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  • Apple Inc. and Apple Corps: It’s All About the Money

    February 7th, 2007

    We like to think of The Beatles the way they were in 1965, when that legendary mop-top band with their goofy personalities and incredible musical talent dominated the pop world. But let’s not forget that the surviving members of that band and the heirs of John Lennon and George Harrison are, today, aging baby boomers with incredible amounts of wealth.

    Indeed, they don’t have to work ever again. Just sit back and count their money, or buy a few more estates. I hate to be cynical about all this, but consider the recent agreement, after years of recurring litigation, over the disposition of the Apple trademark. Have you noticed that it’s now owned by Apple Inc. and portions are licensed back to Apple Corps?

    Now correct me if I’m wrong, but didn’t Apple Corps get there first? So how come they have to license the trademark from Apple Inc.?

    Well, not mentioned too often in that press release is the fact that Apple Inc. paid Apple Corps for those rights. How much? Well, perhaps the SEC documentation will one day detail the real figures, or maybe not. Published reports talk of $50 to $100 million, which is quite a piece of change just for a name.

    I mean, when you hear the name Apple, what do you think about? Is it the holding company that manages the assets of The Beatles and appears on their recordings, or a certain company headquartered in Cupertino, California that makes iPods and Macintosh computers?

    That is a rhetorical question. You know the answer, and it makes sense from a logical point of view to have that trademark in the proper hands. It also gave The Beatles a wonderful payday. They’d have to sell lots of recordings to get anywhere close to what they probably received for signing a few pieces of paper and letting someone else handle that trademark.

    But all of this pales into insignificance compared to what will happen when their recordings are finally made available, legally at least, online. All these matters of contracts, trademarks, and income don’t concern you and I, unless, of course, you’re an Apple stockholder, in which case maybe it’ll impact the bottom line somewhat. But it is true that Apple uses iTunes to sell iPods, and doesn’t make a whole lot from the the music and videos you acquire.

    Certainly Steve Jobs did his best to drop hints that something was afoot during the Macworld Expo. If anything, announcing that agreement between the two Apple companies certainly fuels speculation that the recordings from the Fab Four are imminent. I wouldn’t be surprised if the agreement includes some sort of arrangement where iTunes would have an exclusive on Beatles recordings for a period of time, maybe three months or so.

    One also hopes that the remaining holdouts among the preeminent rock bands will join them once the recordings are available for download. It might even be an avalanche. Sure, you can get Beatles recordings today, all you want, and rip them to iTunes and make your own custom compilations for your iPod.

    I would even bet that the sound quality will probably be noticeably better than what you’d get from iTunes, particularly if you encode at a fairly high bit rate.

    Of course, it’s always possible that newly remastered versions of those original recordings will just blow away the ones you’re familiar with. I’ll grant that. However, even if they were the same recordings, the same quality, millions of tracks will be downloaded within days.

    The rest of the music download services on their will be insanely jealous, and it’s quite possible that Apple will build an over 90% market share, at least until the exclusive expires.

    Now wouldn’t it be fascinating to see a special Beatles Edition iPod come out at the same time, and perhaps a custom version? It doesn’t take any special abilities at prognostication to expect that Apple will do something real special to herald the arrival of The Beatles on iTunes.

    And as far as the Microsoft Zune is concerned, I wonder how many people will continue to say: “The What?”



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