It's tempting to dismiss the Beatles' long-delayed arrival on iTunes as a non-event. After all, it's been more than seven years since iTunes began selling music. And EMI Music reissued the band's entire discography on CD barely a year ago. Still, here are five reasons why the Beatles-iTunes deal is important:
1. Digital marketing boost for the Beatles catalog
Yes, unauthorized copies of the Fabs' music have been available for free on file-sharing networks for more than a decade. But during that time, as CD sales entered into a tailspin, iTunes emerged as the largest music retailer in the United States, topping even former market leader Walmart. Although file-sharing continues to thrive, music retailing isn't dead. Eminem's chart-topping album "Recovery" is available everywhere on peer-to-peer networks. And yet since the album came out in June, about 728,000 U.S. consumers still chose to visit a digital retailer like iTunes and pay for it, accounting for about 25% of the album's total U.S. sales of 2.9 million, according to Nielsen SoundScan. ITunes will extend the Beatles catalog's reach to a sizable new audience of online shoppers, who for the first time will be able to click, purchase and download "She Loves You," "Ticket To Ride," and other cherished titles. Troubled EMI parent Terra Firma will appreciate the new revenue stream.
2. Apple Corps drops its resistance to digital distribution
Apple Corps, which manages the Beatles' catalog, finally dipped its toe into the digital music market in late October with a reissue campaign that included a multi-artist compilation "Come And Get It" and classic albums by Badfinger, James Taylor, Billy Preston and other artists. Remarkably, they were the first Apple Records titles to be sold as both CDs and digital downloads. Now that Apple Corps has reached a deal with iTunes on the Beatles catalog, it will hopefully pave the way for other digital products incorporating the band's music.
3. iTunes reinforces its market dominance
New, on-demand streaming music services like Spotify, Rdio and MOG have generated lots of buzz during the past year. But the Beatles-iTunes deal, which gives the digital retailer a period of exclusivity on one of the most storied catalogs in recorded music, provides a timely reminder of who really dominates digital music. The deal also shows that even though the major labels have expressed a desire to foster greater competition in digital retailing, their urgent, short-term need to maximize sales still leaves them eager to cut exclusive deals with the No. 1 U.S. music retailer. And that, of course, only strengthens iTunes' leverage vis-a-vis the recording industry.
4. iTunes LP scores a big win
Ever since iTunes launched its "iTunes LP" album format in September 2009, the enhanced artwork, lyrics and videos it offered have failed to excite the mainstream digital music market. Making the entire Beatles discography available only as iTunes LPs provides the format with its biggest marketing boost yet. It also helps justify the higher $12.99 retail price point for individual Beatles albums, which is a few dollars higher than the $9.99 that iTunes charges for albums by other heritage acts, like Led Zeppelin and (the solo) Paul McCartney.
5. The Fab Four fix a hole
U.S. digital music sales have shown worrisome signs of slowing. Digital album sales this year through the week ended Nov. 7 were up 12%, slowing from a 17.5% increase during the same period last year, while digital track sales were down 0.4%, swinging from a 10.2% gain during the year-earlier period. The digital release of the Beatles catalog obviously won't reverse that trend, but the development of the overall digital market will benefit as remaining hold-outs like AC/DC, Bob Seger, Kid Rock and Def Leppard license their music for digital distribution.