Help! Coming for Downloads

Maybe I'm not so crazy after all.

Less than a month after I wondered whether Apple Corps' suit against Apple Computer (Nasdaq: AAPL  ) was a cover to help The Beatles' record label enter the music-download business, a top Apple Corps executive said in court that such plans are in the works.

Really? How is that legal? Didn't Apple and Apple agree not to compete? Wouldn't distributing music violate that agreement? Maybe. Maybe not. I'm not a lawyer, so I can't know for sure. But I'll admit that I'm far more optimistic about this suit than I was a few weeks back.

Let me explain. Over the years, Apple Corps and Apple Computer have been at loggerheads over branding issues on name and logo. In addition, neither wanted to be in the other's business, or so it seemed. Now, the Beatles want to sell digital copies of their records, and Apple has the No. 1 online music store. These two shouldn't be fighting; they should be talking -- especially since The Guinness Book of World Records says that, with more than 1 billion albums sold, The Beatles are the top-selling music act of all time.

So, how about we settle this silly lawsuit and arrange a new deal for Apple to distribute Beatles songs through iTunes? There's no reason an agreement can't be reached if both sides are willing to compromise a bit.

First, Steve, you'll have to agree to a lower cut than you're used to with other artists. Yeah, I know, that's a pain. Apple makes only roughly $0.05 per download as it is. Too bad -- this is the Beatles we're talking about. You can take some lesser increment and still make a big wad of cash. Besides, there's plenty more money to be had elsewhere.

And that brings me to you, Apple Corps. You're one of the last remaining holdouts in digital downloading. And while you've been cuddling up with CDs, Apple has grown to dominate the online entertainment market. What could be better than being the top-billed artists on the world's largest digital stage? Not much. Accordingly, if Apple agrees to only offer the Beatles' catalog as entire albums for, say, two years, and for $10.99 a pop, you agree to pay Jobs and Co. something a little less than a 5% royalty on the sales.

Then, after the two-year period is up, you agree to make your song library available for $0.99 per download, while Apple limits its take to a few pennies per download. In return, you agree to exclusive co-branding rights on iPods and make the iTunes video store the permanent home for your band's vast collection of videos.

To sew up the deal, Steve, you'll have to pay an up-front fee for the downloading rights. Previous reports say Apple Corps wanted $15 million for six months. If you ask me, I'd say that's too high; it seems the Beatles would get the better end of a deal as structured above. But a multi-year deal and a permanent ban on litigation involving iTunes might be worth it for Apple Computer, especially with the publicity that will follow.

So what do you say, guys? Try to see it my way. Life is very short, and there's no time for fussing and fighting. We can work it out.

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Fool contributorTim Beyersowned exactly one Beatles album, but he holds no shares in any of the companies mentioned in this story at the time of publication. You can find out what is in his portfolio by checking Tim's Foolprofile. The Fool'sdisclosure policyis never out of tune.


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