iTunes costs Apple $1 billion a year to maintain

Nine years and ten versions later, iTunes has become a staple in Apple's profits and overall business plan. iTunes serves millions of users hundreds of thousands of apps, TV shows, movies and of course, music everyday. It's no wonder that iTunes has been a huge success over the last few years.

However, has anyone ever stopped to think what it costs Apple to run iTunes? Analysts over at Asymco compiled their findings and estimated iTunes costs Apple over $1 billion a year to run and maintain. With a cost of running a store this large, Apple must be making a considerable amount of cash, right? Apple has never fully came forth and explained how much it makes off of music sales, but it's estimated to be around 10%, which would be enough to cover operating costs.

Apple also takes 30% of the sales from Apps, but that also is to cover the operating costs of the data centers and bandwidth. Apple mentioned that both the iTunes Music Store and App Store are run to “break even”, meaning Apple isn't profiting from sales.

Asymco estimates that iTunes costs Apple upwards of $30 million a month to run in 2009, but with an ever increasing market, that price could have jumped to over $75 million a month. That calculates out to just under $1 billion dollars a year, not to mention the TV and Movie store Apple also has.

The new Apple TV will surely increase the iTunes operating costs. This could be why Apple hasn't switched to a cloud-based iTunes store, the cost would just be too great for Apple to bear.

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If it weren't for iTunes, how many iPods and similar iDevices would Apple sell, really?

It's a cost of doing business--specifically, to keep their cash cow going. Their market cap surpassed Microsoft's this year. So cry me a ****ing river, Apple.

How much are Windows and Office costing Microsoft?

quote "Apple mentioned that both the iTunes Music Store and App Store are run to “break even”, meaning Apple isn't profiting from sales." - yeah, but whether that's true or not is a different matter! It wouldn't be the first time something Apple has said isn't quite the whole truth ;-)

M_Lyons10 said,
I find it very hard to believe that they aren't making a profit from iTunes...

it is a estimated, so Itunes can spend over a billion or simply a few millions.

So yes, those public studies usually says nothing.

Digitalx said,
1 billion i doubt it costs that much they use akamai global distributed co-location for all their services.

And do you think Akamai lets them use that for free?

Discovering lately that I could just plug my Samsung Wave into Windows Vista/7 or Ubuntu and simply drag my music albums into it, without any software or drivers installed, made me so glad I didn't get a genuine iPod or iPhone instead. I still don't understand how my friends and coworkers make do with iTunes; so impossibly complicated for no reason at all.

Any portable device that requires proprietary software to function needs to retire.

Inque said,
Discovering lately that I could just plug my Samsung Wave into Windows Vista/7 or Ubuntu and simply drag my music albums into it, without any software or drivers installed, made me so glad I didn't get a genuine iPod or iPhone instead. I still don't understand how my friends and coworkers make do with iTunes; so impossibly complicated for no reason at all.

Any portable device that requires proprietary software to function needs to retire.


Ubuntu and rhythmbox work flawlessly with ipods out of the box, no itunes or other bloatware required. And if you want more functionality such as organising it better or adding album art, then gtkpod is excellent.

However I do appreciate what you are saying. Having to install proprietary software just to access the device you paid good money for is an injustice. I bought a samsung mp3 player for my father, and he just drags it from nautilus directly onto the device, or through rhythmbox. Ubuntu simply detects it as it would any other usb mass storage device (pen drive, microsd card etc).

Edited by LoveThePenguin, Sep 10 2010, 10:46am :

I think you have to not think of the iTunes and Apps stores; you have to look at the total sales of the products that Apple makes and that use the for mentioned stores. With the high rate of sales items such as the iPod, iPhone, iPad, etc.,this is what pays the bills.

Apple it would appear runs the two stores to 1) draw in people who buy their products, and 2) to help maintain their customer base. Just smart business.

I don't see how it could have jumped from 30 million a month last year to 75million a month this year lol

Too many people like to round up IMO

I could except 50million a month as a fair increase without it being over inflated.

Apple mentioned that both the iTunes Music Store and App Store are run to “break even”, meaning Apple isn't profiting from sales.

what said,

Missed that, thanks.

Doesnt seem to be good business practices to have a product that isnt making a profit. I guess they are making enough money elsewhere to be able to support this.

techbeck said,

Missed that, thanks.

Doesnt seem to be good business practices to have a product that isnt making a profit. I guess they are making enough money elsewhere to be able to support this.

You nailed it. The iTunes store is merely a vehicle to drive people to purchase iPhones, iPods, and now the iPad. That's where Apple is raking in the dough.

chaos_disorder said,
You nailed it. The iTunes store is merely a vehicle to drive people to purchase iPhones, iPods, and now the iPad. That's where Apple is raking in the dough.

The article and speculations would seem to support that concept, but somehow I get the feeling Apple makes a pretty penny just off of the iTunes sales as well...

vaximily said,

but somehow I get the feeling Apple makes a pretty penny just off of the iTunes sales as well...

Thats what I was thinking...Apple is not known to release something unless the profit from it.

techbeck said,
Doesnt seem to be good business practices to have a product that isnt making a profit. I guess they are making enough money elsewhere to be able to support this.

The product is iPod, iPad, iPhone and AppleTV. Without a strong iTunes Store those products wouldn't be where they are today. Not to mention indirect Mac, accessory and software sales.

Another option would be to allow you to skip SD versions of HD purchases. Bit of a pain having to download the SD versions as well every time.

protocol7 said,
Another option would be to allow you to skip SD versions of HD purchases. Bit of a pain having to download the SD versions as well every time.

That is one thing that bugs the hell out of me. There are plenty of times where I want one or the other, but end up with both.

I thought Cloud was supposed to be cheaper to run? I supose developers should really take advantage now, because as the market increase, Apple might need to modify the sales percentage they get to keep going. But if they are taking their cut to break even then they really do need to be making money off there hardware products and I think that is the way it should be.

x0r said,
The headline and the article are somewhat confusing. iTunes != iTunes Store.

You say that, but iTunes on my iPhone is the iTunes store. But the music player is called iPod. Then on a desktop iTunes is more of an "iPod" (music playing). It's a bit of a mess really

x0r said,
The headline and the article are somewhat confusing. iTunes != iTunes Store.

I most have missed where it said that iTunes == iTunes Store. it says parts of iTunes, to include the music store and the app store are pulling there weight and paying for themselves. The title is fully valid. iTunes, which includes iTunes Music Store and App Store, costs $1 billion to maintain.

ILikeTobacco said,
I most have missed where it said that iTunes == iTunes Store. it says parts of iTunes, to include the music store and the app store are pulling there weight and paying for themselves. The title is fully valid. iTunes, which includes iTunes Music Store and App Store, costs $1 billion to maintain.

I repeat, iTunes != iTunes Store. The maintenance which is mentioned relates directly to the iTunes Store, as opposed to iTunes. For your convenience in establishing the distinguishment:

http://en.wikipedia.org/wiki/iTunes
http://en.wikipedia.org/wiki/iTunes_Store

This article is clearly speaking about the iTunes Store and the article should be amended to go with the correct wording.

x0r said,
This article is clearly speaking about the iTunes Store and the article should be amended to go with the correct wording.

Yes, even the first sentence of the article is talking about the iTunes software, but somehow equates that to the iTunes Store :
Nine years and ten versions later, iTunes has become a staple in Apple's profits and overall business plan.

Apple should consider cutting costs in area's like energy which these huge data centers need...

Ebay and Google are some of it's prototype customers at the moment saving hundreds of thousands in energy with just going off the normal grid and plugging into a few of these self sufficient power sources. And it's Green Energy too.

Here's the mind blowing solution and which has to be one of the best inventions of the decade so far...

It's called the Bloom Box.

http://www.cbs.com/primetime/6...PSIain9RaCzZm_c3U_QaFAax9qL

.Kompressor said,

<snip>

Wow thats awesome! More companies need to do this! better for their pockets but more importantly better for the environment!

.Kompressor said,
Apple should consider cutting costs in area's like energy which these huge data centers need...

Ebay and Google are some of it's prototype customers at the moment saving hundreds of thousands in energy with just going off the normal grid and plugging into a few of these self sufficient power sources. And it's Green Energy too.

Here's the mind blowing solution and which has to be one of the best inventions of the decade so far...

It's called the Bloom Box.

http://www.cbs.com/primetime/6...PSIain9RaCzZm_c3U_QaFAax9qL

Wow, that is VERY cool. I hadn't heard of that before, but I sure hope that takes off... It sounds great.

.Kompressor said,
Apple should consider cutting costs in area's like energy which these huge data centers need...

Ebay and Google are some of it's prototype customers at the moment saving hundreds of thousands in energy with just going off the normal grid and plugging into a few of these self sufficient power sources. And it's Green Energy too.

Here's the mind blowing solution and which has to be one of the best inventions of the decade so far...

It's called the Bloom Box.

http://www.cbs.com/primetime/6...PSIain9RaCzZm_c3U_QaFAax9qL

+1
When I saw that video I was amazed.

Maybe they can stick some of that money into developing an iTunes version that actually makes use of Mac OS X Snow Leopard's latest technologies... It would be nice if iTunes actually made use of that 2.93 GHz Intel Core i7 processor tucked away inside my iMac.

Or they could use the money more wisely and instead of catering to a select group of individuals, maybe make the Windows version of iTunes look less like ***. This might be helpful given that Windows users make up a significant majority of iTunes usage. It would be kind of nice if Apple for once actually respected us for wanting to use Windows (and an iOS or legacy product).

We can all dream...

.Neo said,
Maybe they can stick some of that money into developing an iTunes version that actually makes use of Mac OS X Snow Leopard's latest technologies... It would be nice if iTunes actually made use of that 2.93 GHz Intel Core i7 processor tucked away inside my iMac.
You know, I forgot about that with iTunes 10. Make it 64 bit already c'mon Apple!

Xero said,
You know, I forgot about that with iTunes 10. Make it 64 bit already c'mon Apple!

They have had a 64-bit version for a while. You have to click 64-bit version under the download button on the download page.

Stokkolm said,

They have had a 64-bit version for a while. You have to click 64-bit version under the download button on the download page.

As explained countless times before here on Neowin: There is no 64-bit version of iTunes (the application itself is 32-bit). Apple only supplies 64-bit drivers for the Windows version...

.Neo said,
...tucked away inside my iMac

I thought you had a Mac Pro

That being said, I would agree lol, iTunes on the Mac is a piece of crap actually, even if it's miles better than the Windows version.

Stokkolm said,

They have had a 64-bit version for a while. You have to click 64-bit version under the download button on the download page.

Except...the only thing 64-bit about that is the installation process and the drivers. That's it. The program itself is still very much 32-bit.

bluarash said,
Or they could use the money more wisely and instead of catering to a select group of individuals, maybe make the Windows version of iTunes look less like ***. This might be helpful given that Windows users make up a significant majority of iTunes usage. It would be kind of nice if Apple for once actually respected us for wanting to use Windows (and an iOS or legacy product).

We can all dream...

Pretty close to what I would have said.

bluarash said,
Or they could use the money more wisely and instead of catering to a select group of individuals, maybe make the Windows version of iTunes look less like ***. This might be helpful given that Windows users make up a significant majority of iTunes usage. It would be kind of nice if Apple for once actually respected us for wanting to use Windows (and an iOS or legacy product).

We can all dream...

+1. Hey folks at Apple! We Windows users stopped thinking brushed steel looked cool 9 years ago!!