Asymco is estimating that it costs Apple some $1.3 billion dollars a year to run the iTunes Store. They came to this conclusion by analyzing the amount of money paid out to developers, the number of accounts, and the total amount of content downloaded from the store so far. Then Asymco cross referenced these numbers with the average selling price on the store and came up with a “content margin” for each month.
This monthly “content margin” added up to $113 million, which, over a year, adds up to $1.3 billion. The report goes on to suggest that the revenue incurred from iTunes goes right back into the infrastructure and upkeep of the store. Apple makes little to no money from this venture.
iTunes proves the argument of why I believed iCloud should be free. The service itself won’t cost the end-user a dime, but if it’s stellar as it should be, then Apple is likely to sell more hardware that ties into the service, thus making more money in the long run. Apple wanted to sell it to users up front, and that just doesn’t seem to be a business model the market is ready for.
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