[12 May 2007]
SAN FRANCISCO - Despite signs that Apple Inc. may land a historic deal with the Beatles to make the band’s entire catalog of music available on its iTunes store, analysts say that such a move would be a “nonevent” in terms of the company’s profits.
Rumors of such a deal have been circulating for years. Speculation grew to a feverish pitch Friday when ex-Beatle Paul McCartney told Billboard magazine that an agreement with iTunes is “virtually settled.”
Currently, none of the digital-music merchants has rights to sell Beatles tunes online.
Apple’s iTunes is by far the largest player in the sector, but the company was hampered by a long-running trademark dispute with the band’s music-publishing arm, which is named Apple Corps.
The two sides reached a settlement in February, which many expected to pave the way for an eventual deal to sell Beatles songs.
Still, this won’t do much to boost profits at Apple and other online sellers, analysts said during interviews Friday.
At 99 cents a song, it is believed by most that Apple simply breaks even on song sales.
Though the company does not disclose its actual profitability on music sales, Chief Executive Steve Jobs has said publicly that there is little in the way of profits in sales of music. He added that he started iTunes as a way to help boost sales of the company’s popular iPod music player.
“Having the Beatles on iTunes is fabulous, but it’s a nonevent,” according to W.R. Hambrecht & Co. analyst Matthew Kather, who has a buy rating on Apple.
“It’s not a needle mover,” agreed Shaw Wu, an analyst with American Technology Research, who also has a buy rating on Apple.
Wu and others believe that to significantly boost any music seller’s bottom line, it would take a jump in online sales, and such a spike is unlikely to come from the sudden availability of the Beatles.
Still, the development is sure to be a boon for music aficionados and for Apple Corps, the company that manages the Beatles’ commercial interests, Wu said.
Meanwhile, Apple Corps and EMI Group, which holds the rights to the band’s recordings, in April said that they had settled a long-standing dispute over royalties - paving the way for the band to release its back catalog through digital-music retail platforms.
A recent agreement between Apple Inc. and EMI to make EMI’s artists available over iTunes without copyright-protection software, albeit at a higher price point, also has raised expectations that a deal will soon be reached to allow the Beatles’ material to be sold digitally.