Unique, lucrative licensing deal brought Beatles to Apple's iTunes

It reportedly took a one-of-a-kind deal in which the band is directly paid royalties from song sales to bring the entire digital catalog of The Beatles to iTunes.

Citing industry sources, Reuters reported Thursday that the parent company of The Beatles, Apple Corps, is receiving royalties directly for digital download sales via iTunes, while "songwriting mechanical royalties" are paid directly to Sony/ATV Music Publishing.

"That suggests the royalty split could be more lucrative for the Beatles than it would be under the typical provisions of a standard artist contract, which treat digital downloads as a retail sale," author Ed Christman wrote.

For "superstar artists," retail royalties are usually between 20 percent and 25 percent of revenue. On iTunes, that amounts to between 17 cents and 22.5 cents for a song that costs $1.29.

Sources reportedly indicated that Apple's deal with the Beatles could mean that label EMI has entered a "licensing pact" with iTunes, which would allow royalty payments to be made directly to the Beatles and Sony/ATV. The report noted that other major artists, like Cheap Trick and the Allman Brothers have attempted to argue in court that digital download sales should be treated as licensing deals rather than equivalent to retail purchases.

"In addition to a potentially more lucrative royalty rate, iTunes' direct payment of U.S. royalties to the Beatles and Sony/ATV would give the band greater accounting transparency over their iTunes sales than they would if EMI distributed the royalties," the report said.

After a long wait, the full catalog of The Beatles arrived on iTunes last November, hyped 24 hours in advance with a teaser on Apple's site that an "exciting announcement" was on the way. The arrival has been heavily promoted with display and television ads.

The arrival of The Beatles on iTunes was a long and difficult road, completed more than 7 years after the iTunes Store first began selling music. Apple and the Beatles' parent company, Apple Corp, were engaged in a trademark dispute for years, before it was finally settled in 2007.