On November 16, 2010, the Fab Four’s legendary music became available on iTunes. CMUdaily recently reported that in order to secure The Beatles catalogue, iTunes may have struck an unusual deal. Typically, the wholesale price for every download sold is paid from the distributor (here, Apple, Inc., owner of iTunes) to the record company, which then passes on the mechanical royalty to the publisher and pays the artist any royalty pursuant to the recording contract. However, Apple, Inc., is allegedly paying the artist royalty directly to Beatles company Apple Corps, Ltd. and the mechanical royalty directly to Sony/ATV, publisher of most of The Beatles’ songs. This direct payment would mean that Apple Corps and Sony/ATV would receive a quicker and probably larger cut of the revenues. Some guess that Apple Corps may even be getting half of the wholesale fee for each download. That piece of the (apple) pie grows quickly — 2 million songs were sold in the first week, and the consumer price is set at $1.29 per song.

AppleIt is suggested that this set up is more like a licensing deal than a standard record sales agreement. However, EMI insists that the agreement was not a licensing deal. A handful of artists have proven unsuccessful in arguing that under their pre-Internet contracts, sales via iTunes constitute licensing. Generally, a license generates a higher royalty to artists than a conventional record sale agreement. Nevertheless, the issue was recently resolved in favor of the licensing interpretation in FBT Productions v. Aftermath Records. The question, however, is contract-based, and the “Apple to Apple” deal remains under wraps.

Kelly Donley

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2 Responses to Apple to Apple

  1. Kelly Donley says:

    Thanks for your comment! For more about artists’ availability on iTunes, here’s an interesting article about the relationship between Sony’s recording arm and Apple iTunes: “Sony hints that it will abandon iTunes”

  2. It’s a very interesting topic – how one of the best ever pop/rock band is being paid for their ever-lasting music. It was hard to understand for so many Beatles fans that The Beatles songs were not available on iTunes when so many new bands with low-quality productions are available there for download. Luckily, now there is a competition between iTunes and Amazon, which the fans applause…