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halftime

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Hey! Today I initially planned to write about Kanye West ending his Gap and Adidas deals. That essay is still coming soon, but we postponed that to cover the more pressing topic, the Super Bowl Halftime Show.

Rihanna’s the headliner. I’m pretty sure that this will be her first on-stage performance in five years. Huge moment! She was one of the first artists signed to Roc Nation. Plus, Jay Z had initially signed her at Def Jam when her career started. Relationships can always close deals that money can’t.

I’ll write more about Rihanna leading up to the show, but today’s memo is about the show’s new sponsor, Apple Music and why it is willing to pay in the expected range of $40 - 50 million annually for the show. Let’s dive in.

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why Apple Music paid to sponsor the Super Bowl Halftime Show

A few months ago, Pepsi declined to continue its 10-year deal as the halftime show’s presenting sponsor. It plans to shift that $40 – 50 million annual cost to digital marketing. Ironically, this isn’t the first time Pepsi cut its Super Bowl budget for the Internet (only to return to the Super Bowl a few years later).

This shift from Pepsi to Apple is music’s version of that legendary Steve Jobs quote to then-Pepsi CEO John Sculley in 1983 to convince him to join Apple.

The Apple Music transition may not be quite as world-changing, but it’s a sign of how sponsorships and broadcast rights have evolved, who’s willing to pay for them, and how Apple Music will justify the cost.

the business of livestream entertainment

The big opportunity for Apple is the potential to livestream the halftime show on Apple Music and Apple TV+. Several streaming services have secured rights to livestream major festivals. Apple Music has livestreamed Verzuz battles, Ye’s Donda listening sessions, and concerts around the world with Billie Eilish and Wizkid. The Super Bowl Halftime show is the biggest stage there is. The show attracts many viewers who could care less about the game itself, especially since Roc Nation has helped the NFL attract a wider range of artists.

the halftime show’s reach across the world

In the U.S., the paid music streaming market is saturated. It reminds me of Will Page’s quote from our podcast episode on Trapital:

The NFL households who aren’t already paying for one of these services are likely more rural and have less willingness to pay for Apple Music, Apple TV+, or the Apple One’s bundle. The bigger opportunity for Apple Music and the Super Bowl is to expand the halftime show’s international reach.

American football may not be as attractive across the world, but the halftime show is! An Apple Music livestream can decouple the musical performance from the game itself. Watching U.S. broadcast TV can sometimes be a challenge for people outside of the U.S., but streaming makes it more accessible.

International markets are where most streaming and subscription-based products have had faster growth in recent years. And since music’s digital streaming providers have become more commoditized, valuable differentiated content is a win.

every Oscar sells more AirPods. every sports deal sells more iPhones

The deal makes more sense when we remember why Apple Music and the company’s other content services exist. They are not intended to be profitable as standalone entities. These are business lines that help the company attract more customers to sell them Apple products.

Here are some recent content moves that Apple has made this year:

– $10 million on CODA’s 2022 Oscar campaign to win Best Picture

– $50 million annually for the Super Bowl Halftime Show

– $85 million annually for MLB Friday Night Baseball (50 games)

– $250 million annually on Major League Soccer​

– In talks for $2.5 billion NFL Sunday Ticket broadcast rights

– Estimated to spend $8 billion total on content in 2022

Even if you add those numbers up, it’s still less than the $12 billion revenue that Apple made from AirPods in 2021.

For further validation of these deals, Amazon’s initial results from Thursday Night Football look promising. Amazon Prime’s new exclusive broadcast of Thursday Night Football attracted a record number of Prime subscriptions in a three-hour period, beating out Prime Day and Cyber Monday. Amazon paid $13 billion for its 11-year Thursday Night deal. For 15 games per year, Amazon spends just under $80 million per game to reach an audience of 13 million for 3.5 hours per week.

Meanwhile, last year’s Super Bowl halftime show reached 120 million people for the 15-minute performance. That’s the audience Apple can reach (and potentially grow) in the future.

Apple’s ultimate dream is to have the NFL’s biggest games exclusively on Apple TV+. That may be the future, but one step at a time. The halftime show just spent the past decade selling sugar water. Let’s see how it does with selling AirPods.

money moves

• Events startup Easol launches new financing solution for music festival organizers​
• How Twitch lost the battle for its soul after reducing top streamer revenue share from 70/30 to 50/50
• Why Warner Music’s incoming CEO Robert Kyncl makes sense for the new era​
• The music industry’s oversaturation problem​

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coming soon from Trapital

Essay: Kanye West and Yeezy leaving Gap and Adidas. New essay coming out in October. Stay tuned.

Podcast: Hannibal Buress. This is his second appearance on the podcast. This time, we talked about his shift to focusing on music under the name, Eshu Tune. Drops next Thursday.