. . . according to analysts that make good money running the numbers accurately (at least they were when the studies were originally done.)
Indeed Apple does get $.29 (not $.30) in *gross revenues* less the *fees* they pay the labels. That leaves a *gross* profit $.29 which is used to pay for advertising, infrastructure bandwidth, maintenance, taxes, etc. The highest estimates are that Apple might make as much as $.10 *net* profit per song. However, if anyone can squeeze extra money out of it through automation, streamlining, smart accounting, and tricky synergistic strategies and planning, it's Apple.
So by now, with their hard won experience and increased competition, I imagine Apple is in position to undercut the rest and still make it worth their while by a penny or two.
Here's an article that contains the widely reported breakdown:
Does the law say that a company can't void the warranty when the purchaser alters the underlying device or its firmware?
I don't think so.
Legal and philosophical arguments moot at this point. The iPhone is a new platform that is still being optimized and it's totally possible that a firmware upgrade could innocently fuckup a modded iPhone. The same goes for non standard applications. Apple has given fair warning on this.
Apple can't give a shit about breaking eggs at this point. It's iPhone "nest" is still under construction/renovation. If anyone other than Apple puts eggs in the nest before they're invited, they shouldn't be surprised if they roll out, or even get dumped out and end up getting broken.
Actually most of that money goes to the labels.
Apple sold about 1.5 billion songs in 2006 for $.99 and are estimated to make around $.10 per song.
That makes their profits a bit less than $150 million (then there's taxes,) but that may not reflect their true profits because Apple never gives a full breakdown of their sales.
In that same time period they sold:
39 Million iPods and 5.3 Million Macs.
What were their overall profits in 2006? Somewhere around $1.99 Billion.
So, best case scenario, iTMS (music downloads) represents no more than %7.5 of Apple's overall gross revenue.
This is probably falling as computer market share is growing rapidly, iPhone is out now, AppleTV will probably grow, all skewing profits to harware. Also iTMS revenues in 2007 will come from a growing number of non-music sources like movies, TV Shows, and maybe rentals?.
Music sales at the iTMS are huge, by any measure, but its real value to Apple is as an online platform to enable and network almost everything they do or will do, not as a music store.
My damn cat just deleted my carefully crafted, long-winded response just as I was about to send it! ^&*(!
Maybe she was trying to spare everyone. Anyway, now it will be briefer and more to the point.
No big argument with you, confused_demon,
Thanks for the info on album artwork. Stupid of Amazon not to make the facts more accessible.
RE your responses to:
1.) Yup, that's what I meant. I should have said "AAC is on par with MP3 in openness and non-proprietaryness." (It also has an edge in quality and is easier for the seller to license.)
2.) While DRM-free music was "available," Apple managed to make a greater variety more widely available and of higher quality.
3.) Slight beef with you here.
Clearly Apple has worked hard to negotiate the cheapest, highest quality, and least onerous DRM from the labels that they could. They have also been careful to act in good faith to fulfill their legal responsibilities to these labels. In both cases this has been in interest of Apple and their customers. All this began at a time when few other companies even tried to created a legit and legally sustainable business model.
Even now Apple has arranged to allow customers to upgrade their original DRMed purchases to DRM-free files at no extra charge (above the cost of the new DRM-free offerings.) No other company is doing that yet (as far as I know.)
I'd say its easy to who is who on this issue. Especially now that the labels are offering similar deals to Apple's competitors at a lower prices. Far from thinking Apple is just another one of the good old boys, they probably see Apple as in the pocket of the customers and would love to undo that, pronto.
Try as I might, I have been unable to determine if Amazon's MP3's include any kind of album art. The details on the web site are rather vague tech specs etc. Since I don't buy *any* downloadable music (only CDs) and no article or review I have seen addresses this point, I have yet to find an answer to this question.
So to you adventurous folks with 89 cents, does Amazon include cover art?
PS
I also, I have to say that it amazes me that people don't know 1.) that AAC is open and standard, not proprietary 2.) that the iTMS has been on the forefront of offering legal DRM free downloadable music (sold more than anyone else.) and 3.) that it's the music publishers, not Apple who insist on the DRM.
I don't doubt you and although I enjoy a home-made sound, I don't begrudge good production by any means.
I just think that really good production, even with higher end tools, can come at a far lower price today than even 4 or 5 years ago. It's a lot like video (or anything in the computing sphere.) New digital tools have so democratized production with inexpensive, quality equipment that the costs are now mainly for for talent, not overhead. The low cost has also grown the volume of folks experimenting in the medium and consequently greatly increased the number of talented folks who can offer their services.
There is a guy near my hometown (little old Rock Island, IL) that has become a "go to guy" for recording and production of southern fried rock and certain other genres. Although I don't know much about him, I'm sure his reputation rests on the quality of his work. But he has advantages monster producer will never have. An easy atmosphere in the studio and great value for the buck, achieved with high talent, very low overhead, a relaxed approach, and a location somewhat off the beaten path. The epitome of the new world of production.
Good point.
Or perhaps, when more established, it's musicians scratching each other's backs to try to get some jack out of the record companies (if so, probably a futile quest.)
You say:
"Its a shame you can't put on an argument without being childish. But anyway, all the projects you listed benefit Apple only, thanks for illustrating my point."
If, as you say, Apple's contributions to these projects:
CDSA-Common Data Security Arch.
Darwin
HeaderDoc doc generator
OpenDirectory
QuickTime Streaming Server
BonJour
WebCore
only benefit apple, then I you must believe that the open source model doesn't work.
And Apple's contributions to GCC, KHTML, and other projects, not to mention their work benefiting open source drivers also yield no value for anyone?
I don't think so.
$100,000/finished minute? Uhmm . . .
Haven't they arrived in the 21st Century yet? Albums can be produced in the average basement with little more than a thousand dollars of audio hardware, some soundproofing, a Mac, and $1,500 worth of audio software (give or take.) some of the finest albums out there are done this way. Anyone who is paying $100,000/finished minute for production is a moron who has not discovered that the world is now flat!
The OSX operating system is very open source and very hacakable. iPods are different. Different product. Different market. Where are the complaints about the difficulties of hacking toasters, watches, cell phones, or cars? Get a grip folks.
And Apple *is* a supporter of OSS, but not necessarily Free Software. I wonder where Linux would be without all the freely available work Apple has done on drivers? But I doubt Apple will open source all of the software they have sunk a few BILLION dollars into. I'm thinking they may want to make some money somewhere.
And how much digital content has Linux freed up? I never hear about their negotiations with the big media companies. What's the URL of the Linnux Music Store?
By the way, you can load any MP3 into iTunes and onto your iPod. It is not a locked down platform. And AAC is an open, non-proprietary standard. It's the DRM part that's proprietary (otherwise it wouldn't BE DRM, get it?) If it didn't have DRM, the labels wouldn't let them sell the music for $0.99, right? If you want to, you can buy the non DRMed AACs from iTunes MS for a bit more (if the labels are willing to allow it.) Me? I prefer to buy CDs.
This is the last straw! The Linux community will not be buying any iPods after this! This really will hurt Apple and they WILL be sorry. Everyone I know who uses Linux on their personal computers will be following suit and NEITHER of them is likely to yield on this point! I'm willing to bet that from now on, their quarterly revenues will be several thousand dollars less than what they would have been otherwise. . .
Should we go to the next story now? . . . OK then.
It's unlikely the rebate was planned, but I'm sure it was considered. The knew the price drop was pretty damn aggressive and some whiners would make a fuss.
On the other hand, I don't think as some do that the price cut was out of desperation and that it will kill the bottom line. I'd say it's a shrewd move to virtually seize a huge share the PDA and smart phone markets in one stroke as well as have a HUGE 4th quarter. This is going to kill palm, hurt many smart phone vendors and carriers while getting a huge leg up on the European and Asian markets. (Zune, your joking, right?)
Economies of scale, etc. plus forward revenues and market share will peg the bottom line.
We need to take a lesson from the Republican Party (Scary, I know.)
Instead of saying
"The Justice Department does not support 'Net Neutrality'."
we should say:
"The Justice Department supports 'Internet Triple Billing'."
or The Justice Department supports "Pay Thrice as You Surf."
How about, The Justice Department supports "Legalized Ransom Payments to ISP Corporate Welfare Recipients."
My attempts are a bit lame.
Anyone have a snappy catch phrase to catch the electorate's attention?
Slashdot Mirror
Indeed Apple does get $.29 (not $.30) in *gross revenues* less the *fees* they pay the labels. That leaves a *gross* profit $.29 which is used to pay for advertising, infrastructure bandwidth, maintenance, taxes, etc. The highest estimates are that Apple might make as much as $.10 *net* profit per song. However, if anyone can squeeze extra money out of it through automation, streamlining, smart accounting, and tricky synergistic strategies and planning, it's Apple.
So by now, with their hard won experience and increased competition, I imagine Apple is in position to undercut the rest and still make it worth their while by a penny or two. Here's an article that contains the widely reported breakdown:
http://blogs.barrons.com/techtraderdaily/2007/04/23/apple-turns-out-itunes-makes-money-pacific-crest-says-subscription-service-seems-inevitable/
"no more than %7.5 of Apple's overall net profit."
Does the law say that a company can't void the warranty when the purchaser alters the underlying device or its firmware?
I don't think so.
Legal and philosophical arguments moot at this point. The iPhone is a new platform that is still being optimized and it's totally possible that a firmware upgrade could innocently fuckup a modded iPhone. The same goes for non standard applications. Apple has given fair warning on this.
Apple can't give a shit about breaking eggs at this point. It's iPhone "nest" is still under construction/renovation. If anyone other than Apple puts eggs in the nest before they're invited, they shouldn't be surprised if they roll out, or even get dumped out and end up getting broken.
In that same time period they sold:
39 Million iPods and 5.3 Million Macs.
What were their overall profits in 2006? Somewhere around $1.99 Billion.
So, best case scenario, iTMS (music downloads) represents no more than %7.5 of Apple's overall gross revenue. This is probably falling as computer market share is growing rapidly, iPhone is out now, AppleTV will probably grow, all skewing profits to harware. Also iTMS revenues in 2007 will come from a growing number of non-music sources like movies, TV Shows, and maybe rentals?.
Music sales at the iTMS are huge, by any measure, but its real value to Apple is as an online platform to enable and network almost everything they do or will do, not as a music store.
Maybe she was trying to spare everyone. Anyway, now it will be briefer and more to the point.
No big argument with you, confused_demon,
Thanks for the info on album artwork. Stupid of Amazon not to make the facts more accessible.
RE your responses to:
1.) Yup, that's what I meant. I should have said "AAC is on par with MP3 in openness and non-proprietaryness." (It also has an edge in quality and is easier for the seller to license.)
2.) While DRM-free music was "available," Apple managed to make a greater variety more widely available and of higher quality.
3.) Slight beef with you here.
Clearly Apple has worked hard to negotiate the cheapest, highest quality, and least onerous DRM from the labels that they could. They have also been careful to act in good faith to fulfill their legal responsibilities to these labels. In both cases this has been in interest of Apple and their customers. All this began at a time when few other companies even tried to created a legit and legally sustainable business model.
Even now Apple has arranged to allow customers to upgrade their original DRMed purchases to DRM-free files at no extra charge (above the cost of the new DRM-free offerings.) No other company is doing that yet (as far as I know.)
I'd say its easy to who is who on this issue. Especially now that the labels are offering similar deals to Apple's competitors at a lower prices. Far from thinking Apple is just another one of the good old boys, they probably see Apple as in the pocket of the customers and would love to undo that, pronto.
So to you adventurous folks with 89 cents, does Amazon include cover art?
PS
I also, I have to say that it amazes me that people don't know 1.) that AAC is open and standard, not proprietary 2.) that the iTMS has been on the forefront of offering legal DRM free downloadable music (sold more than anyone else.) and 3.) that it's the music publishers, not Apple who insist on the DRM.
I don't doubt you and although I enjoy a home-made sound, I don't begrudge good production by any means.
I just think that really good production, even with higher end tools, can come at a far lower price today than even 4 or 5 years ago. It's a lot like video (or anything in the computing sphere.) New digital tools have so democratized production with inexpensive, quality equipment that the costs are now mainly for for talent, not overhead. The low cost has also grown the volume of folks experimenting in the medium and consequently greatly increased the number of talented folks who can offer their services.
There is a guy near my hometown (little old Rock Island, IL) that has become a "go to guy" for recording and production of southern fried rock and certain other genres. Although I don't know much about him, I'm sure his reputation rests on the quality of his work. But he has advantages monster producer will never have. An easy atmosphere in the studio and great value for the buck, achieved with high talent, very low overhead, a relaxed approach, and a location somewhat off the beaten path. The epitome of the new world of production.
Good point. Or perhaps, when more established, it's musicians scratching each other's backs to try to get some jack out of the record companies (if so, probably a futile quest.)
You say: "Its a shame you can't put on an argument without being childish. But anyway, all the projects you listed benefit Apple only, thanks for illustrating my point." If, as you say, Apple's contributions to these projects: CDSA-Common Data Security Arch. Darwin HeaderDoc doc generator OpenDirectory QuickTime Streaming Server BonJour WebCore only benefit apple, then I you must believe that the open source model doesn't work. And Apple's contributions to GCC, KHTML, and other projects, not to mention their work benefiting open source drivers also yield no value for anyone? I don't think so.
$100,000/finished minute? Uhmm . . .
Haven't they arrived in the 21st Century yet? Albums can be produced in the average basement with little more than a thousand dollars of audio hardware, some soundproofing, a Mac, and $1,500 worth of audio software (give or take.) some of the finest albums out there are done this way.
Anyone who is paying $100,000/finished minute for production is a moron who has not discovered that the world is now flat!
The OSX operating system is very open source and very hacakable. iPods are different. Different product. Different market.
Where are the complaints about the difficulties of hacking toasters, watches, cell phones, or cars? Get a grip folks.
And Apple *is* a supporter of OSS, but not necessarily Free Software. I wonder where Linux would be without all the freely available work Apple has done on drivers? But I doubt Apple will open source all of the software they have sunk a few BILLION dollars into. I'm thinking they may want to make some money somewhere.
And how much digital content has Linux freed up? I never hear about their negotiations with the big media companies. What's the URL of the Linnux Music Store?
By the way, you can load any MP3 into iTunes and onto your iPod. It is not a locked down platform. And AAC is an open, non-proprietary standard. It's the DRM part that's proprietary (otherwise it wouldn't BE DRM, get it?) If it didn't have DRM, the labels wouldn't let them sell the music for $0.99, right? If you want to, you can buy the non DRMed AACs from iTunes MS for a bit more (if the labels are willing to allow it.)
Me? I prefer to buy CDs.
This is the last straw!
The Linux community will not be buying any iPods after this!
This really will hurt Apple and they WILL be sorry.
Everyone I know who uses Linux on their personal computers will be following suit and NEITHER of them is likely to yield on this point!
I'm willing to bet that from now on, their quarterly revenues will be several thousand dollars less than what they would have been otherwise. . .
Should we go to the next story now? . . . OK then.
On the other hand, I don't think as some do that the price cut was out of desperation and that it will kill the bottom line. I'd say it's a shrewd move to virtually seize a huge share the PDA and smart phone markets in one stroke as well as have a HUGE 4th quarter. This is going to kill palm, hurt many smart phone vendors and carriers while getting a huge leg up on the European and Asian markets. (Zune, your joking, right?)
Economies of scale, etc. plus forward revenues and market share will peg the bottom line.
We need to take a lesson from the Republican Party (Scary, I know.)
Instead of saying
"The Justice Department does not support 'Net Neutrality'."
we should say:
"The Justice Department supports 'Internet Triple Billing'."
or The Justice Department supports "Pay Thrice as You Surf."
How about, The Justice Department supports "Legalized Ransom Payments to ISP Corporate Welfare Recipients."
My attempts are a bit lame.
Anyone have a snappy catch phrase to catch the electorate's attention?