Home Music Beatles in ITunes Deal that “Apple doesn’t want anyone to know about”

The Beatles’ deal with ITunes? Well, it diminishes their ailing record label, EMI.

In a most unusual deal that ITunes and Apple don’t want anyone to know about, the Beatles and their music publisher are being paid directly by the downloading service.

What does this mean? It means that EMI’s Roger Faxon, who made a big deal out of finally getting the Beatles connected to ITunes, made a concession unlike any other.

The story was first reported in Billboard and Reuters. http://ca.reuters.com/article/entertainmentNews/idCATRE7050IC20110106

I’ve confirmed it independently, however.

What happens normally is that the record label–EMI in this case–cuts the deal with ITunes. Then they receive payments, or royalties, and distribute them to the artist and the music publisher. In a normal deal, EMI would be receiving money from ITunes on Beatles downloads, then sending them to Sony/ATV Music and to the Beatles’ company, Apple Corps (separate from ITunes’ Apple).

However, in this deal, EMI is the last to get paid. They have to wait for the Beatles to receive their money from ITunes. Then Apple Corps pays EMI. ITunes is also paying Sony/ATV directly all its music publishing royalties.

By doing it this way, the Beatles are likely receiving a higher royalty than if EMI were paying them. And so far the Beatles have sold hundreds of thousands of downloads on ITunes since they announced the deal a month ago. Still on the ITunes bestsellers chart are “Abbey Road,” “Sgt. Pepper,” the White Album, the red and blue greatest hits albums, and the Beatles box set.

ITunes/Apple, says my source, does not want this story getting out. “They don’t want to have to negotiate individually with every artist. This could be precedent setting.”

It’s also precedent setting for EMI, which is in dire financial shape and doesn’t have much leverage with anyone. There’s now speculation that EMI’s deal with Pink Floyd might be similar. Pink Floyd sued EMI and won over allowing downloads of their concept albums like “Dark Side of the Moon” in pieces. Now that Pink Floyd has finally re-signed their catalog to EMI, sources say that soon we won’t be able to download individual tracks from those albums. It’s unclear how ITunes will pay Pink Floyd–through EMI or their own company.

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3 replies to this post
  1. Actually it’s “iTunes”

    Beyond that, an astonishing revelation – where will these once-almighty record companies be but five years from now? What is their long-term strategy…borrow capital until the model changes? Huh?

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