Billboard claims Apple made $570 million profit from iTunes Store in 2007

“Research group NPD recently named iTunes the second-largest U.S. music retailer, and the company has just revealed that its store has passed the 4 billion download mark. So Billboard decided to crunch some numbers to see whether the conventional wisdom that Apple makes money from iPods—not downloads—still holds true,” Ed Christman reports for Billboard.

“Billboard estimates that the store sold 1.7 billion downloads last year, and that of that amount, 940 million tracks were sold in the United States and 732 million were sold abroad,” Christman reports.

“Billboard estimates iTunes’ music download revenue at $1.9 billion last year, which is in line with the $2.7 billion in revenue it reported during calendar year 2007 for other music-related products and services,” Christman reports. “At a 30% profit margin, the gross profit equals…”

Full article here.

Wired’s Eliot Van Buskirk picks it up, “At that point, the article tails off into subscriber-only territory (apparently Billboard didn’t get the memo). Without having read the rest of the article, these figures appear to mean that Apple made $570 million in profit from the iTunes store last year — not a bad haul.”

Full article here.

[Thanks to MacDailyNews Reader “Mike in Helsinki” for the heads up.]

From whence did the “30% profit margin” for iTunes Store come, Mr. Christman?

Sheesh, we sound like a slightly tongue-tied Captain Bligh.

Anyway, that 30% is quite an assumption. Christman also seem to have forgotten about the movie, video, games, audiobook, and ringtone sales along with the fact that Apple stated publicly during their last conference call to analysts – a venue in which the SEC doesn’t take kindly to lies – that Apple’s objective is to run iTunes Store just over break even as it helps to sell iPods.


  1. Err… profit?… what about costs?… the development of the store, iTunes software oh yeah while it does cost to push those electrons down really fat pipes too. The article should at least have assumed it was gross as they do not know the costs associated with delivery.

  2. what a bunch of BS math. 30%?? Apple gets 30% of sales from indie labels, but i DOUBT they get that much from the majors. Plus take into account bandwidth costs, fixed costs, promotion costs… thats what you get when billboard tries to do financial analysis.

  3. The article clearly says ‘gross profit’. That simply means the money you get BEFORE operating expenses. It doesn’t actually state 570 million as net profit, which is the implication of the MDN headline. The impression I get from the article it that it’s asking the question of how profitable is the iT music store. It’s only natural that a publication like Billboard will speculate on the possible margins. It’s also likely that Billboard knows Apples gross margin because they know what percentage the labels are getting for each sale. Apple doesn’t have to tell them that Apple has a 30% margin if the labels tell billboard that they (the labels) are getting 70%.

  4. If my memory serves me, when the iTunes Store opened, Apple said that 67 cents of the 99 cents would go to the recording industry. That’s a 30% profit margin before costs of software development, servers, etc. I don’t know what the current costs are but the most important thing to remember is that the store makes it easy to get the music you love and to get it into your ipod.

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