An interesting report from Asymco estimates that it costs Apple US$1.3 billion per year to run the iTunes store and the sum was reached by examining known numbers, like the total number of songs, movies, TV shows and apps that have been downloaded, plus the number of iTunes accounts and how much Apple has paid out to developers…………..

Apple spends approximately $1.3 billion per year or $113 million each month to run iTunes and its App Store and Apple probably isn’t making as much money off of all those downloads as you think it is. There are 225 million iTunes account holders, which is an astronomical figure given that the service has only been operating since April 2003. But iTunes is still only at the break-even point. All of those users account for 15 billion song downloads every year. In addition, they buy 130 million books, 14 billion apps and about 100,000 games. That’s a lot of money exchanging hands. Something like $313 million every month. But, given Apple‘s deals with music labels to secure the rights to all of that music it’s offering in the iTunes store and the $2.5 billion we know the company has paid out to developers, a figure that was revealed just last week at the Worldwide Developers Conference, the content margin is only about $113 million.

That money, the $113 million every month that Apple is bringing in (far more comes from app downloads than music downloads), is spent on support, curation, traffic and payment processing. Whatever is leftover, Asymco suggests, is “invested in capacity increases.” That is, adding to the massive server farms that are required to store all of the available content and acquiring new material. The data that Apple published in the last event included the following:

• 15 Billion iTunes song downloads
• 130 million book downloads
• 14 billion app downloads
• $2.5 billion paid to developers
• 225 million accounts
• 425k apps
• 90k iPad apps
• 100k game and entertainment titles
• 50 million game center accounts

As this data is added to the existing data and cross-referenced additional insight into the economics of iTunes is emerging.

Thanks: (1),(2)

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