Subscription Services Aren't Banking On the Beatles, But Wouldn't Say No to a Little Help From John, Paul, George, and Google

Ten billion songs and a bajillion iPods later, the Beatles finally made good with digital-music fans last week and added their music to iTunes--the first time the songs of the world's best-selling band have been sold digitally. David Krinsky, head of label relations for Seattle-based Rhapsody, says it's only a matter of time before the Beatles also make their way to subscription-based services such as his.

"iTunes was able to commit a global campaign to the Beatles," he says. "It wasn't some sort of them versus us thing. They put something robust on the table that secured that for them."

Krinsky does not expect the eventual appearance of the Beatles' music on Rhapsody to be a panacea in the continuing quest to convince music fans to subscribe--rather than buy tracks and albums a la carte--but says that one of the first things people look for when considering a subscription service is whether their favorite bands are available. When one is missing, it's a strike against forking out a monthly fee for the service.

"Throwing in the Beatles [would] really fill a perceptional hole at this point," he says.

But David Hyman, the CEO of Rhapsody competitor MOG, says the Beatles' debut on iTunes and eventual foray into the subscription market is "just not that interesting. We'd be happy to have them, and it'd be great to have them, but I don't think people are making their decisions on subscription services based on whether you have the Beatles or not."

Hyman says convincing subscription holdouts like the Beatles to come aboard isn't nearly as significant to the future of the sector as increased portability on smartphones and being built into car dashboards the way satellite and terrestrial radio are.

"I think the car, for subscription, is the Holy Grail," Hyman says, noting that he believes MOG will start appearing in cars next year. "It's not going to happen overnight in 2011. There's a process to the way this plays out. You start to see things in the after-market first. The second phase is called dealer-option. And the Holy Grail is you're just built into the car."

Subscription services are as close as there's ever been to a legitimate incarnation of the Napster-led buffet that toppled the industry a decade ago. And though these services remain just a sliver of the digital-music market, the idea of subscribers paying a monthly fee (typically $10 to $15) for access to a library of millions of songs on their PCs, smart phones, and mobile devices has long been eyed as a potential life raft for an industry that's been decimated by former customers who've shifted to illegally downloading music. What's more, in the last year, a host of competitors have challenged Rhapsody. And with Google and Apple rumored to be entering the subscription market as well, 2011 is shaping up to be a critical year.

Both Hyman and Krinsky believe that the entrance of a behemoth like Apple or Google, and their corresponding marketing dollars, would be good for their companies in the end.

"Think about how Apple educated the world on digital mp3 storage devices [with the iPod]," Hyman says. "It would have never happened without the hundreds of millions of dollars in marketing. And so, for [subscription services] to become that kind of size, it's going to require that kind of marketing."

Broad exposure is exactly what Phillip Bailey, the director of digital and mobile sales at Paul McCartney's solo label, Concord, believes subscription services need. A Rhapsody subscriber of seven years, Bailey says he's optimistic about the future of subscription services, as long as they do a better job exposing music fans to the value of their products, and listeners are willing to trade the fact that they don't own their music for the ability to access a massive catalogue of millions of songs from any of their devices at any time.

"I see ownership isn't nearly as important as it used to be," Bailey says. "People want more access."

Though the Beatles' catalogue has never been available on subscription sites, each of the members' solo catalogs - with the exception of George Harrison's - are available on the MOGs and Rhapsodys of the world.

Most of McCartney's catalogue is availalbe, and new label, Concord, is issuing any of his solo and Wings albums that are not already available as they are re-mastered for physical distribution (Band on the Run dropped earlier this month, and the label expects to make another release in early 2011); In October, John Lennon's catalogue made its subscription debut along with the balance of the Beatles' Apple Records catalogue, which includes early releases from the likes of James Taylor. And, yes, you can find Ringo's solo works online for the streaming.

"This has actually been a fairly banner year in terms of the Beatles and their solo projects," Krinsky says.

The exception, of course, is the music of George Harrison, whose classic record, All Things Must Pass, is getting a 40th-anniversary reissue Friday on vinyl. Harrison's catalogue is available on iTunes, but not subscriptions services.

"The Harrison camp has taken a slightly different view on these things," Krinsky says. "Now that not just McCartney but now Lennon has been made available for subscription, we think that's going to be a real turning point in the Harrison estate with the way content should be made available today." A representative for Harrisongs, Harrison's publishing company, did not respond to a request for comment.

Though Lennon's catalogue had a strong showing during its first week on Rhapsody, and made him one of the site's top 10 artist for a time, but neither Lennon nor McCartney registered among Rhapsody's top 100 artists this week. And while The Beatles' first week of sales on iTunes was strong, it did was not outrageous. EMI says the band sold 450,000 full albums and 2 million individual downloads, which is less than the 626,000 copies the re-mastered Beatles CDs sold in their first week in 2009.

Perhaps that's because, as Hyman says, "Anybody who's a Beatles fan, you already have it. Who doesn't have the Beatles?"

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