Are the Beatles finally going digital?

After decades of legal bickering between the Fab Four's holding company, Apple Corps, and computer maker Apple Inc. (AAPL), the two seem to be getting cozier.

The provider of the popular iTunes music store, which has sold over a billion downloads but has yet to score permission to sell Beatles music tracks, nevertheless chose to play one of the band's hit songs, "Lovely Rita," at the launch of its hotly anticipated mobile phone, the iPhone.

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The psychedelic album cover of the Beatles' hit album "Sgt. Pepper's Lonely Hearts Club Band" graced a giant monitor behind Chief Executive Steve Jobs as he talked about the phone that combines a communication device and an iPod music player.

The cover of a second album, "Abbey Road," also was displayed.

The Beatles have been among the last big music acts to refuse to license their music for sale online.

But more than 40 years since the band broke through on the music scene, sources say talks to take the band's music catalog digital were getting closer to a resolution.

"There are ongoing discussions between Apple and Apple," said a source familiar with the matter, citing knowledge of meetings between the two parties in recent weeks.

"It would make sense that the Beatles would bring their music online, and it's safe to assume that something sooner rather than later will happen," said the source familiar with Apple Corps' business dealings.

The firm is owned by Sir Paul McCartney, Ringo Starr and the widows of John Lennon and George Harrison.

Industry observers have been especially watchful since David Munns, head of EMI Group Plc's North American division, in November told a Web industry conference in San Francisco that Beatles music would be available for download "soon."

Apple Corps was not immediately available for comment. A spokeswoman for EMI, the band's record label, declined to comment. A spokesman for Apple Inc. was not immediately available for comment.

Another industry source familiar with the matter said both Apple Corps and EMI have to be careful not to alienate other potential retailers, such as Wal-Mart Stores Inc. (WMT), by going exclusively with an iTunes deal.

"There could be severe repercussions if there were an exclusive deal," said one source with knowledge of the talks.

The sources said various details such as the period of exclusivity for iTunes and other terms have been big talking points in discussions in recent months.

Apple Corps and Apple Inc., which dropped the word "Computer" from its name on Tuesday, long feuded over names and logos.

In May, a London judge ruled in favor of the computer maker, saying iTunes did not violate a 1991 deal in which Jobs was allowed to keep doing business under the Apple name as long as he agreed not to enter the music business.