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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

#51

Post by [deleted] »

smackfu wrote: post #40
rsynnott wrote: post #32

Earlier quoted context omitted.

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.

[deleted]

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

#52

Post by tienshiao »

smackfu wrote: post #40
rsynnott wrote: post #32

Earlier quoted context omitted.

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.

Apple will batch small transactions below a certain threshold and within a certain window. I believe this is an effort to counteract transaction fees.

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

#53

Post by elithrar »

Aloisius wrote: post #17
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…

Does anyone believe that the promotion that Apple offers on average is worth two cents? And what good is a marketplace with some of the worst discovery ever? I mean, there are now hundreds of thousands of apps. Finding high quality apps on the app store is like finding a needle in a Utah sized haystack. I much rather do my own marketing, have a user download the app off my website or heck, Amazon (which actually has…

> Does anyone believe that the promotion that Apple offers on average is worth two cents?

Ask some of the developers[1] of popular apps how much more money they make when the App Store features their app in front-page promotional material. It's a lot.

[1] I believe Marco Arment mentioned this in a Build & Analyse episode a few weeks ago, re: Instapaper.

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

#54

Post by cageface »

Aloisius wrote: post #17
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…

Does anyone believe that the promotion that Apple offers on average is worth two cents? And what good is a marketplace with some of the worst discovery ever? I mean, there are now hundreds of thousands of apps. Finding high quality apps on the app store is like finding a needle in a Utah sized haystack. I much rather do my own marketing, have a user download the app off my website or heck, Amazon (which actually has…

Agreed. The problem with the app store is that it's generic. If you're not in the featured list you're just one more anonymous tile in a sea of hundreds of thousands of anonymous apps, many of which are throwaway. Marketing on the web might be more work but at least you have the flexibility to do something distinctive. I do appreciate not having to worry about payments & sales etc but I'm sure I've gotten a lot more mileage out of the work I've put into marketing my apps on forums, mailing lists, Twitter etc than I have out of just being another app in the store.

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

#55

Post by jrbj »

Aloisius wrote: post #17
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…

Does anyone believe that the promotion that Apple offers on average is worth two cents? And what good is a marketplace with some of the worst discovery ever? I mean, there are now hundreds of thousands of apps. Finding high quality apps on the app store is like finding a needle in a Utah sized haystack. I much rather do my own marketing, have a user download the app off my website or heck, Amazon (which actually has…

As a dev whose app has been featured once on the front page under "New and Noteworthy", I'd say that Apple's promotion is unquestionably more valuable than any other kind of promotion.

Being reviewed on some site is nice, but it's a negligible rounding error compared to being featured on any list on the App Store. I'm sure any dev who's ever been featured will agree that App Store placement is the biggest single factor in sales.

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

#56

Post by Stormbringer »

Okay... so if 70% of the take is 2.5 billion, that means the total amount taken in is 3.57 billion and change.

So Apple gains 1.07 billion with their 30% cut and spends 1.30 billion?

In other words, Apple digs into their own pocket for 230 million dollars in order to run it? And people still complain about Apple's 30% cut. Wow.

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

#57

Post by Stormbringer »

YooLi wrote: post #22
jonknee wrote: post #16

Earlier quoted context omitted.

I don't think the 30% has ever been an issue. The exclusivity is. Doubly so as Apple keeps changing the rules which if you're caught on the wrong side of can destroy your business.

"I don't think the 30% has ever been an issue." Seriously? The 30% on apps, the 30% on in-app purchases, 30% on subscriptions, etc., each caused an uproar when they were announced.

30% on apps caused an uproar because it was so much cheaper than the other alternatives.

Not to come across as an Apple apologist, but seriously, it wasn't even that frickin' long ago... even in internet time.

Those who do not remember the past are condemned to repeat it, repeatedly, in online forums, but in a badly twisted and inaccurate version.

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

#59

Post by zmmmmm »

I think it's missing the point to even talk about the operational cost of running the iTunes store. It's a strategic play equivalent to the setting up of tollgates on rivers in medieval times. The one most consistent theme across all of Apple's decisions is to not let go of a vice like control of access by third parties to their platform. My personal belief is that they know the future value of owning the tollgate that everyone must pass through to get digital products and information to consumers is far greater than even their hardware business is today. It may not manifest in raw numbers directly (yet) but in terms of the position of power it puts them in its value is incalculable.

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

#60

Post by zackattack »

smackfu wrote: post #40
rsynnott wrote: post #32

Earlier quoted context omitted.

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.

Have you ever noticed how they bulk bill you for all your transactions, a few days after purchase?
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