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Apples Make Peace, Will Love Follow?

I Can’t Buy Me Love but can I buy me a Beatles download? Are Beatles songs coming soon to iTunes?

After three decades of fighting, for a third time, Apple and the rights holders of the Beatles’ music catalog (Apple Corps, Ltd.) settled their trademark disputes. 


The History: The first trademark suit was filed in 1978 and settled in 1981 with Apple Computer paying Apple Ltd $80,000 and agreeing not to enter the music business.  In the late eighties, Apple Corps sued again claiming the inclusion of MIDI music software on Macintosh computers violated the terms of the earlier agreement.  Apple Computer (a.k.a. Apple Inc.) settled in 1991.  The deal included a cash payment and separation of uses: Apple Corps would have rights to the apple logo for selling and making music.  Apple Inc. would have the rights for selling  

The Present: The recent battle was started around 2003 over iTunes, and Apple Corps belief that the use of the apple logo for an online music store was a violation of the 1991 agreement.  In court a British judge held that the use of the logo was acceptable but appeals were being prepared and further litigation pending.  

The impact:  The exact terms were not released but it’s speculated that the settlement includes a cash payment to Apple Corps in an amount no less than the 1991 payment, and likely, in a range of 2 to 4 times that.   That cash impact will have a trivial impact on Apple Inc’s financials.

Much more significant than the balance sheet hit is that this new settlement makes further appeals unnecessary.  The settlement also increases the likelihood of the two companies working together soon.

For Beatles songs to be sold on iTunes, licenses and agreements have to be made with the Beatles record label EMI.   It may take time for the 3 parties to come to terms but with litigation behind the two principles, it is more a matter of When then If.  As the Beatles inspired Cirque du Soleil show demonstrates, neither EMI nor Apple Corps is averse to licensing their holdings.  The only matter is contract terms, and if you read between the lines of recent actions and statements, a deal is probably due soon. 

Last month, when unveiling the iPhone at Macworld Steve Jobs included Beatles music and graphics in his presentation.  There is no way that was coincidental. Jobs is a natural showman who has proven time and again there is little he loves more than generating buzz and winking a “hint hint” at the Apple faithful.  Further, in the announcement of the settlement, Neil Aspinall, the manager of Apple Corps says “The years ahead are going to be very exciting for us.  We wish Apple Inc. every success and look forward to many years of peace co-operation with them.”   Note the choice of words: he says “co-operation” not “co-existence.”

My crystal ball isn’t perfect but I’d expect Beatles songs will be on iTunes within the next three quarters or less.  I’d bet on a deal with EMI for other songs in their catalog even sooner. I also wouldn’t even be surprised if future iPod ads include Beatles music (in the same manner as they’ve included U2 previously). 

The biggest obstacle is now out of the way. 

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