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Grapevine: Beatle Mania for Guitar Hero? Subscription iPods?

beatles guitar heroSpring is in the air.  It’s “March Madness,” the time for college basketball’s big tournament. Predicting the outcome has the odds-makers busy.  If they can find some time, they might be equally challenged forecasting another unpredictable event that’s generating March Madness of its own: the digital licensing of the Beatles’ song catalog.

For more than a year the Beatles arrival at iTunes has been an imminent (and recurring) headline grabber.  The prophesies began in January 2007 when Lovely Rita played during the announcement of the iPhone.   They gained credibility when the trademark suit between the two Apples (Apple Inc. and Apple Records) was settled in February.  In June, the speculation surfaced again with the phone’s launch.  Again with new iPods introduced in September.  Then in January, like Punxsutawney Phil it popped up for Mac World only to see its shadow and disappear anew.

Last week, the conclusion of Sir Paul McCartney’s tabloid-fodder divorce fueled a new round of rampant speculation.   Several reports citing sources close to Sir Paul claimed a deal, possibly worth hundreds of millions, was imminent.  Apple summarily dismissed the claims.  "This is not news nor is it a scoop," said their spokesman.

Now there’s a new rumor, a new twist, and this one is much more plausible than the tabloid’s absurd suggestions Sir Paul was driving a deal to seek cash for the divorce settlement.  The new rumor also a bigger surprise than just being logical – this new gossip doesn’t involve Apple.  Instead, according to the latest chatter in the digital rumor mills, the first digital licensee of the music industry’s most coveted prize could be Activision.  That’s no spelling error….Activision, not Apple.

According to reports printed in the UK and US press, a possible Guitar Hero tie-in could be on its way.   Already Activision has demonstrated a barely restrained willingness to expand the franchise (DJ Hero anyone?).  There’ve also already green-lighted a single band edition of the franchise.  Aerosmith Guitar Hero is in the cue and taking pre-orders now.  Those pieces news, coupled with the vast cross marketing potential, make for a natural fit and a good, juicy theory.

For now though, a theory is all this gossip is.  The stories lack facts and are purely speculative.   Sure, they are predicated on the certainty that the Beatles will eventually go digital, and probably do so in 2008, but where remains an uncertainty to all but select few.

The “when” is another question too.  As it stands handicapping Beatles predictions has proven notoriously difficult.  Even with Olivia Harrison (widow of guitarist George) telling Reuters all the heirs and surviving band members were in agreement about an iTunes partnership, even will Paul McCartney saying similar in November, so far it’s not happened.  Part of the reason for that is ownership is convoluted.  The famed song catalog is owned only partly by band members and their heirs.  A more significant chunk is actually owned by Sony and Michael Jackson.

This complex chain of custody dates back to the late 60s.  Around 1963, the Beatles sold publishing rights to Northern Songs, a company created by their manager, Brian Epstein, and a music publisher, Dick James. When Northern Songs went public in 1965, John Lennon and Paul McCartney each held 15%.  Dick James and the company’s chairman, Charles Silver, held a controlling stake of 37.5%. In 1969, James and Silver sold Northern Songs to the Associated Television Corporation (ATV).   In 1985, ATV’s sold the catalog again.  At that time, Michael Jackson outbid Paul McCartney and others to win the rights for an estimated $47 million (which has proven a bargain).  Not all songs were included (depending on when they were written, who wrote them and other prior agreements), but many of the Beatles biggest hits were.  In 1995, Jackson sold half of his stake to Sony for about $95m. 

Getting the Beatles’ catalog into the digital realm requires deals acceptable to all the rights holders involved.  Even though all the Fab Four are there as solo artists, it’s proven a complex process for the band.

At this point, all sources indicate there is nothing imminent with iTunes.  And for Activision, while that’s a different beast, reports from insiders say there aren’t even formal discussion going on, let alone actual game development efforts.

Given all that, putting odds to it, it’s highly unlikely Activision will get a shot at the Beatles before iTunes, Amazon, or other music retailers do.  Still, at some point in the future, a tie in is not outrageous.   Beatles music was licensed for a Cirque du Soleil show in Vegas, and the reigns were loosened further with recent American Idol licenses.  (It also doesn’t hurt that representatives from Sony/ATV including CEO Martin Bandier have indicated they’d be interested if Activision wants to pursue it).

So…."Coming Soon, but not too soon” … “probable but not definitive” … those sounds like more realistic takes.  Definitely, a holiday 2009 GH release would make for good publicity (as if Beatles rumors needed any more hype). 

If it happens, I’d buy one – I’d even throw in a few bucks for some limited edition accessories.  Maybe an Abbey Road, or Sgt. Pepper themed guitar, or a kit bundled with limited edition CDs? Or better yet, how about a joint iTunes/Guitar Hero /Beatles promotion?  Bundle them all.  Any takers?   Come to think of it, why be exclusive to just Guitar Hero too.  Sure they were first, but a custom themed version of MTV and EA’s Rock Band would make my wish list too.  Maybe a bidding war is in the future.  And why stop there, how about a Beatles themed iPod.  U2 had a special edition, maybe a Beatles edition could be I the works too?

So many possibilities.   So many rumors.

Speaking of which, there’s another Apple rumor floating around; a repeat that’s circulated on and off like an office Flu for the past year.  It’s the recurring concept of a new subscription based iPod business model. 

The description for the new concept is similar to phone-based subscription services offered by Nokia and other vendors in Europe.  It  involves building a fee into the hardware price in exchange for either preloaded music, or a subscription to access a larger music catalog at will.

Part of the premium price would be shared with the music labels instead of standard per song royalty fees.   For instance, an iPhone might cost $100 more and $80 of that fee would be given to the music labels in exchange for the music.   ($80 is the fee paid to the music labels by Nokia per handset, according to the Financial Times).

As a subscription service, which likely only be considered for iPhones (which have monthly billing arrangements through the cell service provider), much of the music would likely be lost in the event of a cancellation.  Only a small allocation of songs per year might be considered “purchased” with ownership vested to the consumer.

The idea behind either of these kinds of subscription, or preloaded music, models goes against a number of past statements made by Apple.  At one point, Steve Jobs characterized it bluntly saying: "Never say never, but customers don’t seem to be interested in it.”

It’s possible that he and his staff have changed their minds. It’s possible (though unlikely) they believe their customers have.  It’s also possible that the labels are using the threat of continuing to exclude Apple from DRM Free music licenses as leverage to offer something like this.Ultimately, Anything’s possible.

It’s another Apple rumor.  As often in the past, it probably has one bit of truth, another wishful thinking, and several parts incorrect information.  Real news will get reported when it happens.  For now, just more gossip. With Apple rumors,almost anything is possible. Throw in the Beatles and it’s an infinite loop.


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