP3 format have to search peer-to-peer sites like Limewire for unlicensed songs they can listen to free.
But that may be about to change. While details remain to be worked out, Fortune has learned that iTunes is close to a deal to bring the Beatles catalog online. Apple Computer (Charts) is said to be angling to become the exclusive online music store for the Beatles for a limited window of time. Other music stores, such as Microsoft's (Charts) MSN and Rhapsody, have courted the Beatles over the years to no avail, but it appears Apple is close to getting first dibs on the band's hits
Also being discussed is whether the band would be willing to take two steps at the same time and endorse the iPod by allowing its music to be used in a commercial. Another scenario making the rounds is the prospect of the Beatles following U2's example with a branded iPod. "If the Beatles were in an iPod ad, that would be humongous," this [music industry] executive [apprised of the talks] said.
Just a little post-holiday reminder of what it means to live in an iPod World.
Despite decades of legal wrangling (including a couple of expensive trips to court), Apple Corps (ie, the Beatles) would still rather work with Apple Computer than cut deals with the runners-up. Such is the breadth of the iPod/iTunes/iTunes Store reach across the digital music landscape, that it would be foolish to cut an exclusive deal with someone else.
As others have pointed out, neither Dylan nor U2 seemed to feel that having their music features in iPod commercials was beneath them, and since the Beatles are among the few bands who see real money come from their music sales, they've got every incentive to help Apple sell, sell, sell those tracks.
Not everyone sees the wisdom in an exclusive tie-up between Apple and the Beatles. Take Blake "CrunchGear" Robinson:
[I]t seems Apple is currently hammering out the exclusivity term that will secure the Beatles on iTunes for an undisclosed period of time. Seems like a foolish move on behalf of Beatles management though. The Beatles should be released simultaneously onto all mediums, not exclusively onto one.
Interesting point. It stands to reason that the Beatles would sell more if they were available everywhere from day one. My response? Exclusivity probably gets the Beatles upfront money from Apple they might not otherwise get with an open release across all the online music stores. Furthermore, there are probably complications to negotiating royalty deals for those services, like Rhapsody, offering subscription plans as well as per-track downloads—Apple's model is probably quite a bit more straightforward. The Beatles are probably calculating that Apple's marketing chops are a cut above everybody's, even if Microsoft has equally deep pockets. The Beatles + iPod is a meeting of icons (the same way that Nike + iPod works), but The Beatles + Zune…well…
Ultimately, any exclusivity would be time-limited. Apple benefits from their exclusive window for Beatles songs, and the Beatles get cash, cachet, and access to roughly 80% of the digital music-buying world. Once the exclusivity lapses, I can't imagine that the remaining 20% of the customers out there that would be inclined to buy Beatles tracks online would decline to do so, just because the music was iPod/iTunes-only for a few months. In other words, I can't see how the Beatles really lose, even with an exclusive deal.
Also, I have a minor nitpick with the CruchGear post: it mocks how David Pogue disdained the Zune Marketplace quirk of letting users search for (and find) albums from artists it doesn't sell (like, say, the Beatles), while claiming the iTunes Store does the same thing, saying "I guess when Apple does it it’s not a ham-handed concealment, but rather a clever lifestyle alternative for Mac fanboys to rally behind."
I'll rise to the Mac fanboy bait, Blake. Open iTunes and search for "the Beatles." Your results will include the same All Music Guide bio you'll get from the Zune Marketplace, but it won't include links to any albums you can't buy. Zune Marketplace, on the other hand, has links to a large, but non-digitally-existent, Beatles catalog among the 95 albums in their search results. Perhaps it's not a big deal, but I know I'd expect to be able to buy the things I find through an online music store's search function.
And, just to give you some idea of the pain we're willing to endure over here at Global Nerdy just so we can bring you these tasty morsels, the Zune software I opened to run this stupid, nitpicky test uses around 100MB more memory than iTunes 7 on Windows. It out-bloats Firefox.
Actually, it out-memory-hogs Firefox and iTunes combined, and those apps were written by third parties.