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Apple Meets the Beatles? We'll Find Out Superbowl Sunday
Seeking Alpha ^ | 01/018/2007Carl Howe (Blackfriars Communications) submits: I've speculated previously that Apple's (AAPL) introduction of the iPhone at last week's MacWord was just the start of many announcements to come this year. AppleInsider observes that Apple has picked up rights to air a Super Bowl commercial on February 4.. The rumor is that they'll use that commercial to announce an three-month exclusive deal to electronically distribute some Beatles music via the iTunes Store.
Now wearing my marketing hat, this raises a question: Does this ad buy make sense from an ROI point of view? Current Super Bowl ad rates are about $2.6 million for 30 seconds. Apple makes only about US$0.04 on each song sold via iTunes. So it would have to sell about 65 million Beatles tracks during that limited three-month period to break even on the commercial time, to say nothing of the cost of the ad production. And even if it were to sell 100 million Beatles tracks, that would only make Apple $1.4 million or so. So the open question becomes, "Might there be more in an Apple Super Bowl ad than just the Beatles announcement?"
My call: Assuming it was able to negotiate the rights, Apple will probably announce a Beatles-themed iPod to bundle with the Beatles music, just as it did with the U2 iPods. And given that Apple just talked down iPod projections for the first quarter, that would be a smart way to boost sales during this traditionally slow period -- and again surpass analyst projections.
Follow Ups:
I don't think Apple would look at it as selling only Beatles songs, but rather a chance to sell more iPods, as well as other tunes. Synergy, as it were.The Beatles announcement would likely spur quite a few folks to buy new iPods. Once they have the iPods, the downloading will follow. Cha-ching.
IMHO, of course.
If a Beatles/Apple agreement is a fact, it is very reasonable to think that it may be linked to a settlement of long standing issues between the 2 entities. By all accounts, the Beatles management has a strong argument and case. Could well be that Apple does not make anything from the sale of Beatles tunes.... BUT, I wonder how much incremental traffic and associated downloads will result from the the attention- most of which should flow to Apple's bottom line.It could also be another smokescreen to deflect additional scrutiny from the expanding Apple/Jobs/Option probe. With a 6mos+ introduction pipeline for the iPhone, it should be obvious that the timeing of the annoucement was influenced by the probe. When attention is focused on the scandle, the stock price declines. When Apple can focus attention on other issues, the stock price rises.
Even if Apple does not receive meaningfull direct revenue from the sale of Beatles tunes, support of the stock price does in a sense generate wealth for the company.
Best,
Ross
IF they buy on the Super Bowl, then I suspect it will be more than a Beatles ad, maybe a new IPod line as well
Remember Apple Corps was suing Apple for trademark infringement. Apple was supposed to stay out of the music business.
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