Without citing sources, a recent story from Think Secret published on the PC Magazine site had this to say:

Another near-lock for the September 5 event is the availability of the Beatles’ catalog on iTunes. Following years of litigation that ended in Apple’s favor between Apple and the Beatles’ record label, Apple Corps, concerning trademark infringement, the Beatles catalog—the most coveted catalog not yet available in digital form—is expected to at last be made available. Some have gone so far as to speculate Apple will mark the momentous event with the release of a special Beatle-themed iPod, although evidence of this has yet to manifest itself.

PC Magazine says that Apple will announce that Beatles songs will be available on the iTunes store.

I’d like to predict that this will get press coverage far out of keeping with its import, but whatever. The interesting question: Was Beatles Inc.’s slow movement on digital sales was a smart idea or not? It’s a difficult calculation.

A good part of the decline in pop-music sales the last five or six years is the tapping-out of the oldies CD market. The guys who had bought the Eagles’ One of These Nights on LP, 8-track and cassette over the years had their chance to slip the record biz en masse (WEA, Don Henley & Co., and Sam Goody) another fast $15 when the album came out on CD. This process was duplicated many many times (millions of times, perhaps billions of times) over the 1990s as music-loving teens grew up, got a little disposable income and felt the need to relive a few high-school memories on the digital tip.

(I’m not being condescending, here: I’d be very embarrassed to share the names of some of the albums I re-bought on CD on just these grounds. I’ll see your Fragile and raise you a Captain Fantastic.)

But by the end of the 90s this income stream had tapped out, and none of the industry’s other attempts at a new format (DAT, minidisk etc. etc.) caught on.

Then comes iTunes, and I’d bet that a lot of the downloading comes from people who already had the CDs of the songs in question. This is free money for the Eagles and the record companies, without the need to make the damn record, store it, ship it somewhere, or pay the dullish kid behind the register to sell it to you.

The issue: when was the best time is for the Beatles to strike in this market? The argument that the time is long past is that millions of its original albums are being digitized and passed around amongst friends. I don’t even listen to the Beatles anymore, just on the grounds of overfamiliarity. Still, I just took a quick look on my iPod and discovered … nearly 100 Beatles songs on it. I would bet a lot of people are like me, digitizing their own albums (in my case, almost absent-mindedly) or getting them from friends, and absorbing the Beatles into their digital library almost by osmosis. Isn’t the band losing an enormous, unrecoverable, income stream?

You’d think that the Beatles’ organization making a calculated decision on this. Perhaps, in old-school negotiation style, they were trying to drive a harder bargain, or build up demand, but that would seem to be senseless when on every passing day people are digitizing their own CDs and adding them to their iPod collections—and then passing the discs on to friends, who have no other way to get the music onto their iPods.

The band’s sales veer widely—the 1 collection sold 10 million in 2000 and 2001, but in a typical year the group has a sales base of 1M or 2M. Two years ago, the group sold 2.4 million, according to SoundScan, and last year 1.6, and are on track for about that this year.

Assume the band makes three bucks from each record sold, and so might gross $6M a year just from album sales royalties. Assume the band and the label split the 65 cents they would presumably get from each iTunes sale, and that would translate to a little more than $3—or about the same as for the hard copy—for each album equivalent sold over the web.

In the face of such numbers the main argument I can see mitigating against iTunes sales is that they might in the long run hamper the group’s ability to finagle new generations of repackaging. The success of 1 is a very strong argument for this. There are for some reason millions of people who will buy a Beatles greatest hits set, like 1, even though it has nothing but the same songs they’ve bought again and again, notably in the massive-selling blue and red double CD sets. By contrast, online, once you’ve bought the digital version of “Hello Goodbye,” why would you ever pay for it again, absent some added value?

In the end, though, whatever sales records are bruited about by Apple after the inevitable event occurs, I think in the end the band will have lost untold millions over the last five years by not having benefited from being in the first wave of digitization by allowing, in effect, their fans to do the digitizing for themselves.