Does Apple Make Money on the Music Store?

dstranathandstranathan
Posted:
in General Discussion edited January 2014
Apple® today announced that over two million songs have been purchased and downloaded from its revolutionary iTunes® Music Store since its debut 16 days ago. Continuing the trend set during the first week, over half of the songs purchased to date were purchased as albums, further dispelling concerns that selling music on a per-track basis will destroy album sales











So how much $ does Apple actually MAKE off each song though? I doubt it's much money at all really...

Comments

  • Reply 1 of 9
    buonrottobuonrotto Posts: 6,368member
    The recording companies take 0.65$ for each $0.99 song, so the rest is for expenses, third parties (?) and amybe a few cents of profit when it's all said and done. I would think that $0.10 per song is way too high a number. I'd guess about 5 cents per song. But what do I know? Nothing about the "industry" anyway.
  • Reply 2 of 9
    matsumatsu Posts: 6,558member
    eeek, Apple would need to sell a billion singles to make just to make 50 million. Seeing as they're probably on pace for about 300 million DL's a year, times about 4-5X when you add windows users, looks like eventually the store will do 50-75million in profits for Apple, but not for a while.
  • Reply 3 of 9
    serranoserrano Posts: 1,806member
    This has been done to death. It's ~34¢ a song before bandwidth costs.
  • Reply 4 of 9
    ghost_user_nameghost_user_name Posts: 22,667member
    Right. 34 US cents/song.



    And remember that Apple already made a healthy investment in Akamai back in 1999; so, those bandwidth costs probably aren't as high as they could be.
  • Reply 5 of 9
    formerlurkerformerlurker Posts: 2,686member
    Quote:

    Originally posted by Brad





    And remember that Apple already made a healthy investment in Akamai back in 1999; so, those bandwidth costs probably aren't as high as they could be. [/B]



    of course, if they had just sold their Akamai stock just before the bubble burst, they could probably BUY Microsoft right now....

  • Reply 6 of 9
    cowerdcowerd Posts: 579member
    Quote:

    This has been done to death. It's ~34¢ a song before bandwidth costs.



    And the other costs you forgot to mention including credit card processing (standard is 2% per transaction, though Apple is probably paying less), advertising (they'll have to do it sometime after the novelty wears off), software and hardware development (somewhere to bury those Windows iTunes and iPod development costs) and tech support (for those angry why the f%^S won't my songs download calls).



    Apple is not loosing money by any means, but its not a clean $0.34 before bandwidth.
  • Reply 7 of 9
    toweltowel Posts: 1,479member
    The whole 99c counts as revenue, though. Any source of profit-generating revenue, no matter how small that profit is, helps Apple's bottom line in the analysts' eyes. If Apple's year-over-year revenues can grow while it keeps posting modest profits, that'd be a GoodThing(tm).
  • Reply 8 of 9
    bungebunge Posts: 7,329member
    They're using Fairplay to lock the files. They have to license that too. It's not free.
  • Reply 9 of 9
    serranoserrano Posts: 1,806member
    Quote:

    Originally posted by cowerd

    Apple is not loosing money by any means, but its not a clean $0.34 before bandwidth.



    It's a clean 34¢ before bandwidth/investment/r&d et cetera. But doesn't the advertising come from their advertising budget, and the software development from their software division, and the hardware... you're talking about Apple Computer, Inc., I'm talking about the iTMS.
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