Jobs beat rivals
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Apple CEO Steve Jobs wasn’t the only one looking to broker a deal for the digital rights to the Beatles back catalog, The Post has learned.
Google and Amazon were also pitching to secure the Beatles rights for their own digital music stores, according to industry sources.
In the end, Apple’s iTunes, which remains the dominant digital music store, offered the Beatles the best deal despite the previous bad blood between the two entities, sources said.
The deal was spearheaded by EMI CEO Roger Faxon, who took the mantle in June and almost immediately got to work with Apple Corps Ltd., the company that manages all the Beatles’ business affairs.
Although EMI owns the band’s master recordings, Faxon needed to win over Apple Corps to break a seven-year deadlock over digital rights.
Apple Corps — run by Paul McCartney, Ringo Starr and the surviving partners of John Lennon and George Harrison, Yoko Ono and Olivia Harrison — agreed to pursue an agreement.
By the end of the summer, the three contenders for the Beatles deal were approached about the availability of the digital rights.
After rapid negotiations involving Apple Corps CEO Jeff Jones, EMI’s Faxon and Steve Jobs’ Apple, a deal was hatched and the parties set about planning the announcement and getting marketing materials together the week before the holiday shopping season starts in earnest.
The historic announcement yesterday is an exclusive agreement that runs through 2011. One music executive said: “Who else are they going to do a deal with? Apple dominates the digital market.”
EMI declined comment.
What remains to be seen is the extent to which the pact helps EMI dig out of its debt problems.
One source familiar with the terms of Terra Firma’s loan to acquire EMI described the deal as “far from a game-changer” for the private-equity firm, which has struggled to repay billions it borrowed to acquire EMI in 2007.
“This deal is not going to pull [Terra Firma] out of its hole,” the source said.
According to several sources, Apple made no up-front pay ment to EMI as part of the deal. Although the financial terms weren’t disclosed, Apple typi cally gets a 30-cent cut of every $1.29 download.
That would leave 99 cents for EMI, which in turn has to give a piece to publishing partners and royalty holders.
Industry insiders estimate EMI will pay 9 cents to music publisher Sony/ATV, a joint venture between Sony Corp. and the estate of Michael Jackson that holds the rights to more than 200 songs written by Lennon and McCartney. Universal Music Publishing holds the rights to other Beatles songs.
That would leave EMI with around 90 cents. While no one knows the precise split with the Beatles, industry in siders believe EMI made a gen erous 50-50 split in order to get the band on board. If that’s the case, EMI would take 45 cents, leaving the band members or their estates with 11 cents each per song download.
In an indication of just how much the economics of the music business have changed, back in the Eighties when the Beatles finally agreed to make their music available on CD, each Beatle got a dollar for every CD sold. Music watchers will have to wait until next Wednesday, when SoundScan sales figures are released, to find out whether the Beatles’ digital sales push them into the charts. [email protected]