Apple Corps

Apple Corps Ltd. is a multi-armed multimedia corporation founded in January 1968 by English rock band The Beatles to replace their earlier company (Beatles Ltd.) and to form a conglomerate. Its name (pronounced "apple core") is a pun. Its chief division is Apple Records, which was launched in the same year. Other divisions included Apple Electronics, Apple Films, Apple Publishing, and Apple Retail, whose most notable venture was the ill-fated Apple Boutique in London. Apple's headquarters, in the late-1960s, was at 3 Savile Row in London, known as the Apple Building, which was also home to the Apple Studio.

From 1970–2007, Apple's chief executive was former Beatles road manager Neil Aspinall though he did not bear that title officially. The current CEO is Jeff Jones.

In 2010, Apple Corps ranked second on Fast Company magazine's list of the world's most innovative companies in the music industry, thanks to the release of The Beatles: Rock Band video game and the remastering of the Beatles' catalogue.

History

Formation

The Beatles' accountants had informed the group that they had a large amount of capital which they could either invest in a business venture or else lose to the Inland Revenue. According to Peter Brown, personal assistant to Beatles manager Brian Epstein, activities to find tax shelters for the income that The Beatles generated began as early as 1963–64 when a Dr Strach was put in charge of such operations. First steps into that direction were the foundation of Beatles, Ltd. and in early 1967, Beatles and Co., which later evolved into Apple.

John Lennon remembered it like this:
Our accountant came up and said 'We got this amount of money. Do you want to give it to the government or do something with it?' So we decided to play businessmen for a bit because we've got to run our own affairs now. So we've got this thing called 'Apple' which is going to be records, films, and electronics – which all tie up.

Writes Stefan Granados in Those Were the Days: An Unofficial History of the "Beatles" Apple Organization 1967–2001 on the various processes that lead to the formation of Apple Corps:

The first step towards creating this new business structure was to form a new partnership called Beatles and Co. in April 1967. To all intents and purposes, Beatles and Co. was an updated version on The Beatles' original partnership, Beatles Ltd. Under the new arrangement, however, each Beatle would own 5% of Beatles and Co. and a new corporation owned collectively by the four Beatles (which would soon be known as Apple) would be given control of the remaining 80% of Beatles and Co. With the exception of individual songwriting royalties, which would still be paid directly to the writer or writers of a particular song, all of the money earned by the Beatles as a group would go directly to Beatles and Co. and would thus be taxed at a far lower corporate tax rate.

Now that a new business structure was found with a lower tax rate, The Beatles's manager Epstein mused what to do with it in order to justify it to the authorities, and originally thought of it mostly as a merchandising company, as according to Lennon's first wife Cynthia: "The idea Brian came up with was a company called Apple. His idea was to plough their money into a chain of shops not unlike Woolworth's in concept – Apple boutiques, Apple posters, Apple records. Brian needed an outlet for his boundless energy." Personal assistant to Epstein, Alistair Taylor relates it a bit more in detail:

We set up an 'Executive Board' of Apple before Brian died, including Brian, the accountant, a solicitor, Neil Aspinall, myself, and then sat down to work out ways of spending the money. One big idea was to set up a chain of shops designed only to sell cards; birthday cards, Christmas cards, anniversary cards. When the boys heard about that they all condemned the scheme as the most boring yet. Sure that they could come up with much better brainwaves, they began to get involved themselves.

In the middle of setting up the new company, manager Epstein died unexpectedly in what seemed an accidental sleeping pills overdose on 27 August 1967, which pressed The Beatles to accelerate their plans to gain control of their own financial affairs. In addition to providing an umbrella to cover the Beatles' own financial and business affairs, Apple was intended to provide a means of financial support to anyone in the wider world struggling to get 'worthwhile' artistic projects off the ground. According to Granados, this idea probably first originated with Paul McCartney as the Beatle most engaged in London's local avant-garde scene, "McCartney was among the best-known exponents of swinging London".

McCartney at first had obviously intended to use Epstein's music publishing company NEMS Enterprises for these plans, but after Epstein's death it became apparent that Australian Robert Stigwood was trying to get hold of NEMS, only to control The Beatles and get a hand in their profits. None of The Beatles themselves favoured such an outcome, as McCartney had previously told Epstein in 1967: "We said, 'In fact, if you do, if you somehow manage to pull this off, we can promise you one thing. We will record God Save the Queen for every single record we make from now on and we'll sing it out of tune. That's a promise. So if this guy buys us, that's what he's buying." They hurried to set up Apple instead, and seeing that The Beatles would not be part of the NEMS package, Stigwood went to form his own company, RSO Records.

By this time, also the company name originated with McCartney, coming from a René Magritte painting he'd acquired; 'Apple "Core" (Corps)' was a play on words all the Beatles enjoyed. The ubiquitous logo was designed by Gene Mahon, with illustrator Alan Aldridge transcribing the copyright notice to appear on record releases. John Lennon and McCartney introduced their new business concept on a press conference held on 14 May 1968 in New York City: Lennon: "It's a company we're setting up, involving records, films, and electronics, and – as a sideline – manufacturing or whatever. We want to set up a system where people who just want to make a film about anything, don't have to go on their knees in somebody's office. Probably yours." Said McCartney:"It's just trying to mix business with enjoyment. We're in the happy position of not needing any more money. So for the first time, the bosses aren't in it for profit. We've already bought all our dreams. We want to share that possibility with others."McCartney pitched it to the world's media as an attempt at 'Western Communism': "A beautiful place where you can buy beautiful things… a controlled weirdness… a kind of Western communism."

Early administration

With Epstein's death, there was nobody in the Beatles' inner circle with business acumen who could manage the company, and as with their band affairs, the Beatles decided that they would manage it themselves. Unfortunately, the band members' ignorance of finance and administration combined with their naive, utopian mission of funding struggling, unknown artists left Apple Corps with no solid business plan. The mail room, telephone switchboard, and conference rooms became jammed at all hours with "artists" begging the Beatles to give them money. George Harrison would later lament that "We had every freak in the world coming in there." Many of these supplicants received the investments they sought and were never heard from again.

The Beatles' naivety and inability to keep track of their own accounts was also eagerly exploited by the employees of Apple, many of whom had been hired in the same spirit of populist whimsy that drew applicants for the company's funds. Staff used Beatle money to purchase drugs and alcoholic beverages, company lunches at expensive London restaurants, and international calls made regularly on office telephones, all of which would be treated as business expenses. In essence, the Beatles had allowed themselves to be taken advantage of by anyone who could talk their way into the coffers.

Writers Alan Clayson and Spencer Leigh described the owners' hopelessness in managing their own creation:
Out of his depth, a Beatle might commandeer a room at Savile Row, stick to conventional office hours and play company director until the novelty wore off. Initially, he'd look away from the disgusting realities of the half-eaten steak sandwich in a litter bin; the employee rolling a spliff of best Afghan hash; the typist who span out a single letter (in the house style, with no exclamation marks!) all morning before 'popping out' and not returning until the next day. A great light dawned. 'We had, like, a thousand people that weren't needed,' snarled Ringo, 'but they all enjoyed it. They were all getting paid for sitting around. We had a guy there just to read the tarot cards, the I Ching. It was craziness." .

Neil Aspinall finally agreed to direct the company on a temporary basis, simply so that someone would finally be in charge. When, in 1969, the Beatles engaged Allen Klein as their manager, Klein also inherited the chairmanship of Apple Corps, which led to an immediate streamlining of company affairs. "Overnight, glib lack of concern deferred to pointed questions," wrote Clayson & Leigh. "Which typist rings Canberra every afternoon? Why has so-and-so given himself a raise of 60 pounds a week? Why is he seen only on payday? Suddenly, lunch meant beans-on-toast in the office kitchen instead of Beluga caviar from Fortnum & Mason."

Beatles break-up and beyond

The first two years of the company's existence also coincided with a marked worsening of the band members' relationships with each other, ultimately leading to the break-up of the band in 1970. Apple quickly slid into financial chaos, which was resolved only after many years of litigation. When the Beatles' partnership was dissolved in 1975, dissolution of Apple Corps was also considered, but it was decided to keep it going, while effectively retiring all its divisions. The company is currently headquartered at 27 Ovington Square, in London's prestigious Knightsbridge district. Ownership and control of the company remains with McCartney, Starr and the estates of Lennon and Harrison.

Apple Corps has had a long history of trademark disputes with Apple Computer (now Apple Inc.). The dispute was finally resolved in 2007, with Apple Corps transferring ownership of the "Apple" name and all associated trademarks to Apple Inc., and Apple Inc. exclusively licensing these back to The Beatles' company. In April 2007, Apple also settled a long running dispute with EMI and announced the retirement of chief executive Neil Aspinall. Aspinall was replaced by Jeff Jones.

Subsidiaries

Apple Corps operated in various fields, mostly related to the music business, through a number of subsidiaries.

Apple Electronics

Apple Electronics was the electronics division of Apple Corps, founded as Fiftyshapes Ltd. It was headed by Beatles associate Yanni Alexis Mardas, whom John Lennon had nicknamed Magic Alex.

Intending to revolutionise the consumer electronics market, largely through products based on Magic Alex's unique and, as it turned out, commercially impractical, designs, the electronics division did not make any breakthroughs. Even a planned apple-shaped radio could not be produced at a competitive price, and was ultimately beaten out by Panasonic's 'ball and chain' radio.

After the dismissal of Magic Alex in 1969, during Allen Klein's 'housecleaning' of Apple Corps, Apple Electronics fell victim to the same forces that troubled the company as a whole, including the impending Beatles break-up.

While it did not make a dent in the marketplace, Apple Electronics was still considered a viable business entity years later, when Apple Corps and Apple Computer, now Apple Inc., went into litigation.

Apple Films

Apple Films was the film making division of Apple Corps. Its first production was the Beatles 1967 TV movie Magical Mystery Tour; other notable releases included The Beatles' Yellow Submarine; Born to Boogie, Ringo Starr's 1972 documentary about the band T.Rex; The Concert for Bangladesh by George Harrison And Friends (1972); and Son of Dracula, a 1974 horror-musical which teamed Starr with singer Harry Nilsson. George Harrison was the executive producer for the Apple Films Little Malcolm and His Struggle Against the Eunuchs that included the Dark Horse Records band Splinter's song "Lonely Man".

Apple Publishing

Apple's music publishing arm predated even the record company. In September 1967, the first artistes to be signed by Apple Publishing were two songwriters from Liverpool. Paul Tennant and David Rhodes who were offered a contract after meeting Paul McCartney in Hyde Park. They were advised to form a band by Brian Epstein after he and John Lennon heard their demos and the name of the band was Focal Point. Epstein was to have managed the band but died before he could become involved. Terry Doran MD of Apple Publishing became their manager and they were signed by Deram Records. Another early band on its publishing roster was the group Grapefruit. Apple published the group's self-penned songs from early 1968, though Grapefruit's records were mostly released on RCA.

Apple Publishing Ltd was also used as a publishing stop-gap by George Harrison and Ringo Starr, as they sought to shift control of their own songs away from Northern Songs, in which their status was little more than paid writers. (Harrison later started Harrisongs, and Starr created Startling Music.)

Probably Apple's greatest publishing successes were the Badfinger hits "No Matter What", "Day After Day" and "Baby Blue", all written by group member Pete Ham, and Badfinger's "Without You", a song penned by Ham and Badfinger band mate Tom Evans. "Without You" became a worldwide #1 chart hit for Harry Nilsson in 1972 and Mariah Carey in 1993. In 2005, however, Apple lost the US publishing rights for the work of Ham and Evans.
Apple also undertook publishing duties, at various times, for other Apple artists, including Yoko Ono, Billy Preston, Doris Troy, and the Radha Krsna Temple. Apple received a large number of demo tapes; some songs were published, some were issued on other labels and only Gallagher & Lyle were retained as in-house writers before going on to co-found McGuinness Flint. Many of these demos have been collected on three Cherry Red CDs, entitled 94 Baker Street, An Apple for the Day, and "Treacle Toffee World".

Apple Records and Zapple Records

For the main article on this topic, see Apple Records

From 1968 onwards, new releases by the Beatles were issued by Apple Records, although the copyright remained with EMI, and Parlophone/Capitol catalogue numbers continued to be used. Apple releases of recordings by artists other than the Beatles, however, used a new set of numbers, and the copyrights were held mostly by Apple Corps Ltd. Unlike a mere 'vanity label', Apple Records developed an extremely eclectic roster of their own, releasing records by artists as diverse as Indian sitar guru Ravi Shankar, Welsh easy listening songstress Mary Hopkin, the power-pop band Badfinger, classical music composer John Tavener, soul singer Billy Preston, the Modern Jazz Quartet, and even London's Radha Krsna Temple. A short-lived subsidiary, Zapple Records, was intended to release spoken word and avant garde records, but folded after just two releases: Lennon's and Yoko Ono's Life with the Lions, and Harrison's Electronic Sound.

Apple Retail

For the main article on this topic, see Apple Boutique

The Apple Boutique was a retail store, located at 94 Baker Street in London, England, and was one of the first business ventures by the fledgling Apple Corps. The store opened on 7 December 1967 and closed its doors for the last time on 30 July 1968. The boutique was never profitable, largely due to shoplifting. Perhaps owing to this, the store's remaining stock was liquidated by giving it away.

Apple Studio

Apple Studio was a recording studio, located in the basement of the Apple Corps headquarters at 3 Savile Row.

Originally designed by Magic Alex of Apple Electronics, the initial installation proved to be unworkable, with almost no standard studio features such as a patch bay, or a talkback system between the studio and the control room, let alone Alex's promised innovations, and had to be scrapped. The Beatles recorded and filmed portions of their album Let It Be in the Apple Studio, with equipment borrowed from EMI, and during takes they had to shut down the building's central heating, also located in the basement, because the lack of soundproofing allowed the heating system to be heard in the studio.

Redesigning and rebuilding the basement to accommodate proper recording facilities took eighteen months. The studio reopened on 30 September 1971 and included its own natural echo chamber, a wide range of recording and mastering facilities, and could turn out mono, stereo and quadrophonic master tapes and discs. In 1971, it would have cost £37 an hour to record to 16 track, £29 an hour to mix to stereo, and £12 to cut a 12” master.

The studio became a second home for Apple Records artists, although they also used Abbey Road and other studios, and other artists such as Harry Nilsson, Wishbone Ash, Viv Stanshall, Lou Reizner, Clodagh Rodgers, Kilburn and the High Roads, the Sensational Alex Harvey Band, and Marc Bolan, as shown in the movie Born To Boogie, also worked there. The existence of acetates by numerous performers is evidence the studio was widely used.

When the disbanded Beatles finally moved their offices away from Savile Row in the mid-1970s, the studio was closed permanently.

Legal battles with Apple Computer

For the main article on this topic, see Apple Corps v. Apple Computer

In 1978, Apple Records filed suit against Apple Computer (now Apple Inc.) for trademark infringement. The suit was settled in 1981 with the payment of $80,000 to Apple Corps. As a condition of the settlement, Apple Computer agreed to stay out of the music business. A dispute subsequently arose in 1989 when Apple Corps sued, alleging that Apple Computer's machines' ability to play back MIDI music was a violation of the 1981 settlement agreement. In 1991 another settlement, of around $26.5 million, was reached. September 2003 Apple Computer was again sued by Apple Corps, this time for introducing the iTunes Music Store and the iPod, which Apple Corps asserted was a violation of Apple's agreement not to distribute music. The trial opened on March 29, 2006 in the UK and, in a judgment issued on May 8, 2006, Apple Corps lost the case.

On 5 February 2007, Apple Inc. and Apple Corps announced a settlement of their trademark dispute under which Apple Inc. will own all of the trademarks related to “Apple” (including all designs of the famed 'Granny Smith' Apple Corps Ltd. logos) and will license certain of those trademarks back to Apple Corps for their continued use. The settlement ends the ongoing trademark lawsuit between the companies, with each party bearing its own legal costs, and Apple Inc. will continue using its name and logos on iTunes. The settlement includes terms that are confidential.

The website for Harmonix's The Beatles: Rock Band video game is notable as the first tangible evidence of the Apple, Inc./Apple Corps Ltd. settlement: 'Apple Corps' is prominently referred to throughout, and the 'Granny Smith' Apple logo appears but the text beneath the logo now reads 'Apple Corps' rather than the previous 'Apple'. The website's acknowledgements specifically state that, "'Apple' and the 'Apple logo' are exclusively licensed to Apple Corps Ltd."

Apple versus EMI

The Beatles alleged in a 1979 lawsuit that EMI and Capitol had underpaid the band by more than £10.5 million. A settlement was reached in that case in 1989, which granted the band an increased royalty rate and required EMI and Capitol to follow more stringent auditing requirements.

Apple, on behalf of the surviving Beatles and relatives of the band's late members, again sued EMI for unpaid royalties, in a case beginning in 2005. The case was settled in April 2007 with a "mutually acceptable" conclusion, which remained confidential.

Bibliography

• DiLello, Richard (1973). The Longest Cocktail Party: An Insider's Diary of the Beatles, Their Million-dollar Apple Empire and Its Wild Rise and Fall, Canongate Books Ltd. ISBN 1-84195-602-3.
• McCabe, Peter, and Robert D. Sconfeld Apple to the core; the unmaking of the Beatles ISBN 0-671-78172-3.
• Granados, Stefan. Those Were The Days, An Unofficial History of The Beatles APPLE Organization 1967–2002. ISBN 1-901447-12-X Cherry Red Books 2002