Apple Makes no Profit from iTunes

Some Beech writes: "The Register has an article about the lack of profit from iTunes. Also mentioned in a Seattle Times article dated 27th October, it seems Apple is relying on iTunes to drive iPod sales rather then being a profit centre on its own." Another reader pointed us to Apple's details from the Analyst Meeting.

Comments

Re:bullshit.

[timholman]

if they can't make money at $.99 a song, then why are 20 companies popping up every week doing the exact same thing with no hardware business?

Have you forgotten the dot-com boom and bust so quickly? Since when did a rational business model have anything to do with Internet companies?

Everyone is saying "Apple is doing it! So can we!" All twenty of those companies are going to lose millions as they struggle for market share. Most, if not all, will be gone in two to three years.

If Jobs is smart, he'll wait until most of the competition has gone bust, then use iTune's leverage as the #1 legal music distributor to get a better deal from the music industry, i.e. "It's either iTunes or Kazaa. Take your pick."

Why Did Anyone Imagine...

[reallocate]

...that Apple would not have support costs, would not have to pay the RIAA, would not have to pay credit card costs, etc., etc?

Contrary to the semi-literate ravings The Register cranks out to boost readership and, hence, their own revenue, (go look up "yellow journalism in your history books, boys and girls. God, it's embarrassing to have that rag associated with this industry.), the rest of the world does not work on a gratis basis.

No one is ever going to prevent the record industry from charging whatever it wants to charge until someone else puts together a different marketing structure that, somehow, charges less. And, oh, when that happens, people will find out just how altruistic their favorite musicians really are. Entertainers are like you and me: they don't want a pay cut.

It's hard for me to believe that Apple didn't know this going in, and has always positioned music sales as a loss leader for the iPod.