The Register: Apple’s iTunes Store doesn’t make money for anyone except Apple’

Apple’s “iTunes Store isn’t the future of music. And after more than three years, this is a consensus that’s based not on wishful thinking, but empirical evidence,” Andrew Orlowski writes for The Register.

“Principally this is because iTunes doesn’t make money for anyone except Apple. In itself, the iTunes Store barely breaks even – but it fuels the much more lucrative downstream bit of the delivery system. iTunes sales remain vanishingly small as a proportion of the music business, but most importantly of all, iTunes doesn’t generate money for anyone except Apple. Broadband providers, PC manufacturers, insurance companies, and the battery-replacement services have all profited in some way from the iPod’s success – but no one in the music value chain,” Orlowski writes.

Orlowski writes, “Steve Jobs doesn’t even leave crumbs on the table.”

Full article here.

[Thanks to MacDailyNews Reader “Brian” for the heads up.]
Orlowski has our condolences (how did you get that bug so far up there, Andy?), but we would be remiss if we didn’t point out that Apple gives the bulk of each tunes’ 99-cents to the record companies who supposedly share some of that with the artists. And the bulk of the $1.99 for TV shows to the TV networks and producers who share that with the actors, writers, etc. And the bulk of movie sales with Disney (including Disney-owned studios Pixar, Touchstone Pictures and Miramax Films).

Apple also pays for the massive bandwidth and the marketing and promotion and software development and…

Apple’s iTunes Store has generated over US $1.5 billion, the bulk of which has gone to the record labels who, without Apple, would have had approximately $0 to show for it – just another 1.5 billion songs freely pirated otherwise. Apple’s iTunes Store generates money for music labels, music artists, TV networks, producers, actors, film studios, etc. In short – and in reality – the iTunes Store currently makes money for everyone involved, except Apple.*

The next time Orlowski starts to dash out something based on “empirical evidence,” he should first try thinking about it for more than a nanosecond.

* The iTunes Store operates slightly above break even according to comments from Apple execs during the past few quarterly earnings conference calls.

Related articles / pattern recognition excercise:
The Register: Apple event more like ‘No Show’ than ‘Showtime’ – September 13, 2006 (Andrew Orlowski)
The Register: Whatever happened to… Mac OS X Leopard? – August 08, 2006 (Andrew Orlowski)
The Register: ‘Apple doesn’t invest serious effort in improving iTunes Music Store’ – March 02, 2006

55 Comments

  1. As an Indie artist whose music is sold on the iTunes store, I can attest that there is definitely money to be made…

    iTunes pays me 60 cents on the dollar which amounts to $6.00 per album.

  2. I recall Jobs said in the keynote for Showtime that the iTunes Store was ontrack to pass Amazon in sales for 2006…I know it is atleast in the top 10 music stores…how is that “vanishingly small”?

  3. I’m not sure how this article comes to the conclusion that no-one but apple makes money on the music store. Apple have said they make little on it but obviously justify that with their sales of iPods. Record Companies would no doubt like to make more but then that’s the same in any format. If they were making nothing on it then they wouldn’t have renewed their agreements.

    Whilst personally I’ve always thought there was room for a subscription model of some kind, I always though that the available options (forgetting the whole Microsoft format and DRM thing) weren’t attractive and sustainable for me as a customer. eMusic are entitled to their success if they’ve found a model that can be attractive to both customer and content providers. However I would posit that any success they have has been because of the success of iTunes overall. It effectively legitimised digital downloads on a large scale and brought them to the publics attention.

    The digital market is still very new, a lot of these kind of articles lately seem to be forgetting that.

  4. Orlowski shows what a witless twit he is again.

    For those you don’t know, Orlowski apparently has some kind of personal hatred for all things Apple. Consequently, he just makes things up in a fruitless effort to make Apple look bad.

    Not that anyone really pays attention to him. When it comes to iTunes, money talks, Andy boy. And iTMS has been making so much money for the labels, they are more afraid of getting kicked off iTunes rather go elsewhere and charge more than $0.99 per song.

    That’s right, Orlowski. iTunes is so bad for the labels, they caved to Steve Jobs demand that song prices remain fixed at $0.99.

    It can be said enough, but Andrew Orlowski = Clueless Twit. Seriously, this guy is FAR worse than Thurott.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.