The rumor mill has a funny way of repeating itself and moving in circles until gossip eventually transitions toward fact. Back in March, the airwaves were abuzz with the prospect that the Beatles' digital debut might come by way of Activision’s (ATVI) Guitar Hero video game and not, as widely expected, iTunes' music store.   That news didn’t pan out. Activision revealed their G.H. pipeline and the special release title in the current lineup turned out to be a Metallica special edition.

Now, a few months later, the Financial Times is reporting on a similar Beatles story. A rumor repeat based on new disclosures. According to the new reports, a licensing deal worth several million dollars is in the works and could be weeks away. The parties are talking.

Fact? Fiction? Full Beatles Edition? Just a few songs licensed for the next installment of the Game? It’s tough to say. A digital Beatles release, in any venue, has been a come and go rumor that replays like Aesop’s fable about the boy who cried wolf.

At iTunes, it’s been almost a year and a half since the Beatles' arrival became an imminent (and recurring) headline grabber. Those prophesies began in January 2007. That’s when Lovely Rita played during the announcement of the iPhone.   The stories gained an added false credibility soon after, when the trademark suit between the two Apples (Apple Inc. (AAPL) and Apple Corps) was settled in February. But by June ‘07, the iPhone launched with no musical accompaniment. Now it is nearly July 2008 and there is still no Beatles on iTunes.

In March, the Guitar Hero story was fueled in part by Paul McCartney’s recently completed divorce. Story speculators at the time were theorizing that, with his divorce and asset split issues now resolved, he’d be more motivated to help break any deal-related roadblocks and get something done.

Lending to credibility were other facts too: Among them, Apple Corps, and the other Beatles rights holders, had been showing a more progressive trend toward licensing the song catalog. Rights had already been granted to a Vegas show and to American Idol. Also, Sony (SNE)/ATV head Martin Bandier and folks at Activision (and rival EA (ERTS) and MTV’s rival Rock Band) had said they’d be interested in working with the Beatles songs if given the chance.

The trouble, as Metue reported with the first rumor in March, is that handicapping Beatles predictions has proven notoriously difficult. Even with Olivia Harrison (widow of guitarist George) telling Reuters all the heirs and surviving band members were in agreement about an iTunes partnership, and even with Paul McCartney saying similar in November 2007, so far it’s not happened. Part of the reason for that is convoluted ownership. The famed song catalog is owned only partly by band members and their heirs. A more significant chunk is actually owned by Sony and Michael Jackson.

This complex chain of custody dates back to the late 60s. Around 1963, the Beatles sold publishing rights to Northern Songs, a company created by their manager, Brian Epstein, and a music publisher, Dick James. When Northern Songs went public in 1965, John Lennon and Paul McCartney each held 15%.  Dick James and the company’s chairman, Charles Silver, held a controlling stake of 37.5%. In 1969, James and Silver sold Northern Songs to the Associated Television Corporation [ATV]. In 1985, ATV sold the catalog again. At that time, Michael Jackson outbid Paul McCartney and others to win the rights for an estimated $47 million (which has proven a bargain). Not all songs were included (depending on when they were written, who wrote them and other prior agreements), but many of the Beatles' biggest hits were. In 1995, Jackson sold half of his stake to Sony for about $95m. 

Getting the Beatles’ catalog into the digital realm requires deals acceptable to all the rights-holders involved. Even though all the Fab Four are on iTunes as solo artists, for example, it’s proven a complex process for the band.

So back to the same question: will Activision best iTunes and other suitors to get the Beatles first? Is the rumor more likely the second time around?

In March, we said, “So….’Coming Soon, but not too soon’ … ‘probable but not definitive’ … those sound like more realistic takes. Definitely, a holiday 2009 GH release would make for good publicity (as if Beatles rumors needed any more hype).”

They’re talking. Anything is possible, but that’s probably still the safest answer. Either that, or the smaller license of a few Beatles songs for Guitar Hero 3. That’s definitely in the realm of realistic.

Either way, just as in March, I’ll be lining up to get a copy if and when a full Beatles edition is released, but until then - I’ll remain skeptical.

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Seth Gilbert

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