“In the latest quarter the iTunes top line grew by 32%,” Horace Dediu reports for Asymco.
“Quarterly revenues topped $4 billion (a new high) and the company suggests that this rate is maintainable by stating it has a ‘$16 billion annual run rate,'” Dediu reports. “The content portion of iTunes revenues was $2.4 billion, up from $2.1 billion sequentially. Growth into Q1 is not unusual as many holiday iTunes gift cards are redeemed during January.”
Dediu reports, “In March Apple reported that they have 500 million iTunes [users] so one way to think about the iTunes business is to say that iTunes users purchase content and services at the rate of about $40 per year.”
Much more – including the usual excellent charts, in the full article here.
Just think how easily Apple could increase the amount by adding streaming music and video content to iTunes. They’d become a bigger Netflix almost overnight and they’d be adding an additional $8 a month from every user to their revenue pile.
It’s a shame if the music industry is actually balking over royalties because Apple will then have the same problem with the movie industry. I’m sure Apple has its reasons for being frugal, but it makes Wall Street thinks that wealthy Apple is just becoming incompetent at completing deals. Pandora can do it and Netflix can get it done, however Apple is dragging its feet. I’ll be happy to see streaming content from Apple and it would probably boost ATV ownership.
I would be all over that, if it were music and TV, $12.99. I’m ready.
You make a good point on the revenue increase that would come along with monthly subscription streaming content. I believe the problem to be that Apple wants their share of the pie (and its more than content owners want to give) as they should. Lets be honest, a large part of the reason most content is being purchased through iTunes is because of the convenience/vastness of iTunes. Part of that convenience is:
– anywhere convenience (with web access)
– a single location from which ALL purchased content is remembered and can be reacquired
– single purchase location thus single entity to contact if needed
– and some just want to support the company which makes the products they own and love (sort of like donations people make to support free software, podcasts, etc…
So, the increase in content sold due strictly to its availability in iTunes entitles Apple to a decent portion (I’m not sure what that portion is, but I don’t believe it to be the same 30% as app developers give).
Horace Dediu lives, eats, and breathes the iTunes Store.
If the iTunes Store looked like Minka Kelly, he’ll be having sex with it too.
$40 per YEAR? Per YEAR? Let me guess, 11 cents per day is supposed to impress people. $40 bucks a week, maybe, $40 a day, hell yes, but $40 bucks a year? Where’s the magic? Where’s the awesomeness?
4 CD albums a year is about the average for the US market prior to iTunes. Some folks spend a lot less and some spend a lot more. The awesomeness is in the fact that iTunes took it all away.
US citizens spend more money annually on toilet paper than on music. There’s a message for today’s “artists”.
There certainly is a lot of crap music on the market. That’s for a lot of reasons. The RIAA companies in particular have shot themselves in the head with several different guns in their efforts to keep the future at bay. Oops. Self-destruction.
I do a lot of searching around for new kewl tunes and gradually I find them. There are great musicians out there in the world. The problem is being able to find them, as well as they being able to find a recording and distribution route.
What an odd outcome at the tail end of the ‘Retro Music Era’ that not much of anything new has been born out of it. You’d think the art of music had been having an NDE (near death experience). with the usual ‘life flashing before my eyes’, then actually died.
But that’s not the case. It’s just that the RIAA companies are worthless idiots at this point with only industrialized crap music to show for their self-destructive efforts. Searching afield for actual music artistry is worth the effort. It’s out there.
Try $40 x 0.5 billion users and then maybe you’ll understand dumbass
An interesting aside is that the video revenue is very small. This is something that has never really taken off with iTunes. Maybe its the pricing or the content. I rarely rent because of the price and only having 24 hours use of the content.
A netflix model would be interesting but is there really any profit in that? If no profit what devices would it help sell?
Forty bucks isn’t a lot of money per PERSON per YEAR. You obvious have difficulties comprehending simple measurements. Then again $40 may be your daily income flipping burgers in which case it is an astronomical figure.
I’ll guess it seems small because of the Balkanization of movies. Because apps are a new business you can create an app for iTunes and it is instantly available in most of the world. Movies and books are harder to distribute in many markets.
As of this time last year Apple had 400 million iTunes accounts. $40 times 400 million is $16 Billion. Total revenues for Google last year were about $50 Billion. So iTunes, all by itself, produces about 1/3 the revenue of all of Google’s efforts. There’s the awesomeness.
You realize the article didn’t assert that $40/person/per year was meant to impress anybody?
You realize the article didn’t assert anything was “awesome”?
That’s the problem commenters at MDN have with your contributions: You make stuff up to meet your own agenda. When you figure out why you do that, let us know. It might change some minds.
Well then, the author was completely successful as I was absolutely quite unimpressed with the statistic. Kudos for the author.
I spend Way more than $40 a year. I can do that in one night, especially if I’ve taken an ambien!
I think a ‘$16 billion dollar annual rate run’ would equate with ‘impressive’ would it not for any ‘single commodity’ based business let alone one that provides ‘multi’ number of commodities at similar if not better rates?
This number would be much, much higher if Tim Cook were fired.
I begin to understand the wisdom in your choice of sobriquet…
“Dad, can I buy this new album all my friends are listening to?”
“No, honey, I’m sorry, but Tim Cook is still CEO.”
“Mom! Dad’s off his meds again…. Can I buy this new album…”
I have heard that a lot of retailers love gift cards because a healthy proportion never get redeemed, rather they just get lost. That means essentially pure profit for the retailer and less income for all of those relying upon the ecosystem for their living. I wonder how much this affects Apple as much as it affects other retailers. My family is pretty quick to turn an iTunes gift card into a balance on our account. Not so quickly do we redeem restaurant gift cards or even movie theatre gift cards.
A couple thoughts:
A) I personally buy a lot more than $40 of music from the iTunes store each year. I also buy a number of CDs and DVDs. I’m quite picky about what I buy as well.
B) Oddly, the city in which I reside is doing its best to kill off the brilliant surviving record store we have in town. This is being done in the name of cracking down on ‘pawn shops’ that buy used material and resell it to the public. Some actual pawn shops end up being fences of stolen property. This only occasionally happens at used music and video media shops. But instead of just blaming the criminals, as per insanely usual, the victim used media shops are getting bashed on the head as well. You’d think the RIAA, in the Corporate Oligarchy garb, had thought up this manoeuvre. Apparently not. We’ve now had public protests at the city hall to stop this nonsense. I’ll be joining in the contrarian noise. It’s all akin to the ‘terrorists’ of various kinds turning us into paranoid little children who are afraid of their shadow. Our terror is their victory. What rubbish.
This just in- android users spend, on average, 40 cents per person per decade.
$40 per year used to buy you 3 – 4 CDs. Today, you get up to 40 songs, conceivably from 40 different artitsts and 40 different albums. At 3-4 CDs per year, you got up to about a dozen decent songs and plenty of forgettable filler. At $40 per year, you get forty great songs (at least great to you).
I’m still not sure that the average spending on CDs used to be $40 per year (at its peak).
The music (and movie) labels / studios continue to pound this one message to the press, and it is that iTunes has destroyed the music industry (witness severe decline in CD sales, not yet made up for by the rise in digital sales), and that it will do the same to the movie industry if studios were to cave to Apple.
Conveniently, they neglect to mention the real reason for the decline (rampant online privacy, simple and easy copying of CDs), except when they need to pursue file sharing sites in court; that is when they wield this “piracy is killing us!” argument. All other times, it is “iTunes is killing us!”…
Good good.