Apple’s (AAPL) iTunes Costs A Whopping $1.3b A Year To Run
We always assumed it couldn’t be cheap to run a massive online web store the size of iTunes, with the hundreds of thousands of apps, millions of pieces of music and enough video content to keep anyone busy for some time. A new report though claims Apple (NASDAQ:AAPL) spends even more on the service than we could every have imagined – a whopping $1.3 billion EACH YEAR!
Using information released by AAPL itself – download figures for apps, music and so on – Asymco came to a figure of $133 million each calendar month which brings us to the gargantuan figure above. It’s an unfathomable amount of money, and an expenditure that ensures Apple doesn’t make much, if any profit on its various iTunes stores.
Since we know something about the average price of songs and apps, and we know the split between developers and Apple (and roughly between music labels and Apple) we can get a rough estimate of the amount Apple retains to run its store.
Way back in the dark ages when Apple first announced its iTunes Music Store, it was devised as a way to sell iPods and not a viable source of income for the company. Many years later it is the same model that has made iPhones, iPads and iPod touches such a strong proposition for potential buyers.
Just as it was the largest store with the most music that won the day after iTunes’ inception, now it’s apps that buy users – and Apple has apps by the bucketload.