During a conference call last week covering its second quarter financial results, Apple said its iTunes music store continues to operate at "above cost," generating a small profit
define "SMALL"
300 million dollars small?
or 250,000 small?
We all know its closer to the millions. Who do they think they are kidding?
Steve has more control here than people realize, politicians are already smelling price fixing by the labels, and if this dispute gets out of hand, the politicians will step in.
The CD prices you state are obscene, but what CDs are priced $28, in what currency? I was rummaging through some of Best Buy's titles this evening and I didn't see a single CD priced higher than $15 US.
Canadian currency. Before ITMS the price of a CD was higher.
Quote:
I also don't remember any story or report that said that there was a decline in illegal downloading.
I am not basing that on a study done at MIT. I have read articles but mostly I am saying out of experience with friends and clients. I believe more people are downloading movies now, not music.
We all know its closer to the millions. Who do they think they are kidding?
With over a billion songs sold, with a margin of 19-39 cents each, they'd have made hundreds of millions. ITMS may however be 'paying' for the development of things like the iTunes app... Return on investment has got to be huge.
With over a billion songs sold, with a margin of 19-39 cents each, they'd have made hundreds of millions. ITMS may however be 'paying' for the development of things like the iTunes app... Return on investment has got to be huge.
To help clarify that you need to add a few things:
1. Bandwidth/hosting
2. Hardware
3. Staff
4. Other stuff I've probably left out
That number you queoted would only include what Apple took in after *only* paying the labels. That 190 - 390 Million (per your estimate) woul have to cover the other costs above before it could even be counted as profit. Now spread that over 3 years (or 12 quarters) and the numbers aren't so amazing. Apple is profiting from music sales, but it's pretty small relative to other products.
It's more important for them to get the music out there at a reasonable price. Sales at the iTunes Music Store help drive sales of iPods and keep Apple ahead in digital music overall. The return on their investment you're speaking of is when the music store helps drive sales of other Apple products.
Everything's relative, compare it's cost of operation to its profit and you'll see why they can call something like that "small".
Cost of operation is lower and revenue is higher, therefore there is profit. Wether that profit is small, or "small" (compared to what?) is irrelevant; the true profit of iTMS is how many people bought iPods because of it and vice-versa.
Cost of operation is lower and revenue is higher, therefore there is profit. Wether that profit is small, or "small" (compared to what?) is irrelevant; the true profit of iTMS is how many people bought iPods because of it and vice-versa.
My post was to illustrate how Apple could claim their profit from the iTMS was "small". I do realize that there *is* profit.
I also *did* mention exactly that iTMS helps drive sales of other Apple products, specifically iPods and that is where a much larger share of profit comes from.
To help clarify that you need to add a few things:
1. Bandwidth/hosting
2. Hardware
3. Staff
4. Other stuff I've probably left out
That number you queoted would only include what Apple took in after *only* paying the labels. That 190 - 390 Million (per your estimate) woul have to cover the other costs above before it could even be counted as profit. Now spread that over 3 years (or 12 quarters) and the numbers aren't so amazing. Apple is profiting from music sales, but it's pretty small relative to other products.
Even this list would only run into a few tens of millions. Advertising would be higher though. Legal costs too. Alot of money spent agresively trying to grow the business. Profits may be low but the business value must be skyrocketing.
Comments
Originally posted by hmurchison
I'd like to see Apple increase the bitrate to 160Mbps for more expensive tracks.
umm ... kbps?
During a conference call last week covering its second quarter financial results, Apple said its iTunes music store continues to operate at "above cost," generating a small profit
define "SMALL"
300 million dollars small?
or 250,000 small?
We all know its closer to the millions. Who do they think they are kidding?
Originally posted by BEatMaKeR
define "SMALL"
300 million dollars small?
or 250,000 small?
We all know its closer to the millions. Who do they think they are kidding?
What difference does it make?
Originally posted by BEatMaKeR
define "SMALL"
300 million dollars small?
or 250,000 small?
We all know its closer to the millions. Who do they think they are kidding?
Everything's relative, compare it's cost of operation to its profit and you'll see why they can call something like that "small".
Originally posted by BRussell
Let them charge extra for the newest mass pop crap, if it means better stuff is cheaper. Consider it a crappy music tax.
lol love it
gotta love toothpaste for dinner.
Originally posted by JeffDM
The CD prices you state are obscene, but what CDs are priced $28, in what currency? I was rummaging through some of Best Buy's titles this evening and I didn't see a single CD priced higher than $15 US.
Canadian currency. Before ITMS the price of a CD was higher.
I also don't remember any story or report that said that there was a decline in illegal downloading.
I am not basing that on a study done at MIT. I have read articles but mostly I am saying out of experience with friends and clients. I believe more people are downloading movies now, not music.
Originally posted by BEatMaKeR
define "SMALL"
300 million dollars small?
or 250,000 small?
We all know its closer to the millions. Who do they think they are kidding?
With over a billion songs sold, with a margin of 19-39 cents each, they'd have made hundreds of millions. ITMS may however be 'paying' for the development of things like the iTunes app... Return on investment has got to be huge.
Originally posted by Tag Me Back
With over a billion songs sold, with a margin of 19-39 cents each, they'd have made hundreds of millions. ITMS may however be 'paying' for the development of things like the iTunes app... Return on investment has got to be huge.
To help clarify that you need to add a few things:
1. Bandwidth/hosting
2. Hardware
3. Staff
4. Other stuff I've probably left out
That number you queoted would only include what Apple took in after *only* paying the labels. That 190 - 390 Million (per your estimate) woul have to cover the other costs above before it could even be counted as profit. Now spread that over 3 years (or 12 quarters) and the numbers aren't so amazing. Apple is profiting from music sales, but it's pretty small relative to other products.
It's more important for them to get the music out there at a reasonable price. Sales at the iTunes Music Store help drive sales of iPods and keep Apple ahead in digital music overall. The return on their investment you're speaking of is when the music store helps drive sales of other Apple products.
Originally posted by Bancho
Everything's relative, compare it's cost of operation to its profit and you'll see why they can call something like that "small".
Cost of operation is lower and revenue is higher, therefore there is profit. Wether that profit is small, or "small" (compared to what?) is irrelevant; the true profit of iTMS is how many people bought iPods because of it and vice-versa.
Originally posted by Gene Clean
Cost of operation is lower and revenue is higher, therefore there is profit. Wether that profit is small, or "small" (compared to what?) is irrelevant; the true profit of iTMS is how many people bought iPods because of it and vice-versa.
My post was to illustrate how Apple could claim their profit from the iTMS was "small". I do realize that there *is* profit.
I also *did* mention exactly that iTMS helps drive sales of other Apple products, specifically iPods and that is where a much larger share of profit comes from.
Originally posted by Bancho
To help clarify that you need to add a few things:
1. Bandwidth/hosting
2. Hardware
3. Staff
4. Other stuff I've probably left out
That number you queoted would only include what Apple took in after *only* paying the labels. That 190 - 390 Million (per your estimate) woul have to cover the other costs above before it could even be counted as profit. Now spread that over 3 years (or 12 quarters) and the numbers aren't so amazing. Apple is profiting from music sales, but it's pretty small relative to other products.
Even this list would only run into a few tens of millions. Advertising would be higher though. Legal costs too. Alot of money spent agresively trying to grow the business. Profits may be low but the business value must be skyrocketing.
Originally posted by monkeyastronaut
if Steve doesn't put an end to their greedy ambitions...
And apple doesn't have greedy ambitions by using a near-monopoly to gain undue market influence?
Originally posted by Tag Me Back
And apple doesn't have greedy ambitions by using a near-monopoly to gain undue market influence?
Apple does not have a monopoly.
Originally posted by Tag Me Back
And apple doesn't have greedy ambitions by using a near-monopoly to gain undue market influence?
no. Apple = good. Record companies = bad.