The Beatles' Magical Mystery Myth

If you're a Beatles' fan, you know that Paul McCartney and John Lennon's estate don't own the publishing rights to their songs, though they still own the writer's rights and get paid substantial amounts of money on the music. What I'm writing about is the myth that the two Beatles magically lost the publishing rights, thus missing out on an immense financial windfall.

First let me say that I believe 500 years from now, if our globe is still spinning that people will still be listening to the Beatles. Personally, I love the music. After all, Mozart and Beethoven actually wrote popular music and were only called “classical” after their deaths. This said, unfortunately Lennon and McCartney were bad businessmen as Beatles.

How the two Beatles lost the publishing rights to their songs goes back to how they once owned them. In the 60's artists didn't own the publishing rights, music publishing companies did. However, in the Beatles case, the man who started the company they published with had been an artist who had been taken advantage of by the music business and didn't want this to happen to the Beatles. His name was Dick James.

What James and his business partner did was unheard of back in that day and that was to give all the Beatles a percentage of the stock in Northern Songs, ( McCartney and Lennon received more shares than Harrison and Starr) the company formed to handle the publishing. On top of this, the company was taken public netting the Beatles more money.

So what happened? The short version of the story's that Lennon and McCartney sold their stocks for 3.5 millions pounds, or $ 70 million dollars in today's dollars. Did you get that? They sold, not lost, the music publishing rights. The reason they sold them is that James and his partner became alienated by Lennon and McCartney and decided to get out of the publishing business with them by selling the shares that James and Silver ( his partner) owned.

Because the public stockholders of the Beatles' music formed a consortium to sell at a certain price, McCartney and Lennon entered into an arrangement with ATV, the company that bought the stocks from James and Silver. If the two Beatles could raise the capital to buy the publicly owned stocks, ATV would sell their shares to Lennon and McCartney. If Lennon and McCartney couldn't, the two Beatles would sell their shares to ATV.

Here's where it fell apart. The Beatles had no real money available to buy the public stock because the tax rate was 97.5 % on the wealthy in Great Britain then. How they kept up the lifestyles of rock stars was by forming a corporation, Apple, and borrowing money off it to avoid the tax. Apple; of course, could deduct the loans tax free and everyone was happy. But it meant the Beatles had no liquid income.

And when it came time for John Lennon to come up with his share of the money by taking a mortgage out on his house, he balked. He was tired of playing the Man's game. So Lennon and McCartney magically lost nothing and, in fact, made $ 70 million in 2011 dollars. The problem is no one envisioned i-tunes, sneaker commercials or the fact that in 2011, the largest block of Beatles' fans would be 18 to 25 years old. Today the song catalog's worth $ 550 million dollars.

A lot of life is myth, so next week another myth, that the United States is bankrupt.

By

Jeffrey Ruzicka

Jeffrey Ruzicka is a retired executive of a small company that specializes in industrial water treatment. He lives happily with his wife in Western Pennsylvania and is a contributing writer to FinancialJobBank,FinancialJobBankBlog and Nexxt.