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iTunes now costs $1.3 billion/yr to run

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Re: iTunes now costs $1.3 billion/yr to run

#31

Post by pflats »

jfruh wrote: post #21

Can someone help a poor liberal arts major? I see "costs $1.3 billion to run" and I think "Apple loses $1.3b a year on the iTunes store." But reading the article and the constant Apple talk about breaking even makes me think that what they're trying to get at is "the infrastructure for the store and payments to artists and app creators costs $1.3b a year, but Apple's 30 percent cut of everything produces about $1.3b…

Almost. The site quotes the money that Apple keeps "after paying content owners but before paying for other costs". The 1.3 billion doesn't include paying the record/movie labels, bands, or app developers, but does include everything else.

In other words, "the infrastructure for the store and payments to everyone other than artists and app creators costs $1.3b a year, but Apple's 30 percent cut of everything produces about $1.3b a year in revenue, so it all works out."

Re: iTunes now costs $1.3 billion/yr to run

#32

Post by rsynnott »

smackfu wrote: post #13

Too bad Apple doesn't break it down a bit: iTunes music: must make money. There is no review process, the labels handle everything, and the file sizes are tiny. iBooks: Probably loses money, based on a gut feeling for how many people are actually buying books on iBooks vs Amazon. Mac App Store: Probably losing money at this point. iOS App Store: Could be break even I suppose. Obviously lose money on free apps, plus t…

I would have called music the least likely one to be making money, actually. A common usage pattern is buying one or two songs in a sitting, at which point transaction charges really become significant, and it has always seemed that the record labels take the lion's share of the payment.

iTunes TV, on the other hand, is probably more profitable, due to higher unit cost. Books almost _must_ be profitable, because they're in the same range as Kindle books, and Amazon wouldn't be pushing ebooks (and thus damaging their traditional book market) so hard if they couldn't make a profit on them.

Re: iTunes now costs $1.3 billion/yr to run

#33

Post by ojilles »

smackfu wrote: post #29
xenophanes wrote: post #19

Earlier quoted context omitted.

> Does anyone believe that the promotion that Apple offers on average is worth two cents? I do. I made a couple small and quick apps. They have made several hundred dollars. I attribute that almost entirely to Apple's promotion of them, mostly by having them show up in iTunes search results which Apple promotes. Also having them show up as recent releases. My promotion consisted of linking them on my websites. If tha…

Counting search results as promotion is a stretch.

Not really as Apple made sure searches happen in the first place.

Re: iTunes now costs $1.3 billion/yr to run

#34

Post by ugh »

jfruh wrote: post #30
cooldeal wrote: post #24

Earlier quoted context omitted.

Your first thought is wrong, because "costs" is very different from "takes a loss of".

Well, OK, but is my second thought right?

Apple's revenue is $1.3 billion and since they about break even their costs are about $1.3 billion. Your second thought is consequently not in line with how cost is usually defined. If you are using the usual definition of cost the title of the submission is not misleading.

Price is what you charge your customers, cost is what you have to pay to make the product, revenue is the number of sold products times the price, profit (or loss) is revenue minus number of sold products times the cost.

Re: iTunes now costs $1.3 billion/yr to run

#35

Post by borism »

chicagobob wrote: post #4

Actually, what Tim Cook said at the Apple's Financial Conference last quarter was that it runs "a little ahead of break even". Therefore, it is reasonable to say it runs at break even. Even if you are cynical and assume a certain amount of money is moved from one department to another, he can't say something on the record like that, if it isn't basically the truth (these numbers are audited and are subject to Sarbane…

these numbers are audited and are subject to Sarbanes–Oxley

AFAIK only if they're large enough to make a dent in overall AAPL financial picture.

Re: iTunes now costs $1.3 billion/yr to run

#36

Post by chc »

recoiledsnake wrote: post #12
ugh wrote: post #10

Earlier quoted context omitted.

I don't know, I have no evidence to claim that Apple routinely lies to shareholders. That's why I don't. I'm not particularly attached to that postion and willing to be convinced.

Judging by your posting history, I am not surprised. http://www.eetimes.com/electronics-news/4068357/Apple-restat... http://www.betanews.com/article/SEC-Charges-Former-Apple-Cou... http://arstechnica.com/apple/news/2008/07/steve-jobs-and-com... From the wiki: http://en.wikipedia.org/wiki/Steve_Jobs#Stock_options_backda... Edit: Thanks for the silent downvotes with no replies. Here's the relevant quote from the first…

Those stories are all about one incident many years ago. Posting several articles about the same thing doesn't turn it into a trend. And since that scandal, Apple has been fastidious about obeying the letter of the law. Sarbanes-Oxley is practically Apple's religion.

Re: iTunes now costs $1.3 billion/yr to run

#37

Post by recoiledsnake »

chc wrote: post #36
recoiledsnake wrote: post #12

Earlier quoted context omitted.

Judging by your posting history, I am not surprised. http://www.eetimes.com/electronics-news/4068357/Apple-restat... http://www.betanews.com/article/SEC-Charges-Former-Apple-Cou... http://arstechnica.com/apple/news/2008/07/steve-jobs-and-com... From the wiki: http://en.wikipedia.org/wiki/Steve_Jobs#Stock_options_backda... Edit: Thanks for the silent downvotes with no replies. Here's the relevant quote from the first…

Those stories are all about one incident many years ago. Posting several articles about the same thing doesn't turn it into a trend. And since that scandal, Apple has been fastidious about obeying the letter of the law. Sarbanes-Oxley is practically Apple's religion.

I was merely responding to the statement that 'illegal things are not something Apple would do' that was stated in a matter-of-fact manner.

>And since that scandal, Apple has been fastidious about obeying the letter of the law

And you would know this how? Just because there's nothing revealed right now doesn't mean there is nothing that is going on and might be revealed later. Of course this cuts both ways and I am certainly not implying that something shady is going on, but I am just curious about the free pass given to Apple on here on various things that other companies don't get.

Re: iTunes now costs $1.3 billion/yr to run

#38

Post by [deleted] »

zdw wrote: post #3

So, is 30% too much of a cut when the platform offers: - Credit card processing - The largest marketplace with the most paying customers - Download hosting - Promotion - Highly available document and key/value store infrastructure - Keeping junk and malware out of the store, which maintains user trust. I'd argue that, like most emotionally influence business decisions, Apple sticking with the same percentage is a goo…

[deleted]

Re: iTunes now costs $1.3 billion/yr to run

#39

Post by 7952 »

smackfu wrote: post #13

Too bad Apple doesn't break it down a bit: iTunes music: must make money. There is no review process, the labels handle everything, and the file sizes are tiny. iBooks: Probably loses money, based on a gut feeling for how many people are actually buying books on iBooks vs Amazon. Mac App Store: Probably losing money at this point. iOS App Store: Could be break even I suppose. Obviously lose money on free apps, plus t…

Interestingly the books are listed as downloads rather than sales. I wonder how may of those were free? Does it include winnie the pooh?

Re: iTunes now costs $1.3 billion/yr to run

#40

Post by smackfu »

rsynnott wrote: post #32
smackfu wrote: post #13

Too bad Apple doesn't break it down a bit: iTunes music: must make money. There is no review process, the labels handle everything, and the file sizes are tiny. iBooks: Probably loses money, based on a gut feeling for how many people are actually buying books on iBooks vs Amazon. Mac App Store: Probably losing money at this point. iOS App Store: Could be break even I suppose. Obviously lose money on free apps, plus t…

I would have called music the least likely one to be making money, actually. A common usage pattern is buying one or two songs in a sitting, at which point transaction charges really become significant, and it has always seemed that the record labels take the lion's share of the payment. iTunes TV, on the other hand, is probably more profitable, due to higher unit cost. Books almost _must_ be profitable, because they…

Good points. I assume Apple is paying very low transaction fees, but they would have to be very low to make $1.29 transactions profitable.
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