Brian Epstein was the manager of a family-owned business called North End Music Stores in Liverpool, England. He began hearing a lot about a new group called The Beatles, who were playing at the Cavern Club. So he went to hear them, and one day, proposed a management contract.

The four lads, which included drummer Pete Best at the time, eventually agreed, and a five-year deal was signed in 1962. With that, Epstein created a company called NEMS to manage The Beatles. As the band became popular in England, NEMS began to be overwhelmed with product licensing offers.

But once the band hit America, NEMS became besieged with merchandising requests, so Epstein reluctantly set up a subsidiary called Seltaeb to deal with the offers. Seltaeb was Beatles spelled backwards.

As Epstein saw it, the merchandising was just a PR abstraction at best, so he asked a friend to take the management of Seltaeb off his hands. That friend, Nicky Byrne, suggested a 90/10 split, which, by the way, was 90% for Byrne, 10% for The Beatles.

Epstein agreed immediately, thinking that 10% of incidental merchandising was better than nothing. And in the stroke of the pen, lost untold millions for The Beatles.

CBC Radio’s Under the Influence podcast, on the marketing of rock ‘n’ roll. See more podcast picks.


Photo: moonierocks, Flickr

We need your help to get to 5,000 Longreads Members.

Join Longreads now and help us keep going.