By Horace Dediu
2012 Q4 Publication Date: April 17th, 2013
The iTunes Music store opened ten years ago. It has come to sell not just music but TV Shows, Movies, ebooks and Apps. It has evolved and grown in ways that are becoming difficult to grasp. Consider some of these numbers:
- 63 billion content items have been downloaded
- $33 billion has been paid to content owners, $9 billion last year alone
- $20 billion in transactions will take place this year
- It has overtaken the iPod and will soon overtake the Mac to be Apple's third largest business by sales
- It is nearly one quarter of Amazon's sales level, including all that Amazon sells.
It's a juggernaut whose power over the music and software industries has been challenged as unfair or unsustainable. And yet, it began as something Apple billed as "running at break-even". It is still largely ignored as a business and treated as something that supports Apple's device sales.
But if it does support hardware, why is it something no other hardware vendor has tried to replicate? Why do those with digital content stores like Amazon and Google's Play not tout their successes in terms of sales and payments to content owners?
It seems to be something of an enigma. It's irrelevant by some measures, suffocatingly powerful by others.
What has iTunes become?
This report attempts to answer this question with an in-depth review of iTunes. As Apple re-organized the division at the end of 2013 it signaled a new importance for the group. It also offers us a new way of understanding and forecasting the business.
The data and discussion cover:
- Revenue Recognition
- Sources of Income
- Context in overall business
- Each content type analyzed in terms of units, pricing, revenues, cost structure and contribution
- Discussion of Apple's own Software group
- 4 quarter forecast
32 Page Report: Downloadable* PDF file
Report Data: Downloadable* Excel File
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