Negotiators for the legendary band have spoken with numerous online music providers, ranging from small companies to Microsoft, which is planning to open an Internet music store this year. The Beatles' side is asking for a considerable sum in return for providing exclusive online distribution rights, perhaps for as long as a year or more.
"They are looking for someone to come up with the ideal way to put the Beatles online," one digital music executive told CNET News.com.
The growing interest by rock and roll's premier group--whose breakup more than three decades ago, and the subsequent deaths of two members, have hardly hurt its popularity--in distributing its work online marks a milestone in the short history of digital music. Online music services are struggling to prove they can offer more music than a brick-and-mortar store--and the lack of Beatles songs has been an often-cited gap in their appeal.
"One of the things that have held back digital music online has been lack of availability of very popular artists, notably among them the Beatles," said Jupiter Research analyst Michael Gartenberg. "If they are able to come to some sort of licensing terms, it bodes very well for the online model, and would probably pave the way for some of the other holdouts to come online."
But it may be some time before "Sgt. Pepper's Lonely Hearts Club Band" and "Let it Be" are sold on Apple Computer's iTunes or on Napster. One idea being considered is a Beatles-branded store that would be the only place online where the group's music, videos and other multimedia products would be sold, sources said. The store could be operated by one of the existing online music services.
Some other marquee bands have pursued this plan, but it has not been as popular as expected. Musician Dave Matthews maintains an exclusive online store on a site operated by MusicToday, a company associated with his manager.
Other big-name artists still waiting on the digital sidelines, to one degree or another, include Led Zeppelin and Madonna.
The current round of discussions are being led by the Beatles' representatives rather than the group's record label, EMI, sources said. EMI owns the Beatles' master recordings, and the record label has sought the group's permission before putting the songs online.
"We've had several discussions with them, because we think it would be terrific to make all the Beatles' work available in digital services," said EMI spokeswoman Jeanne Meyer. "We would be delighted if they made that decision."
In an earlier technology shift, the Beatles decided to wait before releasing their songs onto CDs, well after most of the music world had already made the transition.
Any exclusive deal--especially if the music is distributed in a proprietary copy-protected format from a company such as Apple or Microsoft--could spotlight the growing problem of the lack of interoperability between services, digital music formats and portable devices, analysts said.
The Apple factor
If the Beatles were to use Microsoft's format, the songs would not be directly playable on Apple's iPod, which does not support Windows Media. If the group were to chose Apple's copy-protected format, the songs could not be played directly on any digital music device other than the iPod, since Apple has not licensed use of its FairPlay digital rights management (DRM) tools to rivals.
The Beatles have played a small role in digital music already, suing Apple in a dispute over the use of the Apple name and logo after last year's release of the iTunes song store.
The two companies tussled in 1989, when Apple Corps--the company formed by the Beatles in 1968 to manage their business interests-- objected to Apple Computer's expansion into music-related products such as digital music software. Apple Computer settled the case for US$27 million and agreed to avoid using the similar trademarks in most music-related contexts.
In a statement released after the Beatles' company brought suit last year, the computer and software maker said "Apple and Apple Corps now have differing interpretations of this agreement and will need to ask a court to resolve this dispute."
